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NextGen Magazine

 
 

Scary Stories for CPAs: Site Collects Tales of Horrifying Spreadsheet Errors

By:
Chris Gaetano
Published Date:
Mar 21, 2019

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It's late night at the office, the cloistered professionals inside deep into busy season. Wind and rain pound at the windows, howling, as if desperate to be let in. A senior rubs her tired eyes, the numbers on the monitor blurring into practically another language. Sipping her Red Bull, she suggests to the rest of her team that they take a break and tell some scary stories. Because things always get kind of silly that late at night, the team agrees. But what story? Something about vampires? Maybe werewolves? Ghosts? The senior smiles. No, she says. Something much, much worse. 

Spreadsheet errors. 

She turns her browser to the European Spreadsheet Risks Interest Group to find a collection of some of the most horrifying, devastating spreadsheet errors that have been gathered over more than a decade—stories sure to set a CPA’s spine tingling but likely confuse everyone else. Take, for instance, "The Tale of the Computer Error at Fidelity’s Magellan Fund":

"There was a big flap recently over Fidelity's Magellan fund estimating in November that they would make a $4.32/share distribution at the end of year, and then not doing so," said one storyteller, identified only as NS13. "A letter of explanation was sent to the shareholders (including me) from J. Gary Burkhead, the President of Fidelity, including the following pertinent items: 'During the estimating process, a tax accountant is required to transcribe the net realized gain or loss from the fund's financial records (which were correct at all times) to a separate spreadsheet, where additional calculations are performed. The error occurred when the accountant omitted the minus sign on a net capital loss of $1.3 billion and incorrectly treated it as a net capital gain on this separate spreadsheet. This meant that the dividend estimate spreadsheet was off by $2.6 billion...'"

How’s that for scary? Well, what about "The Tale of the Emailed Spreadsheet Containing Private Data in ‘Hidden’ Columns?" told by a storyteller identified as POB1703?:

“Global aerospace firm Boeing earlier this month sent a notification to Washington State Attorney General Bob Ferguson, as required by law,  about a company employee who mistakenly emailed a spreadsheet full of  employee personal data to his spouse in November, 2016. The spreadsheet, sent to provide the employee's spouse with a formatting template, contained the personal information of roughly 36,000 other Boeing employees, including Social Security numbers and dates of birth,  in hidden columns. Some 7,288 of the affected employees resided in Washington State.”

Wow, that’s frightening. Good thing there are regulatory agencies to step in when things like this happen. But, says the senior as she shines a flashlight beneath her chin, what if the error is coming from inside the agency!?!? A storyteller identified as FH1201 related this tale:

“In a recent audit by the Government Accountability Office, they noted the following: 'As we have reported in prior audits, SEC's general ledger system and certain software applications and configurations are not designed to provide the accurate, complete, and timely transaction-level data needed to accumulate and readily report reliable financial information. Instead, the initiation and recording of significant transactions is accomplished through the use of spreadsheets, databases, manual workarounds, and data handling that rely on significant analysis, reconciliation, and review to calculate amounts for the general ledger posting of transactions.' Their financial reporting is still heavily based on spreadsheets: 'This process area continues to have a significant deficiency in FY 2011. Many of the agency’s financial reporting processes are still manual in nature and reliant on spreadsheets and databases to both initiate transactions and perform key control functions.' And some of the spreadsheets were even linked to errors that were found: 'In addition, we noted that a spreadsheet error resulted in incorrect amounts for SEC's legal liability and lease liability disclosed in the notes to SEC's interim financial statements [....] These and other errors we found point to a lack of effective review procedures, which are even more critical given SEC's heavy dependence on spreadsheets and error-prone manual data entry for its financial reporting and accounting processes.' Their CFO promises to improve this in the coming year: '...redesigning and implementing controls over the spreadsheets and databases used by the agency for material financial reporting-related transactions and key operational management decisions, based on risk.'"

Wanna scare your co-workers while simultaneously reminding them to be very careful with what they do with all their Excel tables? The site has literally dozens more scary stories to choose from.