Conviviality Yet Another Company on the Verge of Bankruptcy Due to Spreadsheet Error
Close on the heels of the collapse of construction giant Carillion Plc, Conviviality is yet another company that is now on the verge of bankruptcy due to spreadsheet error. With 60 per cent wiped off its stock market value, the company is scrambling to raise £125 million or potentially go bust. Material discrepancies in the financial forecasts caused by spreadsheet error is a major cause of the problem that this UK drinks retailer finds itself in.
The use of spreadsheets is pervasive in business for final mile reporting, pricing models, budget management and business forecasting, for example. Due to their power and flexibility, spreadsheets are the ‘go to’ tool for many when solving business problems. But their uncontrolled, unmonitored use can, for example, compromise a finance department’s visibility of the day-to-day business. Finance teams may not understand how the critical spreadsheets that the business relies on are linked, how they make use of external data, and have no visibility if a single error or change in these spreadsheets might compromise the integrity of the results they need. The first time they see a problem might be when forecasts fall short, a project suddenly becomes unprofitable or when the business has to restate its earnings.
Unfortunately, Conviviality is not the only corporate who has found its future hanging in the balance due to spreadsheets. In recent years, Marks and Spencer and other major financial institutions have borne the debilitating financial and reputational brunt of errors caused by spreadsheets too.
It’s time corporations afforded the attention these powerful, flexible, but error-prone tools deserve. Despite deployment of the best enterprise-wide systems, research shows that the use of spreadsheets is here to stay. Adopting best practice, technology-led strategic spreadsheet management for safe and secure use of this highly beneficial and valuable tool is a no brainer.
London-based ClusterSeven has developed a range of market-leading software products that provide oversight and transparency of a firm’s spreadsheets, user-built databases and modeling tools. ClusterSeven’s solutions provide departments such as finance, regulatory reporting, operations and internal audit full confidence in the integrity of their firm’s spreadsheet data, while also offering substantial savings on the time and resources used to check data processes and accuracy.
ClusterSeven was founded in 2003 and established a New York office in 2006. The firm now has a third of the world’s top 30 banks as clients as well as multiple leading insurers, investment managers and a wider range of non-financial services organizations. In June 2015, private equity firm Azini Capital Partners LLP acquired 100% of ClusterSeven and has provided additional investment to promote high quality product development and wider customer engagement.
Accountants Warn on the Rise of Spreadsheet RiskSeptember 09, 2015
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