4. University of Toledo Loses $2.4 Million in Projected Revenue

Lesson learned: Future-looking financial statements should have extra scrutiny and review. User training would also help prevent these formula-based errors.
May 2004

Already facing significant state funding reductions for next year, UT officials have discovered an internal budgeting error that means they will have $2.4 million less to work with than anticipated. The mistake—a typo in a formula that led officials to overestimate projected revenue—was found Tuesday.... The budgeting error discovered this week was made in the institutional research office by an employee whom officials refused to identify. While official UT projections call for a 10 percent decline in graduate student enrollment, an increase mistakenly was shown in a spreadsheet formula that led officials to overestimate enrollment and therefore revenue, Mr. Decatur said.

[President Daniel] Johnson said no job action will be taken against the employee who made the mistake, who has a good performance record. Officials will, however, pursue systemic changes to provide more safeguards in the future.

"We have very competent people," Dr. Johnson said. "I do think that the continuing fiscal pressures on universities have forced us to a level of staff support where there is little or no redundance in the process."
—From The Toledo Blade

5. RedEnvelope Skids on Loss Forecast and Budgeting Error

Lesson learned: Quality control is king, especially when reporting to The Street.
March 2005

Shares of RedEnvelope Inc. lost more than a quarter of their value Tuesday after the company warned of a fourth-quarter loss due to weak Valentine's Day sales and a budgeting error that resulted in an overestimation of gross margins. [The company] said its chief financial officer, Eric Wong, had resigned.

"While the concurrent preannouncement and Wong's departure may suggest management believes Wong's replacement remedies the situation, we are not yet convinced the weaknesses are solely related to Wong," analyst Rebecca Jones Kujawa wrote in a research note.

News outlets reported that RedEnvelope spokeswoman Jordan Goldstein said the budgeting error was simply due to a number misrecorded in one cell of a spreadsheet that then threw off the cost forecast and was unrelated to the CFO change.
—From Marketwatch

6. "Think-and-Do Tank" Flubs the Math

Lesson learned: Have another employee double-check the work.
May 2005

The Center for Regional Strategies recently confirmed that a researcher's errant cut-and-paste from a spreadsheet caused one measure of the region's level of educational attainment to appear a lot worse than it is. Specifically, in a study released in March by the Center for Regional Strategies, a self-described "think-and-do tank" housed at Virginia Tech, the center reported that a dismal 11 percent of the region's population older than 25 had bachelor's degrees or higher. That number should have been 20 percent.

"It was just a simple cut-and-paste error," said Stuart Mease, a spokesman for the Center for Regional Strategies. "I don't know how it happened, but it did. We apologize for our mistake and want to correct it."
—From The Roanoke Times