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PublishedintheJournalofEndUserComputing's
SpecialissueonScalingUpEndUserDevelopment
Volume10,No2.Spring1998,pp.1521
RevisedMay2008.

WhatWeKnowAboutSpreadsheet
Errors

RaymondR.Panko
UniversityofHawaii
CollegeofBusinessAdministration
2404MaileWay
Honolulu,HI96822
USA

Email:panko@hawaii.edu
HomePage:http://panko.shidler.hawaii.edu
SpreadsheetResearch(SSR)Website:http://panko.shidler.hawaii.edu/ssr/
Thispaper:http://panko.shidler.hawaii.edu/ssr/Mypapers/whatknow.htm

Abstract
Althoughspreadsheetprogramsareusedforsmall"scratchpad"applications,theyare
alsousedtodevelopmanylargeapplications.Inrecentyears,wehavelearnedagood
dealabouttheerrorsthatpeoplemakewhentheydevelopspreadsheets.Ingeneral,
errorsseemtooccurinafewpercentofallcells,meaningthatforlargespreadsheets,
theissueishowmanyerrorsthereare,notwhetheranerrorexists.Theseerrorrates,
althoughtroubling,areinlinewiththoseinprogrammingandotherhumancognitive
domains.Inprogramming,wehavelearnedtofollowstrictdevelopmentdisciplinesto
eliminatemosterrors.Surveysofspreadsheetdevelopersindicatethatspreadsheet
creation,incontrast,isinformal,andfeworganizationshavecomprehensivepolicies
forspreadsheetdevelopment.Althoughprescriptivearticleshavefocusedonsuch
disciplinesasmodularizationandhavingassumptionssections,thesemaybefarless
importantthanotherinnovations,especiallycellbycellcodeinspectionafterthe
developmentphase.
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Introduction
Inaspecialissueonlargesystemdevelopmentbyendusers,itmayseemoddtosee
apaperonspreadsheetdevelopment.Spreadsheetsareoftenseenassmalland
simple"scratchpad"applications,andspreadsheetdevelopmentisoftenviewedasa
solitaryactivity.Wewillseethatneitherviewiscorrect.Manyspreadsheetsarelarge
andcomplex,anddevelopmentofteninvolvesinteractionsamongmultiplepeople.In
fact,wewouldguessthatthelargestportionoflargescaleenduserapplications
todayinvolvespreadsheetdevelopment.Inaddition,theextensiveinformationthat
hasemergedaboutspreadsheetdevelopmentmayhighlightdevelopmentissuesfor
othertechnologies.Finally,whilespreadsheetdevelopmentmayseem"old,"our
understandingofspreadsheetdevelopmenthasonlymaturedinthelastfewyears.
Thetitleofthispaperisratherpresumptuous.Itassumesthatwehavealarge
enoughbaseofresearchfindingstobeabletosummarizekeyresultsfromthe
relativelyyoungfieldofspreadsheeterrors.Yetwearguethatspreadsheetresearchis
indeedsufficientlymaturetogiveusefuladvicetocorporatemanagementand
individualdevelopers.Thereisfarmoretobedone,butwealreadyknowenoughto
speakoutsideourresearchfield,toworkingspreadsheetdevelopersandtocorporate
managersofendusercomputing.Thisisgood,becausethelessonswehavelearned
mayrequireorganizationstobegintreatingspreadsheetdevelopmentverydifferently
thantheyhaveinthepast.

ASenseofUrgency
Aswewillseebelow,therehaslongbeenampleevidencethaterrorsinspreadsheets
arepandemic.Spreadsheets,evenaftercarefuldevelopment,containerrorsinone
percentormoreofallformulacells.Inlargespreadsheetswiththousandsofformulas,
therewillbedozensofundetectederrors.Evensignificanterrorsmaygoundetected
becauseformaltestinginspreadsheetdevelopmentisrareandbecauseevenserious
errorsmaynotbeapparent.
Despitethislongstandingevidence,mostcorporationshavepaidlittleattentiontothe
prospectofseriousspreadsheeterrors.However,in2002,theU.S.Congresspassed
theSarbanesOxleyAct,whichrequirescorporationstohavewellcontrolledfinancial
reportingsystems.Evenasingleinstanceofafirmhavingamorethanremote
possibilityofamaterialerrororfraudinitsfinancialreportingsystemwillrequire
managementandindependentauditorstogivethefirmanadverseopiniononits
financialreportingsystem.Thisislikelytoresultinlowerstockpricesand,insome
cases,infinesandprisontermsforseniorexecutives.Severalothercountrieshave
developedorarecurrentlydevelopingsimilarcontrolrequirementsforfinancial
reportingsystems.
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AsfirmsbegantoprepareforSarbanesOxleyandagrowingnumberofotherlaws
requiringthestrongcontroloffinancialreportingsystem,theycametorealizethat
manyormostfinancialreportingsystemstodayusespreadsheetsandthatthese
spreadsheetsarenotwellcontrolled.
FinancialintelligencefirmCODAreportsthat95%ofU.S.firmsusespreadsheets
forfinancialreportingaccordingtoitsexperience(www.coda.com).
In2004,RevenueRecognition.com(nowSofttrax.com),hadtheInternational
DataCorporationinterview118businessleaders.IDCfoundthat85%wereusing
spreadsheetsinreportingandforecastingandthat85%wereusingspreadsheets
forbudgetingandforecasting.
In2003,theHacketGroup(www.thehacketgroup.com)surveyedmidsize
companies.Itfoundthat47%ofcompaniesusestandalonespreadsheetsfor
planningandbudgeting.
CFO.cominterviewed168financeexecutivesin2004.Theinterviewsaskedabout
informationtechnologyusewithinthefinancedepartment.Outof14
technologiesdiscussed,onlytwowerewidelyusedspreadsheetsandbasic
budgetingandplanningsystem.Everysubjectsaidthattheirdepartmentuses
spreadsheets.
InEurope,A.R.C.Morganinterviewed376individualsresponsibleforoverseeing
SOXcomplianceinmultinationalsthatdobusinessintheUnitedStates.More
than80%oftherespondentssaidthattheirfirmsusespreadsheetsforboth
managingthecontrolenvironmentandfinancialreporting.EuropeanCompanies
aretakingafalteringapproachtoSarbanesOxley.Sept20,2004,TMCnet.com,
(http://www.tmcnet.com/usubmit/2004/Sep/1074507.htm)
Thequestion,"Whatdowedoaboutallthespreadsheets?"isincreasinglyonthe
mindsofcorporateexecutives.
Althoughthisgrowingfocusonspreadsheeterrorswithincorporationsissomewhat
gratifyingforspreadsheeterrorresearchers,italsorequiresnewresearchdirectionsin
spreadsheetresearch.Inthepast,spreadsheetdevelopershavefocusedmostheavily
on"innocenterrors"causedbyhumanfallibilitybutnotbyevilintent.However,to
copewithcorporateneedsraisedbySarbanesOxleyandotherlaws,spreadsheet
researcherswillhavetofocusonhowtodevelopcontrolsnotonlyforinnocenterrors
butforoutrightfraud.Existingtestingtechniquesaimedatfindinginnocenterrorsare
notlikelytofindfraudbasederrors.Newformsofparanoidsoftwaretestingwillbe
needed,andspreadsheetcontrolswillhavetoworkonpreventingandidentifying
fraud.Ifspreadsheetcontrolscanreducefinancialfraud,thiswouldbeamajorbenefit
tocorporations,becausefinancialfraudisalargecurrentproblem.In2004,fraud
throughfinancialstatementsrepresentedonly7%ofallfraudcasesstudiedinan
ACFEsurvey[ACFE,2004],butthemedianfraudlossforfinancialfraudwasamillion
dollars,comparedtoamedianlossofonly$100,000forfraudsingeneral.

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ErrorRates
IntroductiontoErrorRates
Sincetheearliestdaysofspreadsheeting,therehavebeenconcernsabouterrorsin
userdevelopedspreadsheets.Davis(Davis,January1982)cautionedthat"user
developedsystemsmaybehazardoustoyourorganization"ingeneral,becauseend
usersseldomimplementthedisciplineslongknowntobenecessaryinthe
developmentofsystemsbuiltwithprogramminglanguages.Withspreadsheet
programs,endusersbecamecapableofdevelopinganalysescontainingthousandsof
cells.Undertheseconditions,unlessthepercentageofincorrectcellsisalmostzero,
therewillbeaveryhighprobabilityofbottomlineerrors.
Overtheyears,anumberofembarrassingspreadsheetdevelopmentincidentshave
beenreported(Panko,2005b).Inmostcases,eitherthefirmthatmadetheerrorwas
forcedtodiscloseitsmistakeorconsultantsfamiliarwiththeerrorrevealedit.Given
thenormalreluctanceoforganizationstotalkabouttheirmistakes,weshouldwonder
iftheseincidentswererarecasesorwhetherspreadsheeterrorsareratherfrequentin
practice.
Morebroadly,anumberofconsultants,basedonpracticalexperience,havesaidthat
20%to40%ofallspreadsheetscontainerrors(Panko,2005b).Inapersonal
communicationwiththeauthor,Dent(1995)describedanauditinaminingcompany
thatfounderrorsinabout30%oftheauditedspreadsheets.Freeman(Freeman,
1996)citesdatafromtheexperienceofaconsultingfirm,CoopersandLybrandin
England,whichfoundthat90%ofallspreadsheetswithmorethan150rowsthatit
auditedcontainederrors.OnePriceWaterhouseconsultantauditedfourlarge
spreadsheetsandfound128errors(Ditlea,1987).
Today,wehavemovedbeyondsuchanecdotalevidence,intotherealmofsystematic
fieldauditsandlaboratoryexperiments.Tables1through3summarizekeydatafrom
thesestudies.
Table1containsdatafrom13fieldauditsinvolvingrealworldspreadsheet
spreadsheets.Since1995,whenfieldauditsbegantousegood(althoughusuallynot
excellent)methodologies,88%ofthe113spreadsheetsauditedin7studiesthat
reportedthenumberofspreadsheetsauditedhavecontainederrors,reflecting
improvementinauditingmethodologies.
Furthermore,severalofthesestudiesonlyreportedmajorerrors.
Table1:StudiesofSpreadsheetErrors
Authors

Year

Number
ofSSs

Average
Size

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Percent
ofSSs

Cell Comment
Error
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Audited

(Cells)

with
Errors
21%

Davies&
Ikin
Cragg&
King

1987

19

1992

20

50to
10,000
cells

25%

Butler

1992

273

11%

Dent

1994 Unknown

30%

Hicks

1995

3,856

100%

Coopers&
Lybrand

1997

23

More
than
150
rows

91%

KPMG

1998

22

91%

Lukasic

1998

2,270&
7,027

100%

Butler

2000

86%

Clermont,
Hanin,&
Mittermeier
Interview
I*

2002

100%

2003

~36/yr

100%

Interview
II*

2003

~36/yr

100%

Lawrence
andLee

2004

30

2,182
unique
formulas

100%

Powell,
Lawson,and
Baker

2007a

25

64%

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Rate
Onlyseriouserrors

Onlyerrorslarge
enoughtorequire
additionaltax
payments
Errorscausedby
usershardwiring
numbersinformula
cells.Henceforth,all
futurecomputations
wouldbewrong.
1.2% Oneomissionerror
wouldhavecaused
anerrorofmore
thanabillion
dollars.
Offbyatleast5%

Onlysignificant
errors
2.2%, InModel2,the
2.5% investment'svalue
wasoverstatedby
16%.Quiteserious.
0.4%** Onlyerrorslarge
enoughtorequire
additionaltax
payments**
1.3%, Computedonthe
6.7%, basisofnonempty
0.1% cells
Approximately5%
hadextremely
seriouserrors
Approximately5%
hadextremely
seriouserrors
6.9%*** 30mostfinancially
significantSSs
auditedbyMercer
Finance&Risk
Consultingin
previousyear.

11of25spreadsheets
containederrorswith
nonzeroimpacts.
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&Lawson

Total
since
1995

WhatWeKnowAboutSpreadsheetErrors

2007b

50

86%

113

88%

0.9%

Amongtheten
spreadsheetswithnon
zeroimpactsforwhich
errorsizewasreported,
all10hadanerrorthat
exceeded$100,000,6
haderrorsexceeding
$10million,and1had
anerrorexceeding$100
million.
Percentofformulacells
containingerrorsthatgivean
incorrectresult.Including
poorpractices,1.8%ofall
formulashadissues.Including
poorpractices,94%ofthe
spreadsheetshadissues.

*In2003,theauthorspokeindependentlywithexperiencedspreadsheetauditorsintwodifferentcompaniesintheUnitedKingdom,
wherecertainspreadsheetsmustbeauditedbylaw.Eachauditedaboutthreedozenspreadsheetsperyear.Bothsaidthattheyhadnever
seenamajorspreadsheetthatwasfreeoferrors.Bothalsoindicatedthataboutfivepercentofthespreadsheetstheyauditedhavevery
seriouserrorsthatwouldhavehadmajorramificationshadtheynotbeencaught.Auditsweredonebysingleauditors,sofromthe
researchonspreadsheetandsoftwareauditing,itislikelythathalforfewoftheerrorshadbeencaught.Inaddition,virtuallyallofthe
spreadsheetshadstandardformatsrequiredfortheirspecificlegalpurposes,soerrorratesmayhavebeenlowerthantheywouldbefor
purposebuiltspreadsheetdesigns.
**Thelowcellerrorrateprobablyreflectsthefactthatthemethodologydidnotinspectallformulasinthespreadsheetbutfocusedon
higherriskformulas.However,errorhasastrongrandomcomponent,sonotcheckingallformulasislikelytomissmanyerrors.
***Unlikeotherauthors,LawrenceandLee(2004)measured"issues"ratherthanonlyquantitativeerrors.Thisexplainswhytheaverage
"errorrate"ishigherthanthoseseeninotherstudies.

Inturn,Table2containsdatafromexperimentsinvolvingoverathousandsubjects
rangingfromnovicestohighlyexperiencedspreadsheetdevelopers.Althoughthereis
greatdiversityinmethodologyanddetailedresults,onekeypatternstandsout
clearly:everystudythathasattemptedtomeasureerrorshasfoundthemandhas
foundtheminabundance.
Table2:StudiesofSpreadsheetErrors
Study

SSs

%with
Errors

CellError Remarks
Rate
(CER)

Brown&Gould(1987)

27

63%

9experienced
spreadsheetdevelopers
eachbuilt3SSs.Each
developermadeatleast
oneerror.

Olson&Nilsen(1987
1988)

14

21% Measurederrorsasthey
occurred,evenifthe
subjectcorrectedthem.
CERonlyreflects
formulacells

Lerch(1988)

21

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Measurederrorsasthey
occurred,evenifthe
subjectcorrectedthem
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CERonlyreflects
formulacells
Allformulacells

9.3% CERonlyreflects
formulacells

Referencesto
cellsinthesame
row

6.4% CERonlyreflects
formulacells

Referencesto
cellsinthesame
column

4.7% CERonlyreflects
formulacells

Referencesto
cellsindifferent
rowsand
columns

14.1% CERonlyreflects
formulacells
Noviceprogrammers
eachdevelopedseveral
spreadsheets

Hassinen(1988)

92

55%

Janvrin&Morrison1st
(2000a)

61

4.3% CERonlyreflects
formulacells
Taskwith50links
betweenspreadsheets.
CERonlyreflectssome
formulacellsofhigh
riskmostlylinks
betweenspreadsheets
Differenceswere
nonsignificant

Workingalone,
nodesign
training

14%

Workingalone,
designtraining

7%

Workinginpairs,
nodesign
training

7%

Workinginpairs,
designtraining

7%

Janvrin&Morrison2nd
(2000b)

Taskwith66links
CERonlyreflectssome
formulacellsofhigh
riskmostlylinks
betweenspreadsheets
Differenceswere
nonsignificant

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Notrainingin
design

30

16.8%

Trainingin
design

58

8.4%

73

42%

2.5%

168

42%

2.1% Walltask.

Workingalone

42

79%

5.6%

Dyads(Groups
of2)

46

78%

3.8%

Tetrads(Groups
of4)

44

64%

1.9%

Panko&Halverson(2001)

35

86%

Panko&Halverson(2001)

Panko&Sprague(1998)

26

35%

2.1% WallTask.MBAstudents
withlittleornoSS
developmentexperience

Panko&Sprague(1998)

17

24%

1.1% WallTask.MBAstudents
with250hoursormore
SSdevelopment
experience

Kreie,etal.(posttest)
(2000)
Teo&Tan(1997)
Panko&Halverson(1997)

Galumpketask.
Undergraduates
Basedonalltextand
numbercells

4.6% Undergraduates

Finally,Table3looksatcodeinspectionexperiments.Intheseexperiments,subjects
examinedspreadsheetsseededwitherrors.Theresearchshowsthatpeoplearenot
onlypronetomakeerrors.Theyareonlymoderatelygoodatcorrectingtheseerrors.
Table3:CodeInspectionExperiments
Study

Subjects

Gallettaetal.(1993)

MBAstudents&
CPAsTakinga
Continuing
EducationCourse

Totalsample

60

56%

CPAnovices

<100hoursof
workexperience
withSSs

15

57%

CPAexperts

<100hoursof
workexperience
withSSs

15

66%

MBAstudents,novices

>250hoursof

15

52%

%of Remarks
Errors
Detected
Budgetingtask

containing
seedederrors

Sample
Size

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workexperience
withSSs
MBAstudents,
experienced

>250hoursof
workexperience
withSSs

15

48%

Domain(logic)errors
corrected
Device(mechanical)

errorscorrected
Gallettaetal.(1997)

46%

65%

MBAstudents

Overall

113

51% Sametask
used1993
study
51%

OnScreen

45

45%

OnPaper

68

55%

Panko(1999)

Undergradsworking
alone
Undergradsworking
ingroupsofthree
Panko&Sprague(1998)
Undergrads

60

Modified
versionof
Gallettawall
task.
63%

60

83%

23

16% Studentswho
madeerrorsin
theWalltask
whothenwent
ontoinspect
theirown
spreadsheets.

ConsistentwithOtherHumanErrorData
WhenmostpeoplelookatTables12,and3,theirfirstreactionisthatsuchhigherror
ratesareimpossible.Infact,theyarenotonlypossible.Theyareentirelyconsistent
withdataonhumanerrorratesfromotherworkdomains.TheHumanErrorWebsite
(Panko,2005a)presentsdatafromanumberofempiricalstudies.Broadlyspeaking,
whenhumansdosimplemechanicaltasks,suchastyping,theymakeundetected
errorsinabout0.5%ofallactions.Whentheydomorecomplexlogicalactivities,such
aswritingprograms,theerrorraterisestoabout5%.Thesearenothardandfast
numbers,becausehowfinelyonedefinesreported"action"willaffecttheerrorrate.
However,thelogicaltasksusedinthesestudiesgenerallyhadaboutthesamescope
asthecreationofaformulainaspreadsheet.
Themostcompletesetofdataonerrorratescomesfromprogramming,whichisat
leastacousinofspreadsheetdevelopment.Inprogramming,manyfirmspracticecode
inspectiononprogrammodules.Incodeinspection,teamsofinspectorsfirstinspect
themoduleindividuallyandthenmeetasagrouptogooverthemoduleagain
(Fagan,1976).Significantly,thereisarequirementtoreportthenumberoferrors
foundduringcodeinspection.Thishasresultedinthepublicationofdatafromliterally
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thousandsofcodeinspections(Panko,2005a).Thedatafromthesestudiesshows
strongconvergence.Codeinspectionusuallyfindserrorsinabout5%ofallprogram
statementsafterthedeveloperhasfinishedbuildingandcheckingthemodule(Panko,
2005a).Whilethereissomevariationfromstudytostudy,muchofthisvariation
appearstobedotodifferencesinprogramminglanguage,moduledifficulty,and,
sadly,inhastinessindevelopment.
Notethatwehavebeentalkingaboutuncorrectederrors.Humansmakemanyerrors
whentheywork,buttheyalsocorrectmany.Correctionratesarehighformechanical
errors,buttheyareconsiderablylowerforlogicerrors,andifwehaveanomission
causedbyamisdiagnosisofthesituation,thecorrectionrateisverylow.
Interestingly,datafromastudybyRabbitandVyas(Rabbit&Vyas,1970)suggest
thatagreatdealoferrorcorrectiontakesplacebelowthelevelofawareness,so
peopleareunawareofhowmanyerrorstheymakeandhowmanytheycorrect.
Thereisevenanemergingtheoryforwhywemakesomanyerrors.Reason(Reason,
1990)haspresentedthemostcompleteframeworkforunderstandingwhyhuman
beingserr,butmanyotherwritershaveaddedtheirowncontributions(Baars,1992).
Ingeneral,theemergingtheoryarguesthathumanbeingsareamazinglyfastand
flexible(Reason,1990)andcanjugglemultipletasksandconstraints(Flower&
Hayes,1980).However,thesamecognitiveprocessesthatallowthemtoworkthis
wayinevitablyresultinoccasionalerrors.Overall,AlexanderPopewrotethat"Toerris
human."Today,wecanbothexplainandquantifythatstatement.

MeasuringErrors
ThefieldauditstudiesshowninTable1reportasimplemeasureofspreadsheeterrors
thepercentageofspreadsheetsthatcontainatleastoneseriouserror.(Minorerrors
arediscounted).Whilethisisavividstatistic,itdoesnottellushowmanyerrorsan
averagespreadsheetcontains.
Inaddition,wehavelongknownthatintasksthatcontainmanysubtasks,errorrates
willmultiplyalongcascadesofsubtasks.Inspreadsheeting,forinstance,many
bottomlinevaluesarecomputedthroughlongcascadesofnumericalandformula
cells.LorgeandSolomon(1955)gaveseveralformulasforcalculatingbottomline
errorrates.Equation1isadaptedfromoneoftheirsimplerformulas.Here,Eisthe
bottomlineerrorrate,eisthetaskerrorrate(assumedtobethesameforalltasks),
andnisthenumberoftasksteps.
Equation1:E=1(1e)^n
Inprogramming,thislinkbetweenindividualerrorratesandcascadeerrorratesis
addressedbycomputingtheerrorrateperlineofcode.Morespecifically,
programmersmeasurethenumberoffaultsperthousandlinesofnoncomment
sourcecode(faults/KLOC).Thisstatementerrorrateisroughlyindependentof
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programsize(Putnam&Myers,1992).Althoughitisimportanttomakeadjustments
forcomplexity,size,andothermattersforfineanalysis(Ferdinand,1993),andwhile
itwouldbebettertomeasurefaultsperfunctionpoint,faults/KLOCisagoodrough
measureofprogrammingerrors.
Inspreadsheets,asimilarmetricisthecellerrorrate(CER).Thisisthenumberof
errorsdividedbythecombinednumberofnumericalandformulacells.(Labelcells
arelikecommentcells,whichareignoredinfaults/KLOC).Equivalently,thisisthe
percentageofnonlabelcellscontainingerrors.Table1showsthatjustasfaults/KLOC
usuallyfallsintoanarrowrange(Panko,2005a),theCERsseeninspreadsheet
studieshavebeenverysimilar.Therelativelyfewdivergentnumbersthatappear
withinalifecyclestage,furthermore,comewhenonlycertaincellsareconsidered
generallycellswithhighpotentialsforerror.

ErrorsbyLifeCycleStage
Inprogramming,errorratesvarybylifecyclestage.Programmersmakemanyerrors
whentheyarebuildingamodulebutcatchmanyoftheseerrorsbeforetheyfinishthe
moduleandsubmitittocodeinspection,datatesting,orboth.Modulecodeinspection
andtestingcatchmoreerrors,andasecondwaveofcodeinspectionandtestingat
finalassemblycatchesstillothererrors.Relativelyfewerrorsshouldsurviveintothe
finaloperationalsystems.

ErrorsDuringCellEntry
Onlytwostudieshavelookedaterrorsduringcellentry(Lerch,1988Olson&Nilsen,
19871988),thatis,whenthedeveloperisenteringformulas.Onemorestudylooked
aterrorswhenthesubjectsweretypinglabelcells(Floyd&Pyun,1987).Thesedata,
whilelimited,confirmthatpeoplemakemanyerrorswhiletheyworkandcatchquite
afewofthem(butnotall).Inthemethodologiesused,subjectswereinterruptedby
theexperimentertocorrecterrorsaserrorsweremade,sowedonotknowfinalerror
correctionratesfromthesestudies.
OneinterestingpatternfromtheLerch(1988)studyisthatmechanicalerrorrates
rosedramaticallywhenequationscontainedreferencestocellsthatwereinboth
differentcolumnsanddifferentrowsthanthecellcontainingtheformula.

ErrorsattheEndoftheDevelopmentStage
MoststudiesinTable2lookedaterrorsattheendofthedevelopmentstage,when
subjectssaidthattheywerefinisheddevelopingtheirspreadsheets.Apartfrom
researchthatlookedonlyatselectedhighriskformulas(Janvrin&Morrison,1996
2000),cellerrorratesacrossthesestudiesweresimilar,despitethefactthatsubjects
rangedfromnovicestohighlyexperiencedspreadsheetdevelopers.Onestudy(Panko
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&Sprague,1998)evencomparedundergraduatebusinessstudents,MBAstudents
withlittlespreadsheetdevelopingexperience,andMBAstudentswithmorethan250
hoursofspreadsheetdevelopmentexperience.TheirCERswereverysimilar.Even
whenatask(theWalltask)wasselectedtobeverysimpleandalmostcompletelyfree
ofdomainknowledgerequirements(Panko&Sprague,1998Teo&Tan,1997),about
40%ofallspreadsheetscontainederrors,andtheCERwasabout2%.

ErrorsFoundandMissedinCodeInspection
Codeinspectionorsomeotherformofintensivetestingmaybeneededtodetect
errorsthatremainattheendofthedevelopmentstage.Fagan(Fagan,1976)
developedacomprehensivedisciplineforcodeinspection.Asnotedearlier,this
methodhasagroupofindividualsinspectaprogrammoduleindividuallybygoing
throughthemodulelinebyline.Then,theteammeetsasagroupandagaingoes
throughthemodulelinebyline.Therearestrongguidelinesforthingssuchas
maximumlengthforthemodulebeingexamined(usually100to400linesofcode)
andmaximuminspectionrates(usually100to200linesperhour).Iftheseratesare
exceeded,errordetectionratesfallconsiderably(Panko,2005a).
Experiencehasshownthatcodeinspectionisverydifficult.Inexperiments,ithas
beenfoundthatindividualinspectorscatchonlyhalforfewerofallerrorsinseeded
programmodules(Basili&Selby,1986Johnson&Tjahjono,1997Myers,1978).
Evenrealworldteaminspectionusuallyonlycatches80%orfewerofallerrorsina
programmodule(Panko,2005a).
Incodeinspection,asindevelopment,spreadsheetinghasshownstrongparallelsto
programming.Inthreeexperimentsthatinvolvedindividualsubjectscodeinspecting
spreadsheetsseededwitherrors,subjectsalsocaughtabouthalfofallerrorsorfewer
(Gallettaetal.,1993Galletta,Hartzel,Johnson,&Joseph,1997Panko&Sprague,
1998).Thesestudies,however,didnotimposetraditionaltimedisciplinesorateam
codeinspectionphase.Inonestudy(Panko,1999),traditionaltimedisciplinesanda
groupinspectionphasewereusedinacodeinspectionofaspreadsheetby
undergraduateMISmajors.Theindividualsfound67%ofallseedederrorsinthis
study,andgroupcodeinspectionbroughtthediscoveryrateto92%.Howeverthe
groupsdiscoverednoerrorsthathadnotbeendiscoveredduringtheindividualcode
inspectionphase.Infact,onegroupfailedtorecordanerrorduringthegroupphase
thatoneofitsmembershadcaughtduringtheindividualphase.

ErrorsinOperationalSpreadsheets
Laboratoryexperimentsalwaysraisequestionsinthemindsofmanypeople.
Fortunately,wehavedatafromcodeinspectionsofoperationalspreadsheets,beyond
theHicksstudyjustdescribed.Theseinspectionslackedtherigorousapproachusedin

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formalprogrammingcodeinspection,however,sotheyprobablyfoundonlyafraction
oftheerrorsinthespreadsheetstheyexamined.
Thefirststudy,byDaviesandIkin(Davies&Ikin,1987),inspected19operational
spreadsheetsfrom10developersin10differentfirms.Subjectsexpressedconfidence
inthecorrectnessoftheirspreadsheets.Howeverfourofthespreadsheets(21%)
werefoundtohaveseriousquantitativeerrors,and76%hadquantitativeor
qualitativeerrors.Oneerrorinvolveda$7millionfundstransferbetweendivisions.In
anothercase,therewereinconsistentcurrencyconversionnumbersindifferentparts
ofthespreadsheet.Athirdproblemwasanegativebalanceforstockonhand.There
wasinadequatedocumentationin68%ofthespreadsheets.Tenofthe19failedto
usecellprotection.Onlyonehadusedauditsoftwaretoauditthespreadsheets,and
manualauditswere"rare."Unfortunately,theauthorsdidnotdescribetheirinspection
methodology.
Later,CraggandKing(Cragg&King,1993)inspected20operationalspreadsheets
from10firms.Thisauditfoundseriouserrorsin5ofthespreadsheets(25%).This
time,theauthorsdescribedtheirmethodology.Asinglepersonconductedtwohour
codeinspections.Becausethespreadsheetsrangedfrom150to10,000cellsinsize,
thecodeinspectiontimewasmuchshorterthancodeinspectiondisciplineswould
allow.Theauthorsthemselvesnotedthattheyprobablycaughtonlysomeofthe
errorsinthesespreadsheets.Theauthorsnotedthatthespreadsheetswere
characterizedbypoorlayout,theuseofcellprotectioninonly30%,theuseofrange
namesinonly45%,andotherdesignflaws.Onlyhalfhadclearlyseparatedsections
forinputandoutput,andallmixedcalculationcellswithoutputcells.Onlytwohad
checkedformulasbeforeenteringtheminthespreadsheet.Eightypercenthadbeen
checkedwithinputdata,althoughthedepthofsuchcheckingvaried.Onlyonehad
previouslybeenexaminedbyanotherperson.Halfusedmacros,indicating
considerablecomplexityandsophistication.
OneuniversalaspectoftheCraggandKing(Cragg&King,1993)spreadsheetswas
informaliterativedevelopment.Noneofthespreadsheetsusedformalspecification,
design,orcoding.Inaddition,therewasextensiverevisionbecauseofpoorinitial
design.Therehadbeenamedianofsevenrevisions,despitethefactthatthe
spreadsheetshadonlybeeninuseamedianofsixmonths.In17ofthespreadsheets,
thestructureofthespreadsheethadtobechangedduringrevisions.Insixcases,
therehadbeenproblemswiththespreadsheetinpreviousreleases.
Later,inapersonalcommunicationwiththeauthor,Butler(1996)describedtheaudit
of273spreadsheetssubmittedtoHMCustomsandExcisetaxagencyintheUnited
Kingdom.Theauditmethodologyinvolvedtheuseofaprogramdesignedtolookfor
inconsistenciesinthespreadsheet.Iftheprogramtaggedaportionofthe
spreadsheet,anindividualauditorexaminedthatportionofthespreadsheetfor
errors.Thisprogramprobablycaughtonlyafractionofallerrors,becauseitcouldnot
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catchsuchthingsasomissions,numbersbeingmistyped,mostincorrectformulas,
andmanyothertypesoferrors.Nevertheless,theteamfounderrorsin10.7%ofthe
spreadsheets.
Since1995,fivestudieshaveexaminedspreadsheetsusingbettermethodology.Hicks
(1995)auditedanenormouscapitalbudgetingspreadsheetwith3,856cells.Thiswas
athreeperson,cellbycellcodeinspection.Errorswerefoundinonly1.2%ofalllines
ofcode,buttheerrorswouldhavebeenoverabilliondollarsiftheyhadnotbeen
caught.
InEngland,certainspreadsheetshavetobeauditedbylaw.BothCoopersand
LybrandandKPMGhaveactivespreadsheetauditingconsultancies.Together,they
foundsignificanterrorsin45ofthespreadsheetstheyaudited.Coopers&Lybrand
onlycountederrorsiftheymadesomebottomlinevalueoffbyatleast5%.KPMG
onlylisted"majorerrors."In2003,theauthorinterviewedauditorsfromthesetwo
organizationsseparately.Bothsaidthattheyhadneverseenanerrorfree
spreadsheetduringaudits.Inaddition,bothindependentlygavedataindicatingthat
about5%ofallspreadsheetstheyauditedhavehad"veryseriouserrors."Theynoted
thatthispercentagemaybelowforothertypesofspreadsheetsbecausethe
spreadsheetsbeingauditedhaveawelldefinedformat.Inaddition,both
aconsultanciesonlyusesinglepersoncodeinspection.
In2000,RayButler,whoauditedspreadsheetsforexcisetaxcollectionintheUK,
foundactionableerrorsinsixofsevenspreadsheetsauditedusingsinglepersoncode
inspection.Actionableerrorsincludeddemandsforthepaymentofadditionaltaxesor
providingrefunds.(Inhisearlierstudy,Butlerusedalessrigorousmethoddesigned
tominimizethecostofauditingandonlyfounderrorsin10.7%oftheaudited
spreadsheets).
Mostrecently,LawrenceandLee(2004)inAustraliaaudited30spreadsheetscreated
tojustifyprojectfinancing.Theseauditsusedsinglepersoncodeinspection.The
spreadsheetsaveraged2,182formulas,andonaverage6.9%oftheformulacellshad
auditingissues.Ittookanaverageofsixiterationsbeforethespreadsheetscouldbe
signedoff.
Overall,whatweseeinoperationalspreadsheetsisconsistentwithdatafrom
laboratorystudies.Althoughlaboratorystudiesgenerallyhavehighererrorrates,field
studiesdidnotusemethodologiesthatprobablycouldfindmosterrors.Inthefour
fieldauditsforwhichwehavecellerrorrates,furthermore,theCERs,whichrange
from0.4%to6.9%,aresimilarinmagnitudetoCERsseeninexperiments.In
addition,moststudiesusedsinglepersoncodeinspection,whichmissessomeerrors.

DoesGroupworkHelp?
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Intheirethnographicstudyof11spreadsheetdevelopers,NardiandMiller(Nardi&
Miller,1991)notedthatalldevelopersusedatleastoneotherpersonduring
development.Insomecases,theotherpersonhelpedthedevelopercodedifficult
partsofthespreadsheet.Inothercases,twoormorepeopleusedthespreadsheet
developmentprocessasawaytosharedomainknowledge.Inothercases,theother
personexaminedinputnumbersandresultsforreasonableness,therebyhelpingwith
errordetection.NardiandMillercalledthislastpattern"cooperativedebugging."
ThisledPankoandHalverson(Panko&Halverson,1997)toexaminegroup
spreadsheetdevelopment.Theirsubjectsdevelopedaproformaincomestatement
fromawordproblem,workingalone,ingroupsoftwo(dyads),oringroupsoffour
(tetrads).Dyadsreducederrorsbyaboutathird,whiletetradsreducederrorsby
abouttwothirds.Onlythelatterwasstatisticallysignificant.Furthermore,group
developmentwasonlyeffectiveforcatchingcertaintypesoferrors.
TheoriginalPankoandHalverson(Panko&Halverson,1997)studyallowedsome
subjectstoworkoutsidethelaboratory,inordertoavoidtheartifactsofhavingto
workundercontrivedconditions.Ofcoursethisalsolostexperimentalcontrol.In
a1999,PankoandHalversonredidthestudyinthelaboratory,usingindividualand
triadicdevelopment.Theyalsorewordedtheirtasktoremoveambiguitiesandone
portionthatsubjectsinthefirststudyfoundextremelydifficult.Takingthesechanges
intoaccount,thenewstudygavealmostidenticalresults.
Finally,asnotedearlier,astudybytheauthor(1999)foundthatteamcodeinspection
allowedundergraduateMISmajorstofind83%ofallseedederrorsinaspreadsheet,
althoughthegroupdidnotfinderrorsnotpreviouslyfoundbythemembersofthe
team,whohadinspecteditalonebeforethegroupcodeinspection.
Overall,groupdevelopmentandtestingappeartobepromisingareastopursue.

TypesofErrors
Whenmanypeoplethinkofspreadsheeterrors,theythinkofsomeonemistypinga
number,typingaplussignforaminussigninaformula,orpointingtothewrongcell
whenenteringaformula.Whiletheseerrorsdoexist,therearemanyothertypesof
errorsinspreadsheetdevelopment.PankoandHalverson(Panko&Halverson,1996)
giveataxonomyoferrortypes.
First,therearequantitativeerrors,inwhichthespreadsheetgivesanincorrectresult.
ThestudiesinTable1lookonlyatquantitativeerrors.Howevertherearealso
qualitativeerrorsthatmayleadtoquantitativeerrorslater,duringmaintenance,
whatifanalysis,orotheractivities.Reason(Reason,1990)usestheterm"latent
errors"forsuchproblems.TeoandTan(Teo&Tan,1997)demonstratedinan

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experimenthowonetypeofqualitativeerrorledtoquantitativeerrorsduringwhatif
analysis.
PankoandHalverson(Panko&Halverson,1996),followingAllwood(Allwood,1984)
alsofounditusefultodistinguishbetweenthreetypesofquantitativeerrors.
Mechanicalerrorsaresimplemistakes,suchasmistypinganumberorpointingtothe
wrongcell.Logicerrorsinvolveenteringthewrongformulabecauseofamistakein
reasoning.Asnotedearlier,logicerrorratesarehigherthanmechanicalerrorrates.
Logicerrorsalsomoredifficulttodetectandcorrect(Allwood,1984).Themost
dangeroustypeoferroristheomissionerror,inwhichsomethingisleftout.Omission
errorsappeartobeextremelydifficulttodetect(Allwood,1984Bagnara,Stablum,
Rizzo,Fontana,&Ruo,1987Woods,1984).
WhenPankoandHalverson(Panko&Halverson,1997)analyzedthetypesoferrors
thatsubjectsmadewhiledevelopingaspreadsheet,theyfoundthatallthreeformsof
errorswerecommon.Later,PankoandSprague(Panko&Sprague,1998)foundthe
samebroadpatternoferrors.PankoandHalversoncompareddifferenttypesoferrors
tomultiplelethalpoisons.Evenifallerrorsoftheothertwotypeswereeliminated,
eachtypeoferroralonewouldhaveproducedanunacceptablenumberofincorrect
spreadsheets.
Techniquestoreduceerrorsmaybebetteratfindingsometypesoferrorsthan
others,soitisimportanttobegindevelopingcorpuses(collections)oferrorstolearn
howfrequentdifferenttypesoferrorsreallyare.

DevelopmentPracticesandPolicies
DeveloperSurveys
Afewstudieshaveexaminedtheprocessesthatdevelopersusetocreate
spreadsheets.Thesestudiesaskedthedevelopertoselectasinglespreadsheetand
describeitindetail.Thismethodpresumablyresultedinbiastowardlargerthan
averagespreadsheets.Evenwiththiscaveat,however,theresultshavebeen
extremelyinteresting.
TheDaviesandIkin(Davies&Ikin,1987)andCraggandKing(Cragg&King,1993)
fieldauditsmentionedearlierquestioneddevelopersabouttheirspreadsheet
developmentpractices.Bothfoundveryinformaldevelopmentprocesses,little
systematiccodeinspection,andlittleuseofmanyotherimportantdevelopment
disciplines.CraggandKingnotedthathalftheirspreadsheetshadbeenbuiltwithout
priordesignorplanning,almosthalfhadpoordesign,halfhadpoorlayout,andonly
halfhaddocumentationofanytype.Oneoftheirsubjectscommentedthatheorshe
hadtroubleunderstandingoldspreadsheets.
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Earlier,wementionedtheethnographicinterviewsofNardiandMiller(Nardi&Miller,
1991).Ingeneral,theyfoundthatdeveloperstookconsiderableprecautions
developingtheirspreadsheets,althoughtheinterviewsdidnotgatherquantitative
data.Therespondentswerekeenlyawareofthedangersoferrorandspent
considerabletimeworkingtoreduceerrors,includingthecreationofcrossfootings,
doingspotchecksofformulaswithcalculators,andhavingotherslookatoutput.
Howeveronlyoneofthe11intervieweessaidthattheyhaddoneacompletecode
inspectionofaspreadsheetthiswasaspreadsheetgiventoherbysomeoneelse
(Nardi,1993).Asnotedabove,somehadotherslookattheirresults,becauseerrors
couldbecomeinvisibletotheauthorthroughoverfamiliarity.Howeverthisfallsfar
shortofcodeinspection.
Later,HendryandGreen(Hendry&Green,1994)didasimilarethnographicstudy,
thistimewith10spreadsheetdevelopers.Theyaddedaphaseinwhichthesubject
walkedthroughaspreadsheetwithanauthor.Theyfoundthatsubjectsoftenhada
difficulttimeexplainingpartsofthespreadsheetthattheyhadthemselvesbuilt.They
alsofoundthatsomeofthedevelopershadrunintoseriousproblemstryingtomake
partsofthespreadsheetanalysisfittherowandcolumnlayoutofspreadsheet
program.Thesubjectsfounddebuggingtobeparticularlydifficult.Asaconsequence
ofsuchdifficulties,thesubjectsdidanumberofthingstoanticipateerrors.
Retrospectivelyincommunicationwiththeauthor,Hendry(1994)saidthatonlythree
ofthedeveloperswere"highlynumerate"anddidmanythingstoavoiderrors.In
anotherpersonalcommunicationwiththeauthor,Green(1994)saidthatdetailedcode
inspectiondidnotappeartobepartofthespreadsheetdevelopment"culture."
Overall,bothNardiandMiller(Nardi&Miller,1991)andHendryandGreen(Hendry&
Green,1994)foundthatsubjectstookconsiderablepainswhentheybuilt
spreadsheets.Yetgiventheproblemsthatusersencountered,whichwereespecially
evidentwiththeHendryandGreenmethodology,itisunclearhowsuccessfuluser
errorreductionerrorsare.Giventheinfrequencyofcomprehensivetesting,however,
completesuccessseemsunlikely.
Otherstudieshaveusedquestionnairesurveystocollectdatafromlargernumbersof
respondents.Forinstance,SchultheisandSumner(Schultheis&Sumner,1994)had
32MBAstudentseachdiscusstheirmostrecentspreadsheet.Sizesforthe
spreadsheetswerenotgiven,andaquarteroftherespondentshaddevelopedfiveor
fewerspreadsheets.Thestudyhadrespondentsrateeachspreadsheeton11clusters
ofrisksandtheuseof9clustersofcontrolpracticesduringdevelopment.Eachcluster
hadseverallistedrisksorcontrolpractices.Themostfrequentriskscitedbysubjects
includedthelifeexpectancyoftheapplication(whichmayexceedthetenureofthe
developeratthefirm),usebeyondthedeveloperwithinfirm,usebeyondthefirm,the
numberofusers,andthelevelofcomplexityofthespreadsheet.

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Higherriskspreadsheetsusedslightlymorecontrols(6.7)thanlowerrisk
spreadsheets(4.6),buttheuseofcontrolswaslowinbothcases.Themost
widespreadcontrolwasverificationofthelogic,butthisinvolvedagrabbagof
approachesofdifferentsophistication.Documentationrankedthird,afterparticipation
informaltraining,but"therewasverylittledocumentation,"withaquarterofthe
spreadsheetshavingnoneatall.Formalauditsandformalreviewswereamongthe
leastusedcontrols.Ofthe32spreadsheets,onlyfivewerereviewedbyanauditoror
consultant,andonlytenhadtheirdesignsreviewedbyanyoneotherthanthe
developer.
Onalargerscale,Floyd,Walls,andMarr(Floyd,Walls,&Marr,1995)sent
questionnairesto72endusersinfourcorporations.Eachwasaskedtodescribea
singlespreadsheet.Theaveragesizeoftheselectedspreadsheetswas6,000cells.
Thesubjectssaidthattheirspreadsheetswereimportantinthesensethatimportant
decisionswerebasedonthem.Theyalsosaid,althoughtoalesserextent,thattheir
spreadsheetshadamaterialfinancialimpactonthefirm.Materiality,bytheway,was
notcorrelatedwithsize,and"smallandlargespreadsheetswereequallylikelyto
supportmaterialdecisions."(41).Eightypercentsaidthattheywouldbeabletowork
withoutthespreadsheet,althoughwithsomedifficulty.Oneinsix,however,saidthey
wouldnotbeabletoworkwithoutthespreadsheet.Developmentwasstrongly
iterative.Therewasahighlevelofconfidencethatthespreadsheetdescribedwas
correct.
Hall(Hall,1996)surveyed106spreadsheetdevelopersinAustralia.Theaveragesize
oftheselectedspreadsheetswas216KB,andbecausemostspreadsheetswere
developedusingLotus123,thisimpliedconsiderablesize.Amongherfindingswere
thefollowing:
1.Thespreadsheetswereimportant.Only7%ofthespreadsheetswereoflow
importance39%wereofhighimportance.27%modifiedexistingcorporate
data49%creatednewcorporatedata.67%wererunonaregularbasis,16%
occasionally,andonly17%onceorafewtimes.Only17%hadresultsusedonly
bythedeveloper,while23%hadresultsusedbymanydepartmentsinthe
organization,and29%hadresultsusedoutsidethefirm.
2.Thespreadsheetswerecomplex.45%usedmacros.36%hadlinkstoother
spreadsheets.21%hadlinkstodatabases.47%usedIFfunctions.66%used
absolutereferencing.
3.Developmentusedonlylimitedsafeguards.Onlyhalfhadmodulardesigns.Only
49%usedcellprotection.Only46%usedcrossfooting.
4.Datatestingwaslimited.71%checkedformulaswithdata,butonly50%didso
withresultsdeterminedaheadoftime,only42%usedtestdatawitherrors,and
only33%usedtestdataatthelimitsofthenormalrange.
5.Inspectionwaslimited.Only17%werecheckedbyanotherdeveloper,5%byan
internalauditor,and6%byanexternalauditor(therewasoverlapinthese
percentages).
6.18%saidthattheirprojecthadbeenrushed.

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Interestingly,Hallaskedrespondentsiftheyusedanumberofcontrolsandwhether
theyshouldhaveusedthesecontrols.Foralmostallcontrols,moredevelopers
acknowledgedthattheyshouldhaveuseditthansaidthattheyactuallydiduseit.In
general,experienceddevelopersweremorelikelytousemostcontrolsthan
inexperienceddevelopers,butthedifferencewasonlymodest.
Overall,thesestudiesshowthatmanyspreadsheetsarelarge,complex,important,
andaffectmanypeople.Yetdevelopmenttendstobequiteinformal,andeventrivial
controlssuchascellprotectionarenotusedinmostcases.Inprogramming,code
inspectionanddatatestingareneededtoreduceerrorratesafteramoduleis
developed.Yetcodeinspectionisveryinfrequent,andwhiledatatestingisdone,it
lackssuchrigorsastheuseofoutofboundsdata.Ingeneral,enduserdevelopment
inspreadsheetingseemstoresembleprogrammingpracticeinthe1950sand1960s.

CorporatePolicies
Onereasonwhyindividualspreadsheetdevelopersdonotuserigorousdevelopment
disciplinesmaybethefactthatfeworganizationshavepoliciesonenduser
developmentingeneral,muchlessspreadsheetdevelopment.
GallettaandHufnagel(Galletta&Hufnagel,1992)surveyed107MISexecutivesusing
amailquestionnairethatfocusedbroadlyonpoliciesforcontrollingenduser
development.Forrestrictionsonenduserdevelopment,23%saidtheyhadrulesand
58%saidtheyhadguidelines.Yetevenforcorporationswithrulesandguidelines,the
respondentssaidthattherewasfullcomplianceonly27%ofthetime.Whenasked
aboutrequirementsforpostdevelopmentaudits,only15%saidtheyhadrules,and
another34%saidtheyhadguidelines.Therespondentssaidthatwheretheyhad
rulesandguidelinesforpostdevelopmentaudits,furthermore,therewasfull
complianceonly10%ofthetime,andguidancewascompletelyignored41%ofthe
time.
Cale(Cale,1994)surveyed52ISandnonISmanagersin25firms.This
questionnairefocusedontestinganddocumentation.Calefoundthatonly10%ofthe
companieshadwrittenpoliciesfortesting,whileaboutanotherquarterhad"unwritten
policies."Documentationpercentageweresimilar.About70%stronglyagreedthat
thislackoftestingstandardswasproducingseriousproblems.Nonedisagreed.About
90%wouldimposetestingstandardsforspreadsheetstakingaweekormoreto
develop,ifthespreadsheetwereusedbymultipledepartments,oriftheoutputwould
updatedatabasesinthedevelopersdepartmentorotherdepartments.
Floyd,Walls,andMarr(Floyd,etal.,1995),intheirsurveymentionedearlier,found
thatonlyabout15%ofthefirmshaddevelopmentpolicies,40%implementation
policies,andtwothirdsdevelopmentmodificationpolicies.Thosewhosespreadsheets
wereratedasmoreimportantthantheaveragedidnothaveafullersetofpoliciesfor
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development.Noneoftherespondentsreportedacomprehensivesetofpoliciesforall
phasesofdevelopment.Furthermore,thepoliciesthatdidexistwerecreatedand
implementedattheworkgrouplevel.Floyd,Walls,andMarrreferredtothe
workgroupcentricnatureofpoliciesa"clanbased"socialpolicybasedprimarilyon
socialization.Norespondent,however,knewofaspreadsheetdisasterintheirfirm.
SpeierandBrown(Speier&Brown,1996)surveyed22membersofthree
departmentsaboutendusercontrolpoliciesingeneral.Thecompanyhadfew
corporatewiderulesexceptforbackuprules,whichwerenotenforcedanyway.Most
"rules"wereinformalanddepartmentalanddifferedwidelyacrossdepartmentsand
withintheperceptionsofdifferentusersineachdepartment.Thisreinforcestheclan
basedcontrolconceptofFloyd,Walls,andMarr(Floydetal.,1995).
Finally,Hall(Hall,1996),inhersurveymentionedearlier,askedrespondentsabout
corporatepolicies.Only11%oftherespondentsclaimedtoknowofacomprehensive
corporatepolicyforspreadsheetdevelopment.Ofthese,furthermore,onlyonein
threeanswered"Yes"whenaskediftheyknewwheretofindthepolicyinwritten
form!In90%ofthecaseswhererulesexisted,furthermore,enforcementwasleftto
thedeveloper.Interestingly,39%saidthattheyhadcompliedwiththeirorganizations
policyfourtimesthepercentagesayingthatsuchapolicyexisted.Perhapsthese
respondentsfeltthattheywerecomplyingwithunwrittenrules.
Overall,formalspreadsheetpoliciesseemtobefairlyrare,andtheirenforcement
seemstobecasual.Whilemorerespondentsseemtobelievethatinformaland
typicallyunwrittenguidelinesexist,theeffectivenessofsuchguidelinescanonlybe
lefttoconjecture.

Overconfidence
Whyisenduserdevelopmentinspreadsheetingsocasual?Theanswermaybethat
bothdevelopersandcorporationsareoverconfidentabouttheaccuracyof
spreadsheets,despitethelargeamountofinformationtothecontrary.Asnoted
earlier,whenBrownandGould(Brown&Gould,1987)gavethreespreadsheet
developmenttaskstoninehighlyexperiencedspreadsheetdevelopers,allmadeat
leastoneerror,and63%ofthespreadsheetsoverallhaderrors.Yetwhenasked
abouttheirconfidenceinthecorrectnessoftheirspreadsheets,theirmedianscore
was"veryconfident."DaviesandIkin(Davies&Ikin,1987),whofounderrorsinfour
ofthe19spreadsheetstheyaudited,alsofoundthatthedeveloperswereextremely
confidentintheaccuracyoftheirspreadsheets.Asnotedabove,Floyd,Wall,andMarr
(Floyd&Pyun,1987)foundthattheir72enduserswereconfidentinthecorrectness
oftheirspreadsheets,despitetheirlargesizes(averaging6,000cells).
Inlargerspreadsheets,thereshouldbeahigherprobabilityofanerrorthaninasmall
spreadsheet.YetwhenReithel,Nichols,andRobinson(Reithel,Nichols,&Robinson,
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1996)hadsubjectsexaminespreadsheetsandthenstatetheirconfidenceinthe
spreadsheet,subjectsratedlargewellformattedspreadsheetsmuchhigherthanlarge
plainlyformattedspreadsheetsandalsohigherthansmallspreadsheetsregardlessof
formatting.Inapersonalcommunicationwiththeauthorin1997,Reithelnotedthat
forthelargefancyspreadsheet,72%ofthesubjectsgavethespreadsheetthehighest
confidencerange(80%100%),andonly10%chosethe1%60%range.Forthe
otherthreeconditions,aboutathirdoftherespondentschosethesetworanges.
Unfortunately,thereasonsforthisapparentlyinvertedpatternofconfidenceare
unclear.
Inexperiments,PankoandHalverson(1997)andPankoandSprague(1998)found
highconfidenceamongsubjectsdespitethefactthatthesesubjectsmademany
errors.Inbothstudies,furthermore,confidenceincorrectnesswasunrelatedtothe
actualnumberoferrors.Morerecently,PankoandHalverson(2001)hadsubjects
developaspreadsheetindividuallyorintriads(groupsofthree).Whenaskedto
estimatedtheprobabilitythattheirspreadsheetcontainedanerror,individualshada
meanof18%,whilemembersoftriadshadameanof13%.Theactualfigures
percentageofincorrectspreadsheets86%and27%forindividualsandtriads.
Whilesuchmassivelevelsofoverconfidenceseemunreasonable,overconfidenceis
perhapsthemostwellestablishedphenomenoninthebehavioralsciences.When
askedaboutmanythings,suchasdriving,alargemajorityofallpeoplerate
themselvesasaboveaverage(Brown,1990Gilovich,1991Koriat,Lichtenstein,&
Fischoff,1980).Alongstreamofexperimentshavefoundthatpeopleare
overconfidentinawidevarietyoftasksrangingfromTrivialPursuittypequestionsto
theperceptionofacousticalsignals(Adams&A.,1961Lichtenstein,Fischoff,&
Philips,1982Plous,1993Wagenaar&Keren,1986).Overconfidencehasalsobeen
seenindecisionsupportsystemsuse(Kasper,1996)anddatabasequeries
(Greenblatt&Waxman,1978).Evenexpertsinawidevarietyoffieldsareoften
appallinglyoverconfidentwithintheirdomainsofexpertise(Johnson,1988Shanteau
&Phelps,1977).Overall,inbothcontrivedandrealistictasks,thereseemstobea
pervasivehumantendencytowardoverconfidence.
Oneofthemostinterestingaspectsofthisoverconfidenceisthehardeasyeffect,in
whichoverconfidenceishighestwhenactualperformanceislowest(Clarke,1960
Dunning,Griffin,Milojkovic,&Ross,1990Lichtensteinetal.,1982Plous,1993
Wagenaar&Keren,1986).Inpractice,asdegreeofdifficultyincreases,confidence
falls,butnotproportionately.
Overconfidenceiscorrosivebecauseittendstoblindpeopletotheneedfortaking
stepstoreducerisks.Indriving,forinstance,thereisevidencethatpeopleactasif
theywerealmostblindtolowprobabilitybutlethaldangers(Howarth,1988
Swensen,1977).Infact,whenwetakeunwarranteddrivingrisks,ourriskybehavior
isreinforced,becausewegettooutdestinationsfaster,dolesswork,andsoforth
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(Fuller,1990).Evenifwegetintotroubleandhavetotakeevasiveaction,wetendto
interpretthisasvalidationofourskillsratherthanfoolishness(Fuller,1990
Habberley,Shaddick,&Taylor,1986).Inspreadsheeting,inturn,ifwedonotdo
formaltestingandfollowothertediousdisciplines,webenefitbysavingtimeand
avoidingonerouswork.Whenwedocatcherrorsinformally,furthermore,webecome
convincedofourefficacyinerrorcorrection.
Moregenerically,whenwesearchforerrors,weseemtohavethreebasicprocesses
(Allwood,1984),twooftheseappeartobetriggeredbymismatchesbetweenthe
stateoftheworldandwhatwehadexpectedittobe.Thethird,the"standardcheck,"
involvescheckingforerrorsevenwhenwehavenodirectsuspicionthattheyexist.In
otherwords,thestandardcheckislikecodeinspection,althoughitmaybeforonly
partofthespreadsheet.Thestandardcheckisimportantbecausealthoughitisnot
motivatedexceptbyselfdiscipline,itappearstobetheonlywaytocatchcomplex
logicalerrors(Allwood,1984Rizzo,Bagnara,&Visciola,1986).
Howmuchstandarderrorcheckingshouldwedo?Obviously,itwouldbeinsaneto
questioneverythingwedoinlife(Gilovich,1991).Wemusthavesome"stopping
rules,"andthosestoppingruleswilldeterminewhatwefind(Rasmussen,1990).Ifwe
areoverconfident,ourstandarderrorcheckingislikelytostoptoosoon.
Overconfidencetendstobegreatestwhenrealworldsubjectsdonotgetdetailed
feedbackovermanycases(Shanteau&Phelps,1977Wagenaar&Keren,1986).In
experiments,(Arkes,Christensen,Lai,&Blumer,1987Lichtenstein&Fischoff,1980),
too,detailedfeedbackhasbeeneffective.Note,however,thatexperienceisnot
enough.Theremustbeverydetailedfeedbackoneachcase.Forinstance,Wagenaar
andKeren(Wagenaar&Keren,1986)foundthatexpertbridgeplayers,whoreceived
detailedfeedbackaftereachhandandanalyzedit,werewellcalibratedinconfidence.
Incontrast,professionalblackjackdealers,whoseebutdonotanalyzetheresultsof
eachdeal,werenobettercalibratedthanlaypeople.Inspreadsheeting,wehaveseen
thatdetailedcodeinspectionisrare,sofewdevelopersarelikelytobegettingthe
specificfeedbacktheyneedtoreducetheirnaturaloverconfidence.

ImplicationsforDevelopment
Althoughwestillhavefartoolittleknowledgeofspreadsheeterrorstocomeupwitha
definitivelistofwaystoreduceerrors,thesimilarityofspreadsheeterrorsto
programmingerrorssuggeststhat,ingeneral,wewillhavetobeginadopting(yet
adapting)manytraditionalprogrammingdisciplinestospreadsheeting.Ineffect,we
mustteachnewdogsoldtricks.See,forexample,thepaperbyRajalingham,
Chadwick,Knight,andEdwards.
Oneaspectnotedinpaststudies(Brown&Gould,1987Panko&Halverson,1997)is
thetendencyforspreadsheetdeveloperstobeginbuildingwithoutanadequate
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preliminarydesign.Inlargespreadsheetsbuiltwithmanyiterations,thisisverylikely
toleadtoproblems.Benham,Delaney,andLuzi(Benham,Delaney,&Luzi,1993),
Ronen,Palley,andLucas(Ronen,Palley,&Lucas,1989),andIsakowitz,Schocken,
andLucas(Isakowitz,Schocken,&Lucas,1995)haveevensuggestedtheimposition
offairlyformalplanningtechniquesusingCASEliketools.Howeverinspreadsheet
development,buildingthespreadsheettypicallyresultsinincrementallygreater
understandingoftheproblem,soitmaybeunreasonabletoexpectfullpriordesign.
Wemanyneedsomethingmorelikeplansinwriting,whichgiveguidanceyetshould
bekept"cheapenough"tobethrownawaywhenobsolete(Hayes&Flower,1980).
Mostprescriptionsforspreadsheetdevelopmenthavefocusedonlatedesignand
developmentphase,includingmodularconstruction,havinganassumptionssection
forallinputs,andusingcellprotection.Thesearecertainlyimportant,buttheyarefar
frombeingenough.Ifpeopledoandfeelgoodaboutsuchthings,infact,theymay
becomeoverconfident.Inaddition,assumptionssections,whiledesirableinmany
ways,mayactuallycreateerrors.TheexperimentsofJanvrinandMorrison(Janvrin&
Morrison,19962000)andLerch(Lerch,1988)suggestthatpeoplemakemanyerrors
whentheypointtodistantcells,asisthecasewhenasassumptionsectionisused.
Hall(Hall,1996)listsmanyotherdevelopmentphasecontrols.
Inprogramming,anewformofdevelopmentiscalledcleanroomdevelopment(Linger,
1994).Inthisapproach,theprogramisproventobecorrectmathematicallybeforeit
iswritten.Inspreadsheeting,ourexperienceobservingdevelopersisthattheyoften
enteraformulawithoutthinkingitthroughbeforehand.Unlesstheresultslook
obviouslywrong,theydonottrytodetermineiftheformulaisincorrect.Thisallows
thesurvivalofmanysubtleyetimportanterrors,evenwhenthedeveloperreally
knowsapproximatelywhatthecorrectanswershouldbe.Inmanyways,the
developersseemtobeactinglikeThorndikes(Thorndike,1898)cats,whouponbeing
putinapuzzleboxsimplytriedthingsuntiltheygotout(foramoderndiscussion,see
Mayer(Mayer,1992)).Oneapproachtoreducingsuchbehavioristorequire
developerstowriteoutandcritiqueallnontrivialformulas,doingcalculationsby
hand,andthenreplicatingthesecalculationswiththeformulatypedintothe
spreadsheet.
Mostprescriptivepapersalsodiscusstheimportanceofdocumentation.Aswehave
alreadyseen,documentationisrareinspreadsheets.
Inprogramming,wehaveseenfromliterallythousandsofstudiesthatprogramswill
haveerrorsinabout5%oftheirlineswhenthedeveloperbelievesthatheorsheis
finished(Panko,2005a).Averyrigoroustestingstageafterthedevelopmentstageis
neededtoreduceerrorratesbyabout80%(Panko,2005a).Whetherthisisdoneby
datatesting,linebylinecodeinspection,orboth,testingisanoneroustaskandis
difficulttodoproperly.Incodeinspection,forinstance,weknowthattheinspection
mustbedonebyteamsratherthanindividualsandthattheremustbesharplimitsfor
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modulesizeandforhowmanylinescanbeinspectedperhour(Fagan,1976).We
haveseenabovethatmostdevelopersignorethiscrucialphase.Yetunless
organizationsandindividualsarewillingtoimposetherequirementforcodeinspection
orcomprehensivedatatesting,thereseemslittleprospectforhavingcorrect
spreadsheetsinorganizations.Incomparison,theerrorreductiontechniquesnormally
discussedinprescriptivespreadsheetarticlesprobablyhavefarlowerimpact.
Whateverspecifictechniquesareused,onebroadpolicymustbetheshieldingof
spreadsheeterswhoerrfrompunishment.Inprogramming,ithaslongbeenknown
thatitiscriticaltoavoidblamingincodeinspectionandotherpublicprocesses.For
instance,Fagan(Fagan,1976)emphasizedthatcodeinspectionshouldneverbeused
forperformanceevaluation.AsBeizer(Beizer,1990)hasemphasized,aclimateof
blamingwillpreventdevelopersfromacknowledgingerrors.Edmondson(Edmondson,
1996)foundthatinnursing,too,apunitiveenvironmentwilldiscouragethereporting
oferrors.Quitesimply,althoughtheerrorratesseeninresearchstudiesareappalling,
theyarealsoinlinewiththenormalaccuracylimitsofhumaninformationprocessing.
Wecannotpunishpeoplefornormalhumanfailings.
Finally,wehavebeendiscussingdevelopersinthispaper,butDhebar(Dhebar,1993)
hasemphasizedtheneedforemployeesingeneraltobesmartconsumersof
spreadsheetresultsgeneratedbyothers.Inuniversities,introductoryclassesdeal
withbothstudentswhowillprobablybebothdevelopersandconsumersof
spreadsheets.Ourclasscontentshouldreflectbothroles.
Althoughmanyprescriptivetechniqueshavebeenputforth,onlycodeinspectionhas
beentestedexperimentallyandhasproventobebothsafeandeffective.Individual
codeinspectionhasbeenshowntofindabouthalfofallerrors,sothatgroupcode
inspectionisneeded.AsPanko(1999)hasshown,evengroupinspectionhelpsonly
somewhat,althoughithelpsespeciallyfordifficulttofinderrors.Otherprescriptive
methodshavebeenputforthbuthavenotbeentestedandsomustbeviewed
somewhatskeptically.Forinstance,inunpublishedresultsfoundbytheauthor,when
studentswhoputassumptionssectionsatthestartoftheirspreadsheetwere
comparedwithstudentswhodidnotuseassumptionsections,therewasno
statisticallysignificantdifferenceinerrorrates,andstudentswhodidnothave
assumptionssectionsactuallyhadnumericallylowererrorrates.

Conclusion
Allinall,theresearchdonetodateinspreadsheetdevelopmentpresentsavery
disturbingpicture.Everystudythathasattemptedtomeasureerrors,without
exception,hasfoundthematratesthatwouldbeunacceptableinanyorganization.
Theseerrorrates,furthermore,arecompletelyconsistentwitherrorratesfoundin
otherhumanactivities.Withsuchhighcellerrorrates,mostlargespreadsheetswill
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havemultipleerrors,andevenrelativelysmall"scratchpad"spreadsheetswillhavea
significantprobabilityoferror.
Despitetheevidence,individualdevelopersandorganizationsappeartobeinastate
ofdenial.Theydonotregularlyimplementevenfairlysimplecontrolstoreduce
errors,muchlesssuchbitterpillsascomprehensivecodeinspection.Onecorporate
officerprobablysummarizedthesituationbysayingthatheagreedwiththeerrorrate
numbersbutfeltthatcomprehensivecodeinspectionissimplyimpractical.Inother
words,hewassayingthatthecompanyshouldcontinuetobasecriticaldecisionson
badnumbers.
Amajorimpedimenttoimplementingadequatedisciplines,ofcourse,isthatfew
spreadsheetdevelopershavespreadsheetingintheirjobdescriptionsatall,andvery
fewdospreadsheetdevelopmentastheirmaintask.Inaddition,becausespreadsheet
developmentissodispersed,theimplementationofpolicieshastobelefttoindividual
departmentmanagers.Whileorganizationsmightidentifycriticalspreadsheetsand
onlyimposeharddisciplinesonthem(Panko,1988),thiswouldstillmeanthatmany
corporatedecisionswouldcontinuetobemadeonthebasisofquestionableanalyses.

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