Module 5:

Data Accuracy and Visualization:

Model Review, Auditing,
Validation, and Visualizing Data
with Charts and PivotTables
Mr. Jonelle Angelo S. Cenita, MSIT, LPT
BAISEL2X: PROFESSIONAL ELECTIVE 2
Learning Objectives:
• Analyze the objectives, techniques, and applications of
model review, auditing, validation, and data visualization
using charts and PivotTables.
• Appreciate the significance of accurate data models and
effective visualizations in driving informed decision-
making.
• Apply tools, techniques, and methods to validate models
and create insightful visualizations with charts and
PivotTables.
Model Review, Auditing, and
Validation
Model Review, Auditing, and Validation
• This topic focuses on the critical steps in ensuring that
financial models are accurate, reliable, and fit for their
intended purposes. Each aspect of the topic is explained
below.
• 1. Objectives of Model Review, Auditing, and Validation
• 2. Processes, Tools, and Techniques
Objectives of Model Review, Auditing, and Validation
• The primary objectives of reviewing, auditing, and validating
financial models are to:
• 1. Ensure Accuracy
• Confirm that the model calculations, formulas, and logic produce
correct results.
• Check for errors, inconsistencies, or omissions in the model's
setup.
• 2. Enhance Reliability
• Ensure the model produces consistent results under various
conditions and data inputs.
• Verify the robustness of the model in handling real-world
scenarios.
Objectives of Model Review, Auditing, and Validation
• 3. Maintain Integrity
• Assess the transparency and clarity of the model, ensuring
stakeholders can understand and trust it.
• Verify that the model aligns with its intended purpose and
objectives.
• 4. Mitigate Risks
• Identify and correct potential risks that could arise from
using an erroneous model.
• Reduce the chances of financial loss or reputational damage
due to flawed outputs.
Objectives of Model Review, Auditing, and Validation
• 5. Regulatory and Compliance Assurance
• Ensure the model meets industry standards, regulatory
requirements, or internal compliance policies.
• 6. Facilitate Decision-Making
• Validate that the model provides reliable insights for making
informed business or financial decisions.
Processes in Model Review, Auditing, and Validation
• 1. Planning and Scope Definition
• Define the purpose and scope of the model audit.
• Identify the stakeholders, intended users, and expected
outcomes.
• 2. Model Review
• Perform a detailed examination of the model structure,
assumptions, inputs, and outputs.
• Ensure all variables and parameters are properly defined and
used.
Processes in Model Review, Auditing, and Validation
• 3. Auditing
• Conduct a systematic and independent examination of the
model’s calculations and logic.
• Validate the data sources, input integrity, and assumptions.
• Test for errors in formulas, linkages, and outputs.
• 4. Validation
• Compare model predictions or outputs against actual data or
benchmark models.
• Test the model's performance using scenarios or sensitivity
analyses.
• Use historical data to back-test the model and evaluate accuracy.
Processes in Model Review, Auditing, and Validation
• 5. Documentation and Reporting
• Document the findings, including detected issues, corrective actions,
and recommendations.
• Prepare a comprehensive report for stakeholders detailing the audit
and validation results.
Tools and Techniques
• 1. Error Checking Tools in Excel
• Use Excel's Error Checking and Trace Precedents/Dependents
features to trace formula errors.
• Employ Conditional Formatting to highlight inconsistencies in inputs
or outputs.
• 2. Scenario Analysis
• Utilize Excel’s What-If Analysis, Data Tables, and Scenario Manager
to test the model’s responses to different inputs.
Tools and Techniques
• 3. Sensitivity Analysis
• Evaluate how changes in key variables affect model outputs using
tools like Goal Seek or custom Excel formulas.
• 4. Validation Against Benchmarks
• Compare the model's outputs with industry-standard models or
validated data to ensure accuracy.
Tools and Techniques
• 5. Third-Party Audit Tools
• Use tools like OpenRefine for data integrity checks or financial
modeling tools such as Quantrix for advanced auditing.
• 6. Version Control
• Use versioning systems or tools like Excel Track Changes to maintain
a record of edits and updates to the model.
Tools and Techniques
• 7. Peer Reviews
• Involve other modelers or stakeholders in reviewing the model for a
fresh perspective.
• 8. Code Auditing for Complex Models
• If macros or VBA code are used, conduct a code review to ensure
functionality and security.
Visualizing Data with Charts and
PivotTables
Chart
• A chart is a graphical representation of data that allows
users to visualize and interpret numerical or categorical
data quickly. Charts help in identifying patterns, trends,
and relationships within data.
Chart
• Visualizations are crucial for data analysis because they
transform raw data into a visual format, making complex
information easier to understand, interpret, and
communicate.
Types of charts
• Visualizations are crucial for data analysis because they
transform raw data into a visual format, making complex
information easier to understand, interpret, and
communicate.
Line chart
• A line chart is a type of chart used to display data points
connected by straight lines, typically used to show trends
or changes over time.
• Line Chart use for trends over time.
Line chart
Bar chart
• A bar chart is a graphical display of data using
rectangular bars of varying lengths, where the length of
each bar represents the value of the data.
• Bar Chart use for comparisons among categories.
Bar chart
Pie chart
• A pie chart is a circular chart divided into slices to
illustrate proportions or percentages of a whole. Each
slice represents a category's contribution to the total.
• Pie Chart use for proportional data representation.
Pie chart
PivotTable
• A PivotTable is a data summarization tool in Excel that
allows users to organize, analyze, and explore large
datasets interactively. It helps summarize data by rows
and columns using aggregations like sums, averages, or
counts.
PivotTable
PivotTable
PivotTable
PivotChart
• A PivotChart is a dynamic graphical representation of a
PivotTable. It provides visual insights into the data
summarized by a PivotTable and updates automatically
when the PivotTable changes.
PivotTable and PivotChart: Sales Summary by Region
and Product
PivotTable and PivotChart: Monthly Sales Trends
PivotTable and PivotChart: Top Performing
Salespeople
PivotTable and PivotChart: Units Sold by Region and
Produc