Avoiding Costly Currency Exchange Errors

Avoiding Costly Currency Exchange Errors


Many firms deal with countless currencies in today’s global economy, but improperly categorizing them in spreadsheets (mistaking Canadian or Singapore dollars for American ones, for example) is a human error that can easily happen. Unfortunately, it can also be very costly and pose real implications for a company’s employees and customers, as well as its shareholders. Enterprises must be able to mitigate this spreadsheet risk in order to protect their revenue and reputation.

You should be able to trust your data, but odds are you do not. It’s an unfortunate reality that few finance industry professionals (such as CFOs, controllers, financial analysts, auditors and accountants) actually trust the accuracy of the data they produce from their spreadsheets. One survey indicated that only 38% of the people most responsible for keeping track of the data actually trust it. So it was no surprise when multiple companies suffered adverse market effects following announcements including currency errors based on inaccurate data.

Human errors negatively affect your business’s success

When people talk about currency risk, they mean exchange rates, not spreadsheets. However, currency exchange errors on spreadsheets can happen and be costly, as Ireland’s National Treasury Management Agency (NTMA) found out.

The NTMA purchased a fund in U.S. dollars. However, the currency was not noted on the spreadsheet. The transaction was later recorded elsewhere as euros. Once discovered, the Irish fund had lost €750,000 on an investment because of a human error that could easily have been mitigated with modern spreadsheet management software.

Currency exchange errors and other human errors are more common than you think, and they can harm multiple aspects of your business. Spreadsheet risk is prominent, and often caused by accounting errors, misrepresentation of data, noncompliance with generally accepted accounting principles (GAAP), internal fraud and simple clerical errors like the NTMA’s failure to note the currency. But spreadsheet management technology can prevent such errors and can be a critical factor in fostering confidence in the data used to drive your business transactions and decisions.

To err is human, but it’s not inevitable

The NTMA acknowledges that their currency exchange record-keeping glitch was caused by “human error.” The reality is that human errors are inevitable, so it is critical to prepare for them and implement processes and tools to prevent detrimental results. Your business can mitigate spreadsheet risk by using modern, automated spreadsheet management solutions. This technology combs through spreadsheets seeking anomalies, errors in calculations and formulas, and currency-labeling concerns. Spreadsheet management software provides a layer of protection between detrimental human errors and your company’s success.

Because of the sheer volume and complexity of spreadsheets used in many companies (59% use over 1,000 spreadsheets to make critical decisions), it’s vital that you implement tight controls on your spreadsheets to lower the potential risk of errors. Large errors have forced many companies to restate their financial figures. In fact, restatements caused by inaccuracies in the previous year’s financial statement increased in 2018. Reportedly, in just the first six months of 2018, 65 firms detected accounting mistakes significant enough to require them to restate their financial filings to regulators. You don’t want to go this route.

Incisive Software’s spreadsheet management solution provides a modern, automated approach to gaining accuracy, control and insight into an organization’s most complex, sensitive and critical spreadsheets, enabling you to use accurate and consistent data that you can trust.

Read the Forrester study we commissioned, “Think Spreadsheet Risk Isn’t a Threat? Think Again”, to understand how you can begin to mitigate spreadsheet risk. You’ll learn why companies that prioritize spreadsheet risk are better positioned to protect customers, revenue and reputation.

About Diane Robinette

Diane RobinetteDiane Robinette is President and CEO at Incisive Software, a company helping risk executives reduce exposure in critical business and financial processes. Prior to Incisive, Diane served in executive and senior level positions at companies including BroadVision, Contivo (acquired by Liaison Technologies), Covigna (acquired by ProQuest/Snap-on), Perfect Commerce and Proximex (acquired by Tyco). She also held management positions at KPMG and EY. Diane believes that by taking a modern and automated approach, risk teams can move towards a risk resilient posture that allows them to anticipate and reduce exposure, no matter what is thrown their way.