There are two basic types of errors, both are the enemy of Accurate Spreadsheets:
* A. Quantitative Errors – create an immediate problem in your reports, some sort of incorrect result or information
* B. Qualitative Errors – create confusion for the user and ongoing problems, such as entering the right data in the wrong place
Both these problems decrease the reliability of the end result and cause untrustworthy reports – and we all know an untrustworthy report is as good as useless!
A. Quantitative Errors
There are three ways to create errors in the values reported on a spreadsheet:
- Simple typos – making mechanical errors such as mistyping a number or pointing to the wrong cell
- Mistakes in reasoning – creating an inappropriate formula because of a logic error (usually due to a misunderstanding of the requirements)
- Leaving something out – including data gaps and formula oversights
These mistakes boil-down to simple human errors, not necessarily something that can easily be recreated – and consequently these are very difficult to completely avoid. However being aware of how easy it is to make these mistakes is a good start, and really well designed spreadsheets go a long way to reducing the incidence of these errors.
B. Qualitative Errors
A spreadsheet with Quality Errors is difficult or even impossible to read, edit, update and maintain – which means it is difficult to get right! Quality errors within spreadsheets include incorrect instructions, and usually these drive errors when undertaking basic tasks of change such maintenance and updating data.
Often workbooks are large and complex, and development, and updating, often involves lots of people – so it is also poignant to remember to design your sheet for everyone to use, not just yourself. Often I arrive at clients and the accountant has created a set of tools that no-body else can use, or understand how to run. Whilst being indispensable does create a sense of security, if it also brings with it a risk there will be no reporting, when someone gets sick or goes on holidays – which is best avoided!
Again, designing your spreadsheets in a manner that is user friendly for a variety of excel skill levels goes a long way to reducing these errors too.
9 Ways to Create Spreadsheet Accuracy
For brevity I haven’t included any screen shots or too many examples – check the credits at the bottom of the post if you want more details. I am using “worksheets” to refer to additional/separate spreadsheets/tabs, each with a subsets of work, within a spreadsheet file – these are generally labelled “Sheet 1”, “Sheet 2”, etc in Excel.
1. Use Range Names
Suppose a value in a report is labeled Total Sales, Western Region. And suppose the formula for this result is: =SUM($M$5:$M$34) How can you tell if that formula is pointing to the correct data? It’s impossible to know, of course, without going to the cell address and examining its data.
Instead, suppose the formula is: =SUM(SalesService). If you assign understandable names to key ranges in your spreadsheet, and then use those names in your formulas, your formulas will be much easier to understand. And the errors in your formulas will be much more obvious.
Creating a single worksheet for inputs will enable you to update your workbook without having to change all the formulas – don’t forget to define your range names as larger than required so that the number of inputs can vary without the need to redefine the name range or adjust any formulas in the worksheet – colouring the range you name can help make this even more clear.
2. Keep Formulas Simple
Keep your formulas simple instead of stringing lots of things together – you can make things as complex as you like, but breaking the calculation into easily recognisable steps helps you to identify errors. Work with several meaningful components, across a few more cells with labels so that the logic of your workings is obvious.
e.g. eg Total Sales: =(Price*Quantity)-(Price*Quantity)*Discount+(Price*Quantity)*Tax. Remember your algebra teacher nagging about “showing all your workings” and include the separate steps so your logic is transparent (and later you can come back and see what you did)