Spreadsheets were originally developed in the late 1960s and 70s as computerised analogues of paper accounting worksheets. They are very good when used for their initial purpose, but even today surprising numbers of enterprises run large, and essential, parts of their businesses off these electronic sheets of paper, a task for which they simply weren’t designed.
Inevitably, there have been many cases where errors in spreadsheets have caused significant problems. Here are 10 of the most infamous!
- In the London Whale Trading Scandal, JP Morgan Chase lost over $6 billion due to an error in a spreadsheet used to value complex financial derivatives. Chief Investment Officer Ina Drew stepped down as a result, whilst Chief Executive Jamie Dimon saw his pay cut in half.
- During the 2000 US Presidential Election a spreadsheet error caused the vote in Florida to be incorrectly reported, leading to a contested election and a Supreme Court case.
- In 2005 photography giant Kodak added too many zeros to a severance accrual record resulting in an $11 million overstatement on a single employee’s accrued severance record. The mistake came at a time when the company was losing more than $100 million every quarter, though in this case the mistake was quickly rectified.
- NASA’s Mars Climate Orbiter spacecraft was lost due to a failure to convert units of measurement correctly in a spreadsheet (metric units by NASA and US customary units by spacecraft builder Lockheed Martin), resulting in the spacecraft encountering Mars on a trajectory that brought it too close to the planet.
- The AIG bonus payments controversy occurred in 2009 after it was revealed that AIG paid out millions in bonuses to employees, due to an error in a spreadsheet used to track bonus payments. In the end, some AIG employees, including 15 out of the 20 top executives of the company, paid back the bonuses they had received.
- During the 2012 Olympics organisers managed to sell 10,000 non-existent tickets for a synchronised swimming heats event after a staffer erroneously put 20,000 into a cell instead of 10,000. But with no capacity to accommodate these extra spectators, the Olympic Committee had to upgrade their tickets to ones at major events causing a significant financial loss.
- Investment company Fidelity’s high-profile Magellan fund had to scrap its year-end dividend distribution after a catastrophic spreadsheet error caused by a single missing minus sign. When transcribing the net capital loss of $1.3 billion from the fund’s financial record to a spreadsheet, the accountant forgot to use a -, turning the loss into a gain and making the distribution fund off by a monumental $2.6 billion.
- A worker for Canadian power company TransAlta cost the business an eye-watering $24 million after a simple cut and paste mistake. The error occurred when they misaligned the rows of data in the spreadsheet, meaning high bids intended for in-demand electricity transmission path contracts were instead made for lower demand ones. Consequently, TransAlta ended up overpaying for these contracts, as well as purchasing more capacity than they wanted to in certain instances. All in all, the error wiped out a sickening 10% of the company’s profits that year.
- MI5, the UK’s domestic counterintelligence and security agency, was responsible for an astonishing 62% of incorrect applications for communications data in 2010 due to a spreadsheet formatting error. MI5 accidentally bugged 134 phones after they applied for data on numbers ending in “000” rather than the actual last three digits. Fortunately for those wrongly bugged, the resulting material was destroyed, with the formatting mistake fixed and phone numbers checked manually from then on.
- Banking powerhouse Barclays accidentally bought 179 more contracts than they intended in their purchase of Lehman Brothers assets in 2008. A previous editor had hidden cells containing the unwanted contracts instead of deleting them. When the file was converted into a PDF, the cells were made visible again. In the end, Barclays had to swallow the losses on the 179 contracts, costing them an undisclosed sum.
These are just a few examples, but they illustrate how important it is to use spreadsheets with care and to check the accuracy of the data they contain. For businesses, be they SMB, mid-market, or enterprise, it is far better to trust in purpose built, connected planning software.
One example is our SaaS planning model, which is launching next week. In the meantime you can check out our other models for free over on our Models page.