Nevada City budget problems

In January 2006 it was discovered that there was a deficit of $5 million in the budget for Nevada City. The budget spreadsheet was the same as the one for 2005, updated for 2006. Apparently it was working correctly until sometime in late December, when it developed a problem. The difference was a $5M deficit in the water and sewers fund, that wasn’t present on 14 December but was there in the version discussed at a meeting on 3 January. Evidently some councillors noticed the change. The finance director hadn’t noticed, as he had a printed version that didn’t show the error. Once the error was noticed, it took the finance director about a day to fix it. As he was doing so, he found other errors.

Obviously the spreadsheet had changed after it had been printed out. We have no information about how the error was introduced. We are not told whether the other errors that were found and corrected were actually in the 2005 version of the spreadsheet, but it wouldn’t surprise me.

It appears that the actual Excel file was sent round to the councillors, and indeed posted on the city’s web site. This raises other concerns, unless it was protected so that it couldn't be changed.

Resources

European Spreadsheet Risks Interest Group

This special interest group provides a forum for research on spreadsheets. Its website is at http://www.eusprig.org and includes an excellent collection of spreadsheet horror stories. EuSpRIG organises an annual conference on spreadsheet risks.

Financial Modelling of Project Financing Transactions

A paper that was presented to the Institute of Actuaries of Australia Financial Services Forum, containing interesting statistics on spreadsheet error rates. It's available at http://www.actuaries.asn.au/PublicSite/pdf/fsfpaper2004-jasminandlee.pdf.