I would say it’s due to the fallen nature of Man
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I don’t recall Excel in the 1980s. It didn’t take over with me until the second half of the 1990s. Before then, I used various spreadsheets such as 1-2-3, Symphony, Quattro Pro, and SuperCalc. Visicalc was an Apple spreadsheet, but I never used it.
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Excel took off around v5 (1993). V5 coincided with Lotus failing to transition to Windows very well, and included VBA. Excel 95 (v7), which was 32-bit pretty much nailed the coffin in 1-2-3, if memory serves.
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I 100% agree with this, but…
Microsoft was making Windows and Excel, and 1-2-3 was not interfacing well with Windows. Was that Lotus’s fault or was that Microsoft making it impossible for a 3rd party software to work as seamless in Windows as Excel for marketing purposes? I always thought it was the latter: MS preventing 1-2-3 from working well. After all, what are monopolies for if not for driving competitors out of business (and yes, MS had a monopoly on operating systems)
I gave up on 1-2-3 not because it was a less capable calculation tool, but because it crashed all the effing time in my Win 3.1 world. (My STSC*APL install never crashed)
I kinda preferred the 1-2-3 macro forms over the more of a programming language that is VBA.
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Deloitte Web Travel screw-up with wrong numbers put into a spreadsheet
Again – it’s human error, not the spreadsheet’s fault
Deloitte made me do it: CEO throws auditor under the bus
A weekend call from the auditors sent the $1.7 billion Web Travel into a spin.
Nov 21, 2024 – 6.27pm
key excerpt:
It finally discovered the issue; Deloitte was using the wrong numbers.
Its auditors had copied and pasted the wrong cells to work out the adjustments – a simple (yet substantial) spreadsheet error.
article within
If there is one thing that is sacred with institutional investors, it is a company’s accounts. Investors do not have enough bandwidth to completely understand every ASX-listed company, its industry or various geographies, but they can analyse financial statements.
As soon as a company starts fiddling with historical numbers, changing its interpretation of long-held accounting standards or blueing with auditors, red flags are raised. When all that happens a few days before what should be a routine results release, investors question the foundations.
Web Travel has had a shocking week. The way Guscic tells it, he thought the company’s half-year numbers were as good as finalised last Friday when he sent his board the half-year accounts, investor presentation and even a draft results press release to mull over the weekend. His 28th result in charge of the company looked like plain sailing. Results day was scheduled for Wednesday this week.
He says that changed on Saturday when the company’s auditor Deloitte flagged a potential issue with Web Travel’s finance team.
Despite Deloitte having the same audit partner on the case for the third straight year and despite Web Travel hiring KPMG in London to separately look at this exact issue last year, Deloitte had access to Web Travel’s new accounting system and wanted Web Travel to rethink how it accounted for supplier liabilities including accruals for services rendered but not yet billed at the end of each month.
The impact? Apparently, tens of millions of dollars. Deloitte considered the technical accounting standards issue at a senior-level meeting on Sunday and confirmed it to Web Travel CFO Tony Ristevski on Sunday afternoon.
That’s when Web Travel freaked out.
Tens of millions of dollars was highly material for a company slated to record $113.9 million EBITDA this financial year. And four days out from results day, it was very late in proceedings to be notified of a potential switch in accounting standards. Such high-level issues are usually sorted in the lead-up, well before the trial balance is ruled off.
Strangely, it was also not flagged as a “key audit matter” in Deloitte’s audit opinion last year. Web Travel must’ve known it was a bit of a grey area – why else get that second opinion from KPMG in London? Did that make it worth a mention somewhere in the accounts?
Web Travel, confused but worried it had a bomb on its hands only days out from its first-half results, requested a trading halt on Monday.
Ristevski’s team ran around trying to understand both the accounting standards issue and the size of the potential adjustments to current and prior year earnings. They couldn’t work it out. They called around competitors to understand what their auditors made them do.
Web Travel MD John Guscic thought his half-year results were just about finalised on Friday last week. He was wrong. Arsineh Houspian
You can imagine the panic. Web Travel, having got back in touch with KPMG in London, agreed to switch accounting standards but couldn’t reconcile the size of the proposed adjustments.
It finally discovered the issue; Deloitte was using the wrong numbers.
Its auditors had copied and pasted the wrong cells to work out the adjustments – a simple (yet substantial) spreadsheet error.
The result was a bunch of small adjustments to current and prior year EBITDA, retained earnings and trade and other payables as announced on Wednesday night. Web Travel did its best to hose it down on an investor call on Thursday morning. The shares dropped 4.2 per cent when they resumed trading on Thursday.
We’ve only heard Guscic’s side of the story and the CEO was quick to throw Deloitte – a firm it paid $2.64 million last year for audit and tax services – under the bus. “We can’t comment on this one,” a Deloitte spokeswoman said on Thursday.
If it’s true, it’s an epic error from probably a junior auditor a couple of years into his or her career. Accounts payable isn’t the sexiest part of the audit; the juniors normally get cash, fixed assets and receivables and payables, while mid-level (still junior, really) auditors look at the P&L and the manager tackles key audit matters. Partners review the key balances only.
But the whole thing is incredibly untidy.
Web Travel can consider itself lucky if the worst that comes from it is four days of panic and a handful of immaterial adjustments. That it came only weeks after downgrading earnings (which caused the share price to tank 35 per cent) is worrying – remember investors don’t always understand their portfolio companies, but they like to think they understand their financials. An earnings downgrade into an accounting kerfuffle is two red flags in succession.
Investors will also be asking questions about Web Travel’s demerger of consumer arm Webjet, which now trades as a separately listed company with a $330 million market capitalisation.
If there is a kerfuffle like this inside the parent (the one with the established finance team, accounting systems, auditors etc), you can only imagine what is possible inside the spin-off. Can investors trust its numbers? The accounts there are also running two days late
.
In general, the spreadsheet didn’t screw up.
Usually, people made errors, often simple ones… and didn’t put in controls or check their work.
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Well, we will know in a month or two how many juniors KPMG have let go for this error.
Yup.
So why does Excel keep getting the blame?
I recall a coworker noting all the deficiencies of 123 vs Excel about that same time.
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It’s too easy for people to use.
Not sure that is a criterion to prevent people from MIS-using it.
New Zealand, wtf are you doing?
The body that runs New Zealand’s public health system uses a single Excel spreadsheet as the primary source of data to consolidate and manage its finances, which aren’t in great shape perhaps due to the sheet’s shortcomings.
The spreadsheet-using agency is Health New Zealand (HNZ) which was established in 2022 to replace 20 district health boards in the expectation it would be more cost-effective and deliver more consistent services. The org has a budget of $NZ28 billion ($16 billion) and advised lawmakers it would stay within it for FY 23.24.
That prediction was incorrect and HNZ blew its budget, leading to a review of its finances that last week delivered a damning report [PDF] that found the org lost “control of the critical levers that drive financial outcomes” and had an “inability to identify and respond to the disconnect between expenditure and revenue.”
Let’s look at this report:
From Deloitte, ok
page 42-43
Notably, one major issue was through a significant reliance on the use of an Excel file
to manage the consolidated financials of the organisation. This spreadsheet was the
primary data file used by HNZ to manage its financial performance. It consolidated
files from each district into a single spreadsheet, and key reports, such as the monthly
finance report, were produced from it. The use of an Excel spreadsheet file to track
and report financial performance for a $28bn expenditure organisation raises
significant concerns, particularly when other more appropriate systems are present
on the IT landscape.This Excel file is flawed in that:
• Financial information was often ‘hard-coded,’ making it difficult to trace to
the source or have updated data flow through.
• Errors such as incorrectly releasing accruals or double-up releases were not
picked up until following periods.
• Changes to prior periods and FTE errors in district financial reporting Excel
submissions, would not flow through to consolidated file.
• The spreadsheet can be easy to manipulate information as there is limited
tracking to source information where information is not flowing directly from
accounting systems.
• It is highly prone to human error, such as accidental typing of a number or
omission of a zero.
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