ey financial modeling services · ey conducts detailed analysis of the logical integrity,...
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A financial model is a key tool for quantitative evaluation of the investment attractiveness of companies and projects. Further, it is used to optimize capital structure, including public funds invested.
A financial model review conducted by EY enables the model’s developers and users to be confident in the accuracy of its financial calculations.
We test financial models using our ACE (“Analyze, Create, Enhance”) proprietary special-purpose tool. As such, we deliver independent confirmation to companies, lenders, investors, and state bodies that the model has been constructed appropriately in all material aspects, so as to achieve its objectives, and is free from material errors.
EY conducts detailed analysis of the logical integrity, arithmetic accuracy, and correct presentation of key project assumptions in the model, including consistency with financial, project, and tender documentation. EY experts review accounting and tax assumptions against applicable legislation. We also assess macros designed to optimize the financial model, eliminate circular references, and perform sensitivity analysis. Thus, our financial model review helps to detect significant computational errors made while the model is built, and to mitigate the risk of making poor investment decisions.
Financial model review: key steps
When is a financial model review needed?
Example 1. Compliance with bidding requirements
Bidders for PPP investment projects need their financial models to be verified against tender documentation requirements to make sure that they contain complete information, feature logical integrity and arithmetic accuracy, and are based on correct accounting, tax, and other assumptions.
Example 2. Finance raising
Finance providers need a review of potential borrowers’ financial models where project cash flows are the only source of debt repayment. This includes project finance, PPP projects, and regulated activities.
Example 3. Compliance with covenants
Regular reviews of a borrower’s financial model may be a loan agreement requirement.
EY financial modeling services: financial model reviews
• Preliminary discussion of the model with the client: objectives, assumptions, and calculations
• Analysis and review of the model’s structure • Detailed and step-by-step review of the
model’s logical integrity
• Comments on material errors• Communication with the model’s developers
when amending it• Comparison and checking of the updated model
(this may be an iterative process)
• Final version review • Validation of sensitivity analysis findings• Model review report
Model draft Comments
Final version of the model
Opinion letter
Benefits of our approach to financial model reviews• Special-purpose reports: A model review report prepared by EY may be attached
to an investment application or a bid, in order to show the company’s capacity to comply with loan agreement requirements or for other purposes.
• Experienced team: We offer financial model review services for projects across many industries and bring our clients teams made up of highly-qualified professionals with relevant expertise and deep knowledge.
►• Agility: Our model review processes allow us to meet tight deadlines while providing exceptional quality.
►• Proprietary tool for review: We have designed the ACE, an automated tool for technical reviews of financial models. Our tool allows us to detect inconsistencies in calculations, hidden changes in formulas, and manual entries in calculation sheets, as well as compare model versions to identify and describe changes by calculation blocks and prepare detailed reports on automated review findings, etc.
►• Focus on your needs: We place a particular emphasis on the needs of model users. For instance, we can confirm the accuracy of a grantor’s payment calculation under a PPP project in accordance with tender documentation or the concession agreement.
• Connectivity: We closely interact with our clients to ensure the smooth exchange of information, quality improvements to financial models, and the prompt issue of the opinion letter on the review findings.
EY’s financial model review projects — selected credentials
Development, reconstruction, and operation of an airport in the North-Western Federal District EY regularly reviewed the project model to assist the client with meeting loan covenants
Regional medical rehabilitation centerEY reviewed the financial model of a bidder, including its tax and accounting assumptions
Construction of a hospital in the North-Western Federal DistrictEY reviewed the financial model of a bidder, including its tax and accounting assumptions
Toll road (relief road) in MoscowEY reviewed the project financial model, including its tax assumptions
Highway bridge across the Lena RiverEY reviewed the financial model and financing plan of a bidder against tender documentation
Construction of a coal terminal at a sea port in the Far East Construction of medical centers in the Moscow region
Construction of a road in the Volga Federal District EY reviewed the project financial model of a bidder, including its tax and accounting assumptions
Construction of medical centers in the Moscow regionEY reviewed the financial model and tax and financial aspects of the concession agreements
Airport in the Southern Federal DistrictEY reviewed the project financial model for a potential investor
Development of the city parking system in the North-Western Federal DistrictEY reviewed the financial model and provided advisory services on financial, accounting, and tax issues
Contacts
Anna GusevaPartner, Transaction AdvisoryTel.: +7 (495) 641 [email protected]
Sergey LuzanDirector, Transaction Advisory Tel.: +7 (495) 755 [email protected]
EY Assurance | Tax | Transactions | Advisory
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