2. Source> *Freeman, 1996; **Panko, 2005b; ***Ditlea, 1987; ****Dent , 1995) Humans make mistakes, hence most spreadsheets are bound to contain errors An audit in a mining company found errors in about 30% of the audited spreadsheets**** 90% of all spreadsheets with more than 150 rows that a consulting company audited contained errors** A Price-Waterhouse consultant audited 4 large spreadsheets and found 128 errors*** 20% to 40% of all spreadsheets contain errors* Spreadsheet errors exist in all spreadsheets, consistent with other human cognitive domains
3. Source> classmate interviews and personal experience While it is difficult, it is very important to minimize spreadsheet errors “ While modeling possible profitability scenarios for the client, one input error could sway our final client recommendation” Management Consultant “ Incorrectly calculating stock options expense could materially affect the calculated profitability of my employer company, which would result in providing false financial reporting to the SEC” Sr. Accounting Manager “ I made an error in cell reference when doing DCF analysis, which would have resulted in an incorrect recommended acquisition price for our client! Good thing, my mistake was caught by my boss!” Investment Banker A spreadsheet error can cost someone career or even freedom
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5. To prevent spreadsheet errors, we need to first understand what is causing them Source> Natalie’s analysis Educating spreadsheet creators on main causes of errors can be error-prevention already Microsoft Excel Excel User Error! Sense of urgency Spreadsheets are frequently created under a time pressure Overconfidence of the spreadsheets creators on the extent of their competency Lack of review Knowing that no one will ever look at the model to review it Lack of organized approach to spreadsheet creation