A useful point: Calcbench insights on rounding

Posted on October 15, 2021 by Editor

Just last week we posted on rounding of figures in reports, and how it can cause validation processes to flag calculation inconsistencies that – while they should be checked – should not be a cause for concern, since there is (generally) no underlying error. Great minds evidently think alike, since Calcbench has also published a post exploring the theme of rounding and the ensuing discrepancies, which though small can be unexpected.

The authors at Calcbench wanted to know how common it is for numbers not to add up neatly due to rounding, so they tried using a text search for the words ‘rounded’ and ‘add’ appearing within ten words of each other – roughly speaking, in the same sentence – indicating where this issue has been signalled within the report itself.

“We searched that string for the S&P 500’s 2020 reports, and nearly two dozen companies that mentioned their columns may not always add up due to rounding,” they say. “What can an analyst do with this information? First, you can put aside any fears that you’re crazy: the numbers really don’t add up; it’s not a flaw in your Excel formulas.”

The use of the search string for words in close proximity is a clever approach to quickly canvass the frequency of issues or themes across reports, and one that certainly can be applied to other software and to other searches. Let us know if you use it to uncover anything interesting – or if you have a favourite search trick!

Read more here.

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