Why should you check your model?
- Are the staff members typically responsible for the financial model junior staff members?
- Are you using a financial model for decision making?
- Are you using a template from a previous deal that has not been custom built?
- Are you relying on a financial modeller to build and edit a financial model for you?
- Will you go to investment and credit committees before a financial model audit?
- Is your financial model VBA code being reviewed to the extent it should be?
- Do you fully understand any VBA code being used in your model which could affect structuring and outputs?
- Does your financial model give unexpected results?
- Is auditing the financial model cost prohibitive?
- Does your financial modeller fully understand the entire model, including any VBA code?
Don't get caught out by your model
Although the financial model is often at the nexus of every deal, and significant decisions are made based on it, it is often assumed to be correct. Reliance is placed on the model prior to audit, without it being significantly checked. The model may even contain VBA code that is not fully understood by the financial modeller or the deal team, or perhaps a template was used from a previous deal.
Credit and investment decisions and theses are presented based on the financial model – but history has shown that most financial models contain errors. Nexus Financial Modelling offers our clients the ability to assess and review the financial model prior to a full model audit at a much lower cost than a traditional model audit. We enable our clients to feel confident that their financial model accurately reflects the deal.
We do not provide a model audit or provide written assurance.
Well Known Financial Model Errors
Over 90% of spreadsheets and financial model contain errors. Sometimes these are immaterial but sometimes not!
- 10,000 extra tickets sold at the London 2012 Olympics
- Hiding cells instead of deleting them lead Barclay’s to buy more assets than they intended
- Cut and paste leads to a $24m loss for TansAlta
- The JPMorgan London Whale Debacle