¶ … error detection and prevention in regards to regulatory issues and governance issues. With the advent of the internet, the use of spreadsheets and other data manipulation software has become widespread. The use of these forms of software has numerous implications for any business irrespective of size. For one, the ubiquitous nature of spreadsheet modeling allows it to be instantly transferred between end-users without any subsequent recreation of the original document. This allows multiple end-users to have access to the same spreadsheet without recreating it, thus saving time and increasing efficiency. Furthermore, spreadsheets modeling tools provide multiple solutions to multiple problems facing businesses. Excel, for example, can preform data mining tasks, what if analysis, and report generation. All of which provide a means for the end user to make better informed decisions therefore increasing profits and customer satisfaction.
Spreadsheets are not without their flaws however. As the article indicates, errors occur constantly in spreadsheet production. In many instances, these areas are transferred to other unsuspecting end users of the model. This compound effect creates widespread errors in the calculations and thus decision making of the end user. Even more prevalent, is the issue of fraud, as individuals will intentionally manipulate spreadsheets to achieve a desired effect. The detection and subsequent prevention of...
A person with desires to locate fraud must first comb though large amounts of information to simply pinpoint one mistake. More troublesome, the individual looking for the mistake may himself overlook aspects hidden within the spreadsheet causing the fraudulent financial information. As such, the prevention of such efforts is quite difficult (1).
This not only has a profound impact on the end user but by all stakeholders involved in the use of the financial information provided by the end user. These stakeholders include, audit firms, management, employees, customers, investors, and the government. In regards to investors, misleading spreadsheet information can have a profound impact on individual investing behavior. As the article stated, 80-95% of all U.S. based companies use spreadsheet financial reporting. Many of these financial statements contain mistakes that, as I mentioned earlier, are very difficult to detect. Therefore, investors are using misleading financial information that will subsequently cause them to make ill advised investing decisions. These decisions further effect the economy as money that could otherwise be used for honest companies is going towards fraudulent companies with misleading financial reporting standards. This will cause the fraudulent company to obtain financing…
