Auditing models

So, it is important to remain realistic about what auditing can achieve and the main limitations of our approach discussed in Sect

To begin with, the feasibility of model audits hinges on the construct validity of the metrics used to assess characteristics like robustness and truthfulness

A model audit is an important task in financial auditing that helps ensure that spreadsheet errors are eliminated

Also called a model review, it is commonly requested by banking organizations in order to make sure that the assumptions contained within their models are accurate, reassuring lenders and investors that the models can be relied upon

When an all-inclusive review of the model is needed, the scope of review is often extended to include tax and accounting, sensitivity testing, and the verification of data contained inside the model back to the legal documentation and original financing

For a full-scale model audit, the following elements are essential to be included: