Simon Selkrig, Strategize Financial Modelling, simon@strategizefm.com, Montreal, QC

Article series: Avoiding financial spreadsheet mistakes

Part 3 of 3

Spaghetti soup of data links

A common mistake in preparing a business’ financial spreadsheets is creating a whole new spreadsheet rather than simply rolling over the document from the previous year. It may seem innocuous, but it can result in data conflicts or version control issues due to historic numbers. In the development of a spreadsheet, try to build the model with the idea that you will use it again in the future, and not simply for the current period. This will help to alleviate potential data link problems.

Complex formulae i.e. nested IF statements

Try to keep the use of formulae to a manageable level. Avoid the use of complex, esoteric formulae – especially multiple ‘IF’ statements. Not only are they prone to error, but they are very hard for spreadsheet users to understand and present an audit risk. Instead of a using complex formula involving multiple cells, break it down into smaller steps.

This concludes the Avoiding financial spreadsheet mistakes article series. The mistakes included in this series are the result of developers not adhering to the core best practices of spreadsheet development. Working to avoid these mistakes will make your financial spreadsheets easier to use and to audit.

Check out the rest of the articles in the series Avoiding financial spreadsheet mistakes:

  1. Avoiding financial spreadsheet mistakes: Structure, hard-coding
  2. Avoiding financial spreadsheet mistakes: Email referencing, formatting
  3. Avoiding financial spreadsheet mistakes: Data links, formulae

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