Reliance on erroneous spreadsheets by corporations for inaccurate financial reporting and business decision making has been reported in the financial media, because it has often resulted in profit downgrades, share price falls and a revision of corporate financial statements.
Audit spreadsheet risk or simply audit risk, like human spreadsheet risk, can be a source of material financial and business cost to companies; thanks to erroneous financial models or spreadsheets. There are three types of audit risk: control risk, detection risk and inherent risk.
Arguably the biggest driver of business cost, it is the type of risk caused by human error in financial spreadsheets. There are many ways financial modellers can undermine the accuracy and credibility of a financial model.