One of the key differences in approach adopted by the various financial model audit firms is whether they follow a parallel build or a cell by cell approach.
If you are engaging an auditor to review your model, it is a question you should ask.
This approach is what the name implies. Someone is paid to methodically go through the model one cell at a time, checking that every formula does what one would expect it to be doing.
Under a parallel build approach, the model auditor uses their own model in parallel with the model under test. They will use the same inputs and validate that the outputs generated by the test model match the results generated by their own. They will complete a detailed reconciliation exercise of the financial statements and key output metrics and seek to understand any variances.
At Gridlines, we prefer to adopt the Parallel Build approach, as it offers a number of key benefits versus Cell by Cell.
To find out more about our approach to Model Audit, contact us today. We’d love to hear about your project.
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