http://www.mis.coventry.ac.uk/~nhunt/pottel.pdf

In the General Remarks section he writes,Quote:
Another important remark is that although many people have voiced their concerns about the quality of Excel’s statistical computing, nothing has changed. Microsoft has never responded to comments on this issue. Consequently, the statistical flaws reported in Excel 97 worksheet functions and the Analysis Toolpak are still present in Excel 2000 and Excel XP. This, of course, is most unfortunate.
The final section summarises the implications:Quote:
Will these problems affect you?
If you are using Excel for simple data analysis, on relatively easy data sets, it is most unlikely you will have any problems. The impact of the poorer algorithms used by Excel will be more visible on relatively ‘not so easy’ data sets. If you are dealing with very large numbers, scaling and/or centering your numbers will solve the problem. Note that you should not use Excel’s STDEV function to scale your data, in case of large numbers. In most cases, centering the data will suffice to generate the correct results. Some of the difficulties mentioned in this text can be overcome by using a good third-party add-in. These add-ins will usually provide the user with many more statistical tools, including non-parametric hypothesis testing, which is completely absent in Excel.
It remains to be seen whether any of these flaws are addressed in Excel 2007.

” Oracle Tools Extend your Oracle System. Meet Sarbox Requirements.”
” Sarbanes-Oxley Solutions Promote best practices for Sarbanes Oxley compliance -Free white paper.”
” Spreadsheet Professional Spreadsheet review software for Sarbanes Oxley. Free download. “

SOX is tossed around in my company as a reason to make any CYA decision. Need something done twice? Call it SOX and you’re golden.

It’s like we already knew what was coming from SOX, and had been doing it for the last fiftenn years… But the laughing stopped when we realised just how detailed, bureaucratic and burdensome Sarbanes-Oxley turned out to be. The costs in management time, and the administrative overhead – never mind the lawyers’ fees – are making every company that ever did business in the USA (or ever offered shares, bonds or depositary certificates to a US investor) look for ways of extricating themselves from this dysfunctional jurisdiction. Take a look at how many companies are floating in London this year, when they all used to issue their IPOs in New York.

Worst of all, the long, long lists of rules and filings have turned out to be another gadarene rush into the swamp of ‘prescriptive’ audits – a game for clever lawyers and accountants, who satisfy the letter of the law in a lengthening list of ever-more-detailed and complex regulations, and sign off the audit with a statement of compliance with all relevant legislation.

Here in Britain, we sign off accounts as ‘True and Fair’; ‘principles-based’ audit, and I know which type I prefer. So when I document a trading spreadsheet, and put in place the audit controls, I can’t just cover my backside by stating that it satisfies the detailed wording of a specific regulation: I have nowhere to hide when the FSA conduct their audit, nor in a court of law, unless the controls I put in place are ‘Adequate’, transparent and effective, and a full and determined attempt to comply with the spirit and principles of the law.

I agree with Z–nice freakin’ rant.

I agree with you that non-diversified portfolios should be approached with open eyes to the negative possibilities. I have little sympathy for folks who loaded up on Enron, or never diversified when it NNG and Houston Natural Gas merged to become Enron because “our family has owned the stock forever”. (And you should have little sympathy for me when LVLT tanks.)

I also agree with you that Enron failed due to fraud. But what was fraud’s cause? Greed and really terrible business decisions. These guys wouldn’t have needed to resort to the fraud if they would have stayed within the company’s competencies. When that industry de-regulated in the mid 1990′s, many utilities started buying all kinds of crap with no idea how it worked–just to “grow the business”. So preced fraud a healthy dose of greed and ignorance, and viola, you have major implosions of Fortune 500 companies and Big 8/6/5/4 accounting firms. Then Congress–that’s right, the same body that deregulated utilities–comes up with SOX as the corporate messiah. And so the hits just keep on coming . . .

Now you have me all worked up.

DA

http://www.sysmod.com/praxis/prax0404.htm#Excel
The Devil’s guide to spreadsheet creation

( a little early for Friday humour)

Also, about human error and Excel. I agree it happens and it will keep happening, but mindless drones that plug information into Excel without stepping back and ‘analyzing’ the outcome of calculations, need better bosses or better training. Controller, accounting managers, accounting supervisors, whatever title you want to give them have to have the knowledge and take the time to actually review what they’ve done to ensure it passes the ‘smell test’. A little healthy skepticism is always good when you look at things.

“back before Enron crashed companies could offer little other than their own stock in their 401(k) plans”

Not true. I worked for a Fortune 100 company until five years ago. Our 401(k) plan included around a dozen funds, one linked to the company stock, of course, but the rest offering a range of risk/return for the participants. The 401(k) plan was managed by one of the large financial services companies that handles individual and group plans like this. The opportunity for fraud was very slim in this arrangement.

Unless, of course, the auditing/consulting firm is part of the problem as well – ala Arthur Anderson’s role in the Enron debacle.