End-of-Year Budgeting and Double Counted Sub-Total Errors

End-of-Year Budgeting and Double Counted Sub-Total Errors

It’s that time of year, and for many the priority is working hard to finalise next year’s budget. Or indeed you may thankfully have completed this process by now.

Perhaps it’s worth mentioning a major accounting error discovered in the 2016 Fort Saskatchewan city budget which decreased the overall tax rate by more than three per cent. The budget had been inflated by 3.5% instead of 0.7%

The spreadsheet error made by the city’s finance department effectively doubled the annual debt, instead of counting it once, it was double counted. Needless to say, the $1.27-million over-estimation on city taxes left some city councillors second guessing the overall budget process and its outcomes.

Of course the issue here became the political fuss, the embarrassment as well as the loss of credibility and trust in the departmental figures. “I can’t support this budget because I have no trust in the budget or its processes, especially after this error”, said a prominent council member.

Where the council members had issue was that inadequate checking and monitoring routines were in place.

A familiar re-statement ensued, with the new CFO stating “… looking back at the formula we realized we double counted … now new procedures have been put in place, so this would not happen again.”

What we see here is that spreadsheet error is a material and persistent risk for many organisations, and that the challenge broadly is one of awareness raising. Added to this, spreadsheet risk skill levels can certainly be enhanced, for example so that double-count error checking routines for calculations become the norm.

The Fort Saskatchewan city budget error is certainly a familiar story. Bringing everyone up-to-speed about the potential for spreadsheet error and the implications, and establishing a set of core spreadsheet risks skills and norms for the organsiation, in order to check for and guard against routine spreadsheet error, goes a long way to mitigate the risks.

Garry Cleere
Spreadsheet Safe
Programme Manager

Syllabus Reference
1.3.2.3 Check for and correct double counted sub-total errors.

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