Published: 23rd November 2018
Why does clerical error reduction matter?
Simple errors can come at extremely high costs. One simple error by one Australia’s largest banks, Westpac, cost in excess of $4,000,000 because they accidently deposited money into the account of a teenager who then proceeded to go on a lavish spending spree before the money was recovered (read more here).
Another time one of Australia’s largest banks, The Commonwealth Bank, was in the spotlight for bad clerical errors was when they accidentally leaked the data of over 10,000 customer. Simply missing off the “.au” part of the email domain saw personal information of their customers fall into the wrong hands (read more here).
Hopefully, you are now convinced that clerical errors need to be minimised, so let’s look at some techniques used to minimise clerical errors.
What can you do?
When doing research, I was shocked by the simplicity of some articles that provide advice on reducing the amount of clerical errors made. The internet is saturated with articles that will tell you to ‘double-check’ but you won’t find that here; I have categorised different controls you can use to minimise clerical errors into novice, intermediate and expert.
For simple clerical error reduction, most strategies start and end at data entry controls:
The lesser important (yet still important) tests are as follows:
On a cost to benefit ratio this has to be one of the top options, predetermined forms will allow your business to ensure all the data required is gathered. It will increase efficiency because employees won’t need to determine what is needed every single time and it will also reduce the amount of entry errors. Additionally, a form is an excellent way to implement many of the novice controls discussed earlier since you know exactly where to check for what type of values. Forms can be implemented in more places than you would anticipate and there are some extremely cheap options. For example, google forms offer you the ability to gather data form any device and output the data into an excel file (one of the most useful and reliable file formats)
At the end of the day, you will almost certainly have places in your business where there is potential for employees to make clerical errors. To quantifiably reduce the amount of errors you can implement all the other advice in this article, but somehow there will still be a way to make mistakes. That’s why a more humanised approach to error reduction can be just as effective. Unfortunately, there is no definitive advice I can give on this subject in a succinct manner (there is an entire fields of research dedicated to this) but I can give you some points to consider that may contribute to mistakes by your employees that all employers should consider:
Unfortunately, some mistakes are just unavoidable. This method is one of the most advanced methods used to detect clerical errors and the sooner it is done the sooner you can fix the issue. It will provide you with a greater understanding of your organisation but also consume the most amount of resources.
Variance analysis involves comparing budgeted data, expected data and actual data. I believe it is best explained using an example:
Variances are perfectly normal, the important thing to understand is the reason for the variance. For example, in the above example, something clearly went wrong. They received 10 times more raw material than they had budgeted for. If throughout the ordering process, they had cross-checked documents, then they would have realised that they accidently added an extra zero to the purchasing order than was in the purchase requisitions.
Additionally, in the above example, the purchase requisition was 100 less than the budget. This may or may not be a clerical error. Perhaps a large order fell through or perhaps the person preparing the document accidentally entered the wrong number; the key here is understanding the variance.