We have all read about the Harvard economists Reinhart and Rogoff's most famous finding that countries with a debt exceeding 90 per cent of their annual GDP experienced slower growth than their thriftier peers, being debunked by a 28-year-old student.
Thomas Herndon, a graduate in the economics department at Amherst College in Massachusetts, found that they had made fundamental mathematical errors because of a botched Excel spreadsheet. More detail about this can be found here.
You may also have read about the JPMorgan Chase's trading loss of $6.2 billion was caused by an Excel error in copying and pasting data.
Fortune published an article about how Excel is running the world. It implicated Excel in the financial crisis, Europe's growth problems, the U.S.'s weak economic recovery, and pretty much everything else. It states how MF Global went bust because of Excel errors, and also how Barclays was forced to buy losses on an additional 179 toxic assets it never intended to buy from Lehman Brothers. For more interesting cases of Excel error read the article here.
Today, CNBC published a report stating Spreadsheet errors are costing businesses billions of pounds.
It cites a research done by financial modeling company, F1F9. The company estimated that 88% of all spreadsheets have errors in them, while 50% of spreadsheets used by large companies have material defects, resulting in loss of time and money, damaged reputations, lost jobs and disrupted careers.
The report's top ranked errors included the omission of a minus sign which cost Fidelity Magellan Fund around 1.6 billion ($2.45 billion) in 1995, and the British government's botched efforts to assess bids for the West Coast Rail Line in 2012, which is estimated to have cost around 50 million.
Why do you think these errors happen and how can we avoid them, use the comment section below and let us know your thoughts.