How to Audit a Model?
Its a question I’ve been asking myself for a long time now.
For context, I can build pretty much any model without issues. But what I’m really questioning is; what’s the best way to audit a model?
Is there no better way than simply going through the model exactly how you would build it?
Are there any tricks and tips for auditing/reviewing someone else’s model. Obviously, you can tell when line items should be +ve -ve etc, but is there anything else you do when reviewing to increase speed or accuracy?
let me know what I’m missing! Cheers
Well I mean, what are you auditing it for? Arithmetic accuracy? (I.e. are completing formulas correctly), Plausibility? (I.e. do the assumptions we’re using and the output hold any water), Client readiness? (Is it pretty / easy enough to follow with proper color coding, tab sections, comments where needed etc)
It depends on what perspective you are coming from. Generally you should be reading and interpreting your forecast, then checking in with the research you’ve done to see if your hypothesis is believable enough to put in front of someone senior or put your money down on. It’s not that complicated really
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