Control Yourself

Spreadsheet risk is a type of operational risk defined as “the risk associated with deriving a materially incorrect value from a spreadsheet that will be used in making a related decision”.

In other words, incorrect value on spreadsheet = potentially wrong decision

In other words, spreadsheet = potential disaster!

What can you do to help prevent spreadsheet risk?

You need a robust control framework, suggestions include:

  • Data validation and checks – eg error warnings if values are greater than or less than expected values
  • No hard coding – assumptions should be in a clearly labelled section of the spreadsheet – not hard coded
  • Review assumptions – are these still relevant and accurate?
  • Documentation – clear procedure notes on which cells need to be updated, remembering to update pivot table ranges, formulas and dates
  • Review – key spreadsheets need multi stage reviews
  • Focus on key spreadsheets – not all spreadsheets can have multi stage reviews – focus on the key ones for your business
  • Sense check your answers – do not rely on the spreadsheet – use your own knowledge and challenge the results
  • Open communication – make sure people feel they can speak up if their spreadsheet looks to have errors or they do not understand how to use it
  • Training for employees – especially if new to the role and need to upskill to be able to understand the spreadsheets in detail

 To help reduce your spreadsheet risk, contact Sunbird Advisers here.

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