The Handbook of Financial Modeling: A Practical Approach to Creating and Implementing Valuation Projection Models

Model Testing and Auditing

This chapter examines some essentials to modeling that are actually not in the hands of the modeler, namely the testing and model audits. Both model testing and model audits are broadly referred to as model reviews or peer reviews. Ironically, model reviews are not performed by the modeler who has created the model. They are instead the domain of an independent person or body. Although it may seem odd that I am including this chapter, I would urge anyone who is serious about modeling to give attention to it. As a modeler, you should have a basic knowledge and appreciation of how testing and auditing are conducted. Not ...