Model Review, Auditing and Validation
Michael Rees · 2018
This chapter discusses Excel model auditing and related areas. It provides a structure to the definitions of possible objectives, outputs and activities of such processes. In model review contexts, it can be useful to consider three generic types of objectives and outputs. These include audit, validation, and improvement, restructuring or rebuilding. The first main part of a review process is to gain a general overview of the model. Once an overview has been established, it will generally be necessary to generate a very detailed understanding, especially of the logic and its flow. A model that has been validated should be appropriate for decision support. A genuine validation is often hindered by the fact that no sufficiently precise explicit specification has been documented. The basic objective of restructuring is to create a model which follows best practice principles, is transparent and is easier to test and validate than the original model.