Everyone knows that spreadsheets can be risky if not built properly. To minimize errors, it is important to have the proper structure, include data validation to prevent user input errors, and include checksums to ensure calculations are correct.
Errors in spreadsheets can have very significant adverse effects. Business executives have fiduciary and compliance obligations which, if not met, can result in hefty fines. The risk of errors is great and the causes are many.
Fortunately, there is the European Spreadsheet Risks Interest Group, or EuSpRiG ("yewsprig"), which provides ongoing research into spreadsheet risks and best practices.
To quote from the EuSprRiG website:
Directors of companies, charities, departments of government and other organisations have numerous statutory, fiduciary, reporting and compliance obligations. Penalties for failing to meet them include fines, jail sentences, undesired share price movements and unplanned career changes. The ability to meet these obligations is undermined if the information upon which decisions are based turns out to be flawed. In most businesses, a majority of that information is derived from spreadsheet models.
Research has repeatedly shown that an alarming proportion of corporate spreadsheet models are not tested or controlled to the extent necessary to meet these obligations. Uncontrolled and untested spreadsheet models pose significant business risks, including: • Lost Revenue, Profits, Cash, Assets & Tax • Mispricing and poor decision making due to prevalent but undetected errors • Fraud due to malicious tampering • Systemic financial failure, due to overdependence
Furthermore, an inability to show that spreadsheet-based business information has been subject to procedures designed to ensure it is reliable is in itself a failure of fiduciary and regulatory compliance.
EuSpRIG offers Directors, Managers and Professionals in all disciplines, the world’s only independent, authoritative & comprehensive web based information describing the current state of the art in Spreadsheet Risk Management. EuSpRIG is the largest source of information on real-world, implementable methods for introducing into organisations processes and methods to inventory (keep records of), test, fix, document, backup, archive, compare and control the legions of spreadsheets that support critical corporate infrastructure.
There is an abundance of resources if you want to delve into this topic further. Here is the link: http://www.eusprig.org/index.htm