Do Your Spreadsheets Suck?

May 29, 2008

I just read a good article from that detailed the worst practices that people adopt when using spreadsheets – the most widely-used financial application out there. Most of us that have used spreadsheets at all in our jobs have seen poorly designed spreadsheets that were hard to follow, had incorrect formulas or were just plain sloppy looking. I study by PriceWaterhouseCoopers showed that over 90% off all spreadsheets contained errors. Adopting some sound practices around how spreadsheets are designed, handled, and updated can go a long way to cut down this error rate.

Among the worst practices cited by, were: poor segregation of data, poor documentation of assumptions, poor documentation of constraints, and difficulties in making changes.

I will not go into a lengthy discussion about each of these offenses here, mainly because already has, but one of the worst that I run into is poor segregation of data. Do not put multiple data points into a single cell and enter your calculation criteria in that cell. For instance, do not add four quarters of revenue by putting this in the cell: “=123544+127584+129848+153287”. Instead, create separate cells for this data and label each item appropriately. It is difficult for others, or even for yourself weeks later, to decipher what the numbers are that are arriving at the result. A properly designed spreadsheet will spell it out for the user.

Another practice that causes countless hours of rework for users is when spreadsheets are not originally designed to make changes easy. When formulas are entered as in the above example, it would be necessary to reenter all of the data if your estimates change for just one quarter. This vastly increases your likelihood for error.

By implementing these and other simple solutions mentioned in the article, you can make your lives a lot easier by reducing the amount of time you spend tracking down discrepancies and rebuilding spreadsheets.

Donna Bordeaux, CPA with Calculated Moves

Creativity and CPAs don’t generally go together.  Most people think of CPAs as nerdy accountants who can’t talk with people.  Well, it’s time to break that stereotype.  Lively, friendly, and knowledgeable can be a part of your relationship with your CPA as demonstrated by Donna and Chad Bordeaux.  They have over 50 years of combined experience as entrepreneurial CPAs.  They’ve owned businesses and helped business owners exceed their wildest dreams.   They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.