Financial Model Validation

Detailed and often complicated financial projections prepared by promoters or corporates seeking funds or by equity houses or lenders investing in a deal are prone to arithmetical inaccuracies, errors in employing assumptions or mistakes in inserting formulae in a worksheet. This could potentially lead to inaccurate, or worse, wrong financial projections and expected results, jeopardizing a potential transaction.

What is a Financial Model Validation?

A financial model validation is a technique of analysing the accuracy and appropriateness of financial projections and the model used to prepare the forecasts. This validation raises valid questions on the data, the assumptions used, and the parameters considered while building the projections.

Why do you need a Model Auditor?

Independently validated models provide assurance to the model author(s), investors in the deal or other interested parties that there is logical integrity, internal consistency and arithmetical accuracy in all material respects, of the formulae, calculations and algorithms applied within the model and that major assumptions have been uniformly and consistently utilized.

Financial projections and their validation are both complex processes and can be fraught with biases that creep in from interests of the managers or business owners. Hence there is immense merit in outsourcing validation services.

PKF’s team of professionally qualified and experienced consultants is adept at preparing complex and detailed financial projections, and hence well placed to validate varied models used in financial transactions. Extensive modelling capabilities and business knowledge, enables our team to identify all kinds of errors and provide forward looking and constructive solutions.

Customer Story Highlight

More Stories