Financial model quality in the investment process: standards, best practices and application

Improving the quality of financial models and the overall financial modeling process in abank or investment fund involves a number of activities: implementation of general requirements or recommendations, development of examples of full-scope financial models and calculations, as well as specific calculations, consideration of possible errors, analysis of the applicability of assumptions etc. The article provides a brief overview of available literature, sources and examples on financial modeling issues,considers a number offinancial modeling standards, the best practice approaches and rules for constructing financial models. The peculiarities and limitations of the use of universal templates when preparing afinancial model of an investment project or financial models for a set (pool) of investment projects arediscussed.