New financial modelling guide aims to reduce risks for businesses

Financial modelling guideA new financial modelling guide authored by the ICAEW Corporate Finance Faculty and RSM aims to help businesses of all sizes plan and reduce risk. With improvements in Excel, financial modelling is a powerful tool for analysing transactions and increasing the efficiency of deal processes. The guide examines best practice framework and applied best practice financial modelling.

Head of ICAEW Corporate Finance Faculty, David Petrie, said:

'Financial models are ubiquitous. It is difficult to imagine a business or a corporate finance deal without one, and the importance of applying best practice modelling approaches cannot be overstated.'

'As we have seen so clearly demonstrated by the impact of the Brexit vote, the financial world does not like uncertainty. Tools that can help plan and reduce business and commercial risk are of vital importance. Since the guide was published four years ago, much has changed in the world of modelling. So, we have updated our previous guidance to try and ensure that businesses, and their advisors, have what they need to build robust models as a key element in effective decision making.'

Alistair Hynd, Head of Project Finance, Modelling and Valuations at RSM Corporate Finance LLP and author of the guide, added:

'There has recently been a sharpened focus on financial modelling risk following a number of high profile cases of flawed financial models - the West Coast Mainline debacle and Reinhart and Rogoff’s GDP forecasts among the most notable. In addition there has been an increased emphasis on the importance of financial modelling standards as well as the continuing development of Microsoft Excel. Most pertinently, in a post Brexit climate, robust, accurate, and timely scenario planning is now more important than ever. The launch of this new guide is therefore very timely, and the updates should ensure that it remains relevant and helpful to its target audience.'

The new guide is available to download here.