Top 5 Auditing Tools for Financial Models

auditing tools in excel

What makes a good financial model?

A financial model is a tool to forecast a business’s financial performance in the future. The forecast is typically based on the company’s historical performance and assumptions about the future. Besides, it requires to prepare the information from an Income Statement, Balance Sheet, Cash Flow Statement, and supporting schedules.

A financial model is usually it’s built-in MS Excel. So, being good at modeling means being outstanding in Excel. But also to have a good knowledge of accounting and corporate finance.

In our article “Financial Modeling Best Practiceswe discuss what makes a good financial model:

  1. Well structured with a good layout.
  2. Easy to follow and understand.
  3. Drivers and assumptions clearly laid out.
  4. Simplicity over complexity.

Following this guidance, you will build a great model. It would be easy to audit and understand by others.

This article will give you the best five auditing tools for a built-in financial model in Excel. In addition, you will be able to review your own or someone else’s models.

Auditing tools in Excel

1. Checking formula in the cell

Excel shortcut for that is F2 (Function 2 on your keyboard).

auditing tools for financial models
auditing tools for financial models
auditing tools for financial models

2. Checking all formulas on the spreadsheet

Excel shortcut for that is Ctrl + `.

auditing tools for financial models
auditing tools for financial models
auditing tools for financial models

3. Tracing precedents and dependents for the cell

In this case, the Excel shortcut for tracing precedents is Alt M P.

auditing tools for financial models
auditing tools for financial models
auditing tools for financial models
auditing tools for financial models

To remove arrows, use the following Excel shortcut Alt M A A.

auditing tools for financial models
auditing tools for financial models
auditing tools for financial models
auditing tools for financial models
auditing tools for financial models

The Excel shortcut for tracing dependents is Alt M D.

auditing tools for financial models
auditing tools for financial models
auditing tools for financial models
auditing tools for financial models

4. Checking links

Excel shortcut for that is Ctrl + [.

auditing tools for financial models
auditing tools for financial models
auditing tools for financial models

Now let’s come back to the previous cell in one click. Excel shortcut for that is F5, Enter.

auditing tools for financial models
auditing tools for financial models
auditing tools for financial models
auditing tools for financial models

5. Working with comments.

It is important to include comments in your financial model. You should explain why and from where you would derive some numbers. Besides, you should be able to explain some difficult calculations. So, when coming back to your model, you understand it easily. Users will find it easy to follow.

Excel shortcut to insert and show the comment is Shift+F2.

auditing tools for financial models
auditing tools for financial models
auditing tools for financial models
auditing tools for financial models
auditing tools for financial models
auditing tools for financial models
auditing tools for financial models

Conclusion

We showed you the top five auditing tools for financial models in Excel for reviewing your own or somebody else’s model. There is so much more you can do in Excel to build financial models quickly and efficiently. Learn Excel Efficiency and Financial Modeling by playing educational games with keySkillset.

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