In Maryland we have a lemon law — if you buy a new car and it turns out to have lots of defects then the dealer has to take it back. Should the same apply to banks? A federal judge will make that determination.
In September, Barclays bought Lehman Brothers investment banking and trading business — and it thought it had cherry-picked just the good assets. It turns out that due to a spreadsheet error, Barclays bought hundreds of not-so-good assets too. This PC World Article lays out the details. In November, a federal court will decide whether Barclays gets to return the bad assets.
In a normal acquisition most likely this error would have been caught, but in the rush of a fire sale, it didn’t. Would spreadsheet controls have helped prevent this error? Maybe — but doubtful in this case. The spreadsheet was too unique. However, in cases where spreadsheets are used repeatably for the same task, then a spreadsheet control strategy can help prevent costly errors.
2 responses so far ↓
1 Dennis Howlett // Oct 22, 2008 at 11:01 am
I don’t know how many years I have been railing against the spreadsheet but this is yet one more example where error costs dearly.
On the basis of past cases, I’d be surprised if the court holds in Barclays’ favor - caveat emptor anyone?
2 K K Tang // Oct 23, 2008 at 11:15 am
I am just amazed that many companies would employ staff to use spreadsheets without providing them with adequate training. Would any company employ a Financial Controller who has not undergone the rigors of the ACA qualification. Surley not, you say. Then why do we allow staff to use the spreadsheet without ensuring that they are adequately trained. Many accountants have undegone formal training to create reliable and impactful spreadsheets. Imagine resolving the yearly budgetting process in just one meeting with an instataneous what-if budget model For other amazing examples go to http://www.icpas.org.sg/bizexcel/bizexcel_testimonials.asp
For Chartered Accountants in the UK wishing to produce monthly reports with just 3 clicks of the mouse, go to http://www.icaew.com/index.cfm/route/160544/icaew_ga/en/Technical_Business_Topics/Faculties/Events/Business_analytics_and_reporting
I would be happy to e-mail them an example of automated reporting and interactive Financial Reporting. Send request to kktang@icpas.com.sg
In fact, Dennis, you should contact Paul Booth for a sample of the amazing Excel files and you would be the biggest evangelist of Spreadsheet
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