More than half of accountants said that the frequency of errors found on spreadsheets is either “very high” or “fairly high”, while almost three quarters ranked “spreadsheet risk” as a major business risk, according to new research commissioned by ClusterSeven.
According to the study, two thirds of accountants believe it is likely that over the next two years a large company in the UK will suffer financial and potential reputational losses due to spreadsheet based failure.
The lack of a system for checking or tracking who has made changes and when the changes were made, accounts for 54% of errors. Too many people having access to key spreadsheets account for 42% and insufficient training or understanding of how to use spreadsheets accounts for 39% of mistakes.
One in 10 respondents reported that more than 30% of their time is spent checking spreadsheets and similar applications for errors.
However, ICAEW warned that spreadsheet errors often go unnoticed. Richard Anning, head of ICAEW’s IT faculty, said, “We know flawed spreadsheet design and lack of formalised training can lead to significant costs. Errors, however, often remain unspotted which means the damage is difficult to recognise or measure. With nine out of ten respondents agreeing finance professionals will increasingly rely on spreadsheets and data management, this is a major concern for both businesses and UK economy.”
The majority of accountants surveyed believe that regulators and other key stakeholders such as auditors will take an increasing interest in the use of spreadsheets and corporate data management over the next two years.
Ralph Baxter, CEO of ClusterSeven, said, “Accountants and financial professionals are exposed to spreadsheets and similar applications more than most people, and the message they are sending is that the propensity for critical errors on spreadsheets is. The challenge for businesses and financial institutions is that the quality of data held and managed on spreadsheets, and the processes behind validating this data, are increasingly being reviewed by stakeholders such as regulators as the inherent fallibility of spreadsheets becomes ever more apparent.”
This research follows the news last month that accounting professionals are among the most concerned about technology advancements threatening their jobs.
According to research by CV Library, over a third of those working in accounting fear their jobs are at risk due to technological advancements in the industry compared to 25% nationwide.