---
title: "Spreadsheets: Best Practices (Part 3)"
description: "Spreadsheets are known to be error prone. As per one study by Raymond Panko , 86% of spreadsheets contains errors. Errors in spreadsheets can’t be eliminated completely, but steps can be taken to reduce them."
publicationDate: 2017-06-22
category: "Audit & Forensics"
authorName: "Lavneet Bansal"
originalPublication: "Audit Monk"
originalUrl: "https://auditmonk.wordpress.com/2017/06/22/spreadsheets-best-practices-part-3/"
featuredImage: "/images/auditmonk/spreadsheets-best-practices-part-3.webp"
draft: false
tags:
  - "Excel"
  - "Spreadsheets"
---

Spreadsheets are known to be error prone. As per one study by <a href="https://arxiv.org/ftp/arxiv/papers/0802/0802.3457.pdf">Raymond Panko</a>, 86% of spreadsheets contains errors. Errors in spreadsheets can’t be eliminated completely, but steps can be taken to reduce them.
<blockquote>In 2003<em>, “a cut-and-paste error in a spreadsheet cost TransAlta, a Canadian power generation company, $24 million in overpayments for hedging contracts.”</em></blockquote>

Below are some best spreadsheet practices suggested by Paula Guilfoyle of the Excel Club;
<ul>
	<li>Workbooks should contain a how to or explanatory page.</li>
	<li>Inputs and assumptions should be kept on a separate sheet to calculations, outputs should also be on a separate sheet.</li>
	<li>Keep a log sheet – detailing changes to the workbook. This will help other users track and understand any changes.</li>
	<li>Name and number your worksheets for example 1_P&amp;L, 2_Balancesheet, 3_Cashflow.</li>
	<li>Keep timelines consistent. &nbsp;If a number of your worksheets have timelines, keep these timelines in the same place on each worksheet.</li>
	<li>Navigation: Keep a contents page that links to the worksheets and the worksheets should link back to the contents page.</li>
	<li>Keep formulas simple and at the lowest level. &nbsp;Don’t be afraid to use the results from one formula as a criteria or value for another formula. Lower level formula will allow other users understand the workbooks better.</li>
	<li>Security covers a number of elements.&nbsp; Not everyone need access to every spreadsheet. &nbsp;If they do have access to spreadsheets, lock cells so that formulas cannot be changed.</li>
</ul>
There are also many research papers available on spreadsheet best practices. One of them is “<a href="https://arxiv.org/ftp/arxiv/papers/1301/1301.5878.pdf">How do you know your spreadsheet is right?</a>” by Philip Bewig.

It’s good to ask “Is your spreadsheet right?” but confidence comes from answering the question “How do you know your spreadsheet is right?”

Related Articles:

<a href="https://auditmonk.wordpress.com/2017/06/12/spreadsheets-risks-part-1/">Spreadsheets: Risks (Part 1)</a>

<a href="https://auditmonk.wordpress.com/2017/06/16/spreadsheets-auditing-validating-part2/">Spreadsheets: Auditing &amp; Validating (Part 2)</a>