How Can Spreadsheet Errors cause Financial Mistakes

Software are designed in a way to assist you in doing or completing the work efficiently and in less time. However, the flaws cannot be denied; it can be in processing the input or human inference or something else, but it somehow has a major effect. One of such developed software is the Spreadsheets which are used every day by large and small companies, to handle their complex data information.

It is used in complex modeling and forecasting, for managing the accounting records and another minor bookkeeping.  Simply put, Spreadsheets handle the total financial records of any company. In fact, in the year 2016 it was recorded that there were more than 1.2 billion users of Microsoft Office, and with Word and Excel the most generally used programs. One can only imagine how many spreadsheets exist today, still the research has been going on.

Are Spreadsheets error free?

While they are considered as the most trustable way to compute the finances and other records, surprisingly these spreadsheet has both pros and cons. No doubt that they are of big benefit for handling the complex financial data, but how can we deny that a little error in processing the input can make your whole financial data at risk. It can all be mistaken with one single mistake. 80% of spreadsheets have mistaken in them, but most of them aren’t serious.

Let’s look into the following spreadsheets errors which has been recorded over time and are highly common among companies

Feeding of wrong data or information:

Wrong input or we can say human errors are one of the major prevalent problems which make the whole spreadsheet at risk. This Spreadsheet software presents an easy-to-use data entry program for students and professionals, particularly in the field of marketing, sales, business, and finance fields.

However, there are equal chances to overtype incorrect numbers or formulas, or mistakenly put factor in numbers. These may look very minor but can render the whole spreadsheet wrong and will present a totally different picture of the whole organization financial position.

Miscalculations not a minor issue for big companies:

So according to the size of the organization the effect of the error can be justified, a small miscalculation can be a minor thing and won’t affect a small organization but can majorly effect big business houses and their image in the market. For families and small companies, miscalculations may only have a minor effect on balance sheets, but these errors surely do effect greater financial and professional impact for larger organizations.

Even small spreadsheet mistakes can cost corporations billions of dollars or ruin a professional’s career and character. These days all the big business houses are enlisted on the stock exchange any wrong information presented on the financial front may prove to be big havoc on the reputation of these houses and may render their shares down which will cost them quite a lot in numbers as well as in terms of their brand value.

Increased organizational pressure:

Another major reason error rendering the spreadsheet into errors is the increased organizational pressure. Several cases of spreadsheet errors over the past few years have supplemented fuel to this topic and increased pressure for organizational action.

Things not done in a proper state of mind eventually turn up to be incorrect and the software works according to the data inserted if not done in a right manner will provide error thereby turning the company into losses.

When you’re trading in a large corporation even a small mistake can prove to be very serious and it can get you into big troubles as the last thing a company want to make wrong would be its financial statements.

These wrong made in these spreadsheets can make the situations quite worse to even financial instability. Penalties imposed by the concerned authorities, false statements and even or even full-blown bankruptcy