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Financial Model Audit: More than a box ticked

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February 2022  |  Model Audit

I have spent a large chunk of my career as a financial advisor, and that has often involved helping clients to select their model auditor.

Often clients see the financial model audit as a necessary evil, a due diligence requirement from lenders, a box to be ticked. The audit is seen as an insurance policy against error, and often the cheapest solution is seen as the best.

Personally, I believe this misses the point. It comes from the viewpoint that the financial model is materially correct and that the audit will not uncover anything of note. In my experience, this is rarely the case.

It is rare that we do not find any issues which impact pricing to a greater or lesser degree.

We often uncover errors in models which can lead to material pricing differences, significantly outweighing cost and margin tweaks that are receiving all of the focus of the team.

In a highly-competitive environment where bids can be won or lost based on marginal pricing differences, even small errors which go undetected can mean the difference between winning and losing.

The financial model audit should be valued as a key part of developing a successful bid and so much more than a box ticked.

Let us know if you have found errors that could have won a bid you lost. Or probably worse, won a bid that you should have lost! Contact us today.

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Danny Leitch

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