There are many different software tools, and I have yet to see one that does everything.

Spreadsheet mapping tools (such as Spreadsheet Professional (SP) or OAK) show how a worksheet is structured, showing whether cells are labels, inputs or formulae, and in particular, showing whether calculation cells are consistent with adjoining cells.

Having consistent cells in a row, or a block of rows, means that only one cell in that row or block is unique, and only that unique formulae needs reviewing. This reduces review time, and in a model audit, reduces cost!

Another area that software can help is in identifying potential errors. SP, for examples, unused inputs, unused formulae, formulae with no precedents, references to blank cells, hard codes within formulae and complex formulae. These potential errors can then be reviewed to see if there is an error, or amended to make the model more robust.

Software should be considered a tool as part of the reviewing process, whether a peer review process or an independent review. We provide a service called a ‘modelling best practice review’, and I am happy to share the key elements of this:

- separation of inputs, calculations and outputs;
- consistency of formulae across rows, down columns and across worksheets;
- integrity of financial statements (no balancing figures!);
- linearity of calculation flow (no circularities).

Using the tools, such as SP, allows the reviewer to focus on areas of the model with more risk, and I think that is the best way of thinking about software.

Hope this is of help.

Regards,
Andy

It is refreshing to read about your passionate approach to not just model audit but also to client service. This is one of the few times I have heard reference to client service in financial modelling forums.

The potential change in the UK government could give rise to siginficant repeat business opportunities for model audit firms, thats an interesting insight I hadn’t though of.

Regards,

Nick