7. Kodak Restates, Adds $9 million to Loss

Lesson learned: Lack of data-quality controls can have a negative outcome.
November 2005

Robert Brust, Kodak's chief financial officer, said that the severance-related error stemmed from miscalculating severance pay accrued by just one employee, revealing what he called "an internal control deficiency that constitutes a material weakness that impacted the accounting for restructurings." Brust said the company expects to fix the problem by year-end.

Kodak spokesman Gerard Meuchner said the hefty $11 million severance error was traced to a faulty spreadsheet. "There were too many zeros added to the employee's accrued severance. But it was an accrual. There was never a payment," he said.
—From Marketwatch

8. Westpac Jumps the Gun on Profit

Lesson learned: You can never get enough spreadsheet and data-handling training.
November 2005

Westpac was forced to halt trading on its shares and deliver its annual profit briefing a day early after it accidentally sent its results by email to research analysts. Details of the $2.818 billion record profit result for the 12 months to September 30...were embedded in a template of last year's results and were accessible with minor manipulation of the spreadsheet. (Some news reports indicated an employee had thought that a black cell background fill would hide black text.)

Westpac CFO Philip Chronican said, "It is not just one error, it is a compounding of two or three errors.... We will obviously be conducting a full inquiry to make sure it doesn't happen again."
—From The Sydney Morning Herald

Can Software Trump Wetware?

Microsoft's Excel is the most widely used spreadsheet application. Chris Caren, the general manager of Office business applications at Microsoft, says Microsoft Office (which includes Excel) can be found on some 450 million desktops today.

Caren says he's aware of the risks of spreadsheet mistakes—what he terms "errors of input." He says Microsoft has tried to address these with new features in Microsoft Office 2007 and the Microsoft Office PerformancePoint Server. For example, instead of a sales manager having to manually cut and paste data from document to document, he can now have an application do it for him. "It's relying a lot less on the individual, especially when he is working with complex formulas," Caren says.

According to Caren, historically, CIOs' main gripes with using Excel spreadsheets for critical financial data could be summarized with a couple of reasons. First, CIOs worry about access to confidential information, either on a laptop that is not safely stored on a server or as data in a spreadsheet (such as payroll information) that is freely available to other employees. Also, because users can have different snapshots of data in the spreadsheet, "They all think they're operating off the same thing," says Caren—but each user is looking at a different version.