Financial Modelling ServicesModel review

Our approach to model reviewOur model review service provides our clients with comfort and assurance on their models, helping to safeguard investor returns and augment their financial due diligence or internal control processes.

We are able to provide corporations, lending banks, equity investors and other parties independent assurance that a model has been built materially in accordance with its objectives and is free from material errors.

Our model review team provides:

► A market leading team: we provide assurance on over 100 models annually covering all key sectors. We employ qualified and experienced staff familiar with working with transaction and operational models.

► Structured methodology: we have developed and apply a tried and tested process to ensure we complete our review within your timetable whilst maintaining the necessary rigour.

► Reporting and reliance: our engagement letters and reports follow industry standard formats, designed to meet your reporting requirements.

► Tailored scope: we can tailor our review to address specific issues or critical model sections where a more extensive review is not required.

► Collaboration: we work closely with you to understand the model and relevant transaction structure and to work through our review findings expeditiously.

► Competitive fees: based on the size and complexity of the model and on the scope of work required. Our fees are designed to satisfy our clients’ need for a fixed model review cost and a flexible review approach.

Who needs model review services?Model reviews can be performed to support the development and use of financial models in many different circumstances. For example, we have performed reviews for the following:

Example 1 — Debt borrowed against contracted or regulated cash flows:

Lenders have particular interest in financial models prepared to support leveraged transactions to acquire or develop projects which generate predicable cash flows (for example, project finance, PPP or regulated businesses). Lenders are likely to want to see that a review of the transaction model or operating model has been performed in such cases.

Example 2 — Business plans for regulated businesses:

Regulated companies are commonly required to provide business plans to their regulators. Models prepared to support such plans are often subject to model review before submission to the regulator.

Example 3 — Meeting corporate governance requirements:

Some companies establish internal regulation to control risks associated with significant investment or strategy decisions. These controls may require the review of models prepared to support major business decisions.

review | revise | report

► Early reporting of material errors

► Report of interim findings

► Ongoing dialogue with developer

► Review of new model versions (model updates)

► Review of scenarios and sensitivities

► Review of completed model

► Draft and completion of final model review report

Draft model Interim findings

Updated model(s)

Opinion letter

► Initial kick-off meetings

► Detailed, line-by-line logical integrity review

► Project document assessments

► Initial analytical review

Use of specialised automated spreadsheet toolsWe have developed our own automated application (’Analyse’, ‘Create’, ‘Enhance’ —‘ACE’) to support our review work. This tool assists us in timely delivery of highly valued work.

This includes ‘mapping’ of Excel worksheets in order to identify e.g., logical characteristics (unique formula), hard coded numbers, summation ranges, the flow of data through the model and many more features. The software also includes a ‘comparison’ capability which compares worksheets for differences as well as producing comparison maps. This allows us to review new versions of workbooks efficiently for changes as well as being able to quickly compare similar worksheets in different models. This process will greatly improve the efficiency of our review and reduce the time we require from you to deal with our findings.

Detailed review of codingOur team will review the coding in the model line by line, together with any macros of relevance to the logical integrity of the model. This detailed approach is not followed by all providers of model review services.

Analytical reviewThis is a key part of our methodology. Through a variety of analytical procedures we can quickly identify potential errors in the coding and the commercial/operational peculiarities of the model.

SensitivitiesWe review your chosen designated sensitivity cases and include the results in our final model review report.

Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. Ernst & Young LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material.

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