Spreadsheet Auditing Resources

Spreadsheet Error Research

We All Make Mistakes

We’ve all heard stories of spreadsheet errors, and some of the worst are listed on the Horror Stories web page of EuSpRIG, the European Spreadsheet Risks Interest Group.

We may be tempted to think, “I’d never do that”, but Prof. Ray Panko in Hawaii has spent decades researching spreadsheet errors. He has found that there is a “base error rate” of between 1% and 5% for any complex human activity. And this means that errors are inevitable in almost any spreadsheet.

When things go wrong, there are online Excel tutorials and spreadsheet error experts who can help sort things out. But it’s much better to avoid problems in the first place, by following proper quality assurance standards in developing, testing, and auditing spreadsheets.

Spreadsheet Audit and Review

Reducing Risk

Even the most carefully crafted spreadsheet will likely contain errors, and the best way to reduce the risk of spreadsheet horror stories as mentioned earlier is a professional financial model review or model audit. This will involve a top-down inspection review, probably some kind of bottom-up analytical review, and occasionally even an independent replication of what the model does.

As with spreadsheet quality standards, the ICAEW has published a comprehensive guide to How to review a spreadsheet, covering five different levels of review as well as the useful audit functionality built into Excel itself. And at the other extreme is a one-page summary from Danielle Stein Fairhurst.

When it comes to a detailed analytical review, Rainbow Analyst can reduce your time and costs by an order of magnitude. As one of our users told us, “Up until now it has taken us days to trawl through models but your add-in has reduced this to a matter of hours. It is very powerful and well worth the money”.