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Mistakes were made

New York City meets Munich

The Fear of All Sums

August 9th, 2002 · No Comments · Uncategorized

WorldCom seems to have been confused about how much money they made. Looks like they were off by a wee bit. Around 3.85 billion dollars too high. Oh, wait, did they say 3.85 billion dollars? It turns out to be more like 7 billion dollars.

I’m glad to discover I run my checking account like CEOs of multinational companies. The only difference is the order of magnitude. And I’m not accountable to shareholders.

Of course, I’m sure all these differences are simple to explain. It can only be one thing: rounding errors.

I’ve made my fair share of “executive reports” in my lifetime. I know exactly how it happens. Information is simplified and consolidated and reformated and allocated. Every company has a legion of people who are nothing but data cuisinarts. And all it takes is one guy who says “I want this column in billions, see?” and the hapless peon makes it so, including rounding those billions up here and there. Then another guy comes along, takes that report, and uses those numbers for another report. He sums them and rounds them some more.

Next thing you know, POW! You’re off by 7 billion dollars or so. Happens all the time. Just read the news.

It’s all the fault of Microsoft Excel.

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