Client news: F1F9 reveals Capitalism’s Dirty Secret
Posted by: Alistair Clay | 09.04.15

FINANCIAL modelling firm F1F9 has launched a white paper, Capitalism’s Dirty Secret, which reveals the truth about the uses and abuses of spreadsheets in the corporate world.

The YouGov-backed study, covered in the Daily Telegraph, shows that almost one in five large British businesses have suffered financial loss due to errors in spreadsheets.

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The report also reveals that 33 per cent of large businesses report poor decision making due to spreadsheet problems and in around one third of businesses, none of the financial decision makers have ever received any spreadsheet training.

The Capitalism’s Dirty Secret (CDS) report was commissioned by financial modelling experts F1F9 to examine the true extent of the uses and abuses of spreadsheets in the corporate world.

The findings paint a shocking picture of massive unidentified risk that potentially puts billions of pounds of investment at risk.

Data from the CDS report revealed that spreadsheets are used in the preparation of British company accounts worth up to £1.9 trillion – the UK manufacturing sector uses spreadsheets to make pricing decisions for up to £170 billion worth of business.

In total spreadsheet analysis underpins up to £38 billion of British private sector investment decisions per annum.

Despite the huge sums at risk 60 per cent of respondents said their businesses spent nothing on spreadsheet training in the last year, whilst some admit that many spreadsheets are flawed and contain errors.

Sixteen per cent of large businesses have experienced inaccurate information in spreadsheets more than 10 times in the last year – the financial risks are colossal.

Kenny Whitelaw-Jones, Managing Director of F1F9, said the findings of the report had serious implications for business.

He said: “The failure to take seriously the risks posed by spreadsheets is Capitalism’s Dirty Secret. This YouGov report looked at businesses here in the UK but we’re confident that by extension this is a global issue.

“More often than not just one person in a company has the knowledge of how the financial spreadsheet models are constructed. Other people are unable to understand and therefore check the analysis. The potential for errors is massive.

“Companies must act now to confront these challenges head on if they are to reduce their exposure to the significant financial risks hidden away in spreadsheets that simply aren’t fit for purpose.”