The 6 most expensive Excel mistakes in history

Statistics have shown that the vast majority of spreadsheet modellers don't have a basic background. The reason is simple. Many people feel that daily use of the software is enough to master it. In reality, knowing how to create Excel tables, several cells, is not enough to pretend to have mastered Excel and avoid mistakes. You have to learn Excel to fully master advanced functions, basic functions, search functions, etc.

Some companies have paid a high price for bad manipulations made in Excel. We've given you a top 6 of the most expensive mistakes.

‍

🏦 In 2012, JP Morgan suffered a $6 billion business loss due to an Excel copy and paste error

The loss experienced by JP Morgane in 2012 is linked to a simple copy and paste problem.

Indeed, the company used spreadsheets to create value at risk models (Var).

The problem came from an employee who entered the wrong data into the model. He took the false information from one spreadsheet and copied it onto another sheet.

The resulting model minimized risks. This caused a commercial loss for the company. This amounts to 6 billion dollars.

This is a mistake that someone working in the finance sector could easily make when dealing with multiple expense reports.

For example, consider the case where you have, in your spending process, a copy of information from spreadsheets and personal amount notes. When you have this information copied into a main spreadsheet, it is very easy to make a mistake in where the information is going.

In the case of J.P. Morgan in 2012, it turned out that the modeler who made the mistake received an email from the company that had reported to. The latter recommended that he put pressure on the people responsible for validating the models.

The modellers were therefore working to speed up the review process. It is undoubtedly this factor that caused the problem with the models.

So you understand that when the review team is under pressure, mistakes can happen very easily.

For this, it is very important to put safety elements inside the sheets that are used by many people. These can take the form of blocked cells

💵 Fidelitys $2.6 billion “minus sign” error

Fidelity's “Magellan” fund had made a poor forecast for the end of 1994. In fact, he estimated the distribution that will be made during this period at 4.32 dollars per share. This poor forecast is linked to a sign error made by a company accountant in the spreadsheet software. This was a negative sign that the accountant failed to put at the level of a net capital loss of $1.3 billion.

As a result, the dividend was reduced by $2.6 billion. Generally, errors do not come from the malfunctioning of the Excel spreadsheet. These are human errors that are the basis for bad calculations, at the level of the Microsoft Excel application.

Even on a small scale, such mistakes can have big consequences. It is important to have a global command of Excel to create security systems in all the sheets leading to decisions.

🔥 Miscalculation of $25 million in the Utah Office of Education budget

In 2012, the Utah Bureau of Education incorrectly estimated how many students the education system will know as enrolled. This error was made in the spreadsheet of the Microsoft Office application. It was actually a problem with the calculations to determine the weighted number of students. This is the number that the budget should come from. This error made in Excel resulted in a poor budget estimate. As a result, the state of Utah caused a loss of $25 million.

Since weighting functions are rarely used, this one seems trivial, but is clearly not without consequences. Larry Shumway (then State Superintendent of Public Instruction) went back to the severity of this spreadsheet error by raising how difficult it was to exercise their authority.

📷 In 2005, Kodak suffered a loss of $11 million in severance benefits due to a typo in Excel

Kodak was also the victim of an error resulting from the use of Excel. The error was due to a typo. A company staff member has inadvertently added several zeros to a severance package. This error caused the Excel calculation to be inaccurate. This resulted in an overestimate of 11 million dollars.

This factor shows once again that an error in an Excel cell or an Excel document or an Excel sheet can have very serious consequences.

❌ In 2008, Barclays Capital had to spend millions on worthless contracts due to an Excel formatting error

In 2008, it was a formatting error in the Excel program that earned Barclays Capital a financial investment in worthless contracts.

Indeed, Barclays Capital had to buy out the contracts of Lehman Brother, which was bankrupt. The Excel software was therefore used to create an Excel table containing contracts that were to be the subject of transactions.

But some rows in the Excel spreadsheet have been hidden instead of being removed. On each hidden Excel line, there was a contract that did not have to be purchased. It was only after reformatting the Excel sheet into PDF that the contracts hidden in the Excel tool appeared. Barclays was therefore obliged to make these purchases.

🕵️ In 2010, MI5 tapped the wrong phones due to an error

Using Excel requires mastering the functions. While Barclays used the formatting function before noticing the errors, the M15 error came from this formatting performed on a list of telephones that should be tapped. In fact, more than 134 people with no connection to the operation were wiretapped. The last three digits of the numbers in the spreadsheet have been changed in the Excel spreadsheet.

🧠 What do you need to remember?

Excel is a key tool in the business world, it's a real Swiss Army knife. But, as these companies saw, its misuse can lead to costly mistakes. Your company is not spared. It is therefore necessary to take the necessary measures to prevent you from these various consequences. A good understanding of the tool makes it easier to navigate it and to be able to ensure the quality of your work.

Having tools in place to ensure that employees are properly trained on Excel significantly reduces the number of errors and increases the quality of work. This training will allow you to master the advanced functionalities of the application. Having an introduction to Excel for newcomers and a continuous upgrade for employees is key for good professional development. This improvement will allow them to extend their mastery of the tool and to master advanced functions. In particular, they will be able to learn VRESEARCH or to do advanced analyses with dynamic cross-tables.

‍