When a comprehensive review of the model is required, the scope of review is often extended to include tax and accounting, sensitivity testing and the checking of data contained within the model back to the original financing and legal documentation.
For this reason, the party conducting the review will provide a level of reliance on the form of an amount of liability.
[citation needed] The model audit is not, or at least not as a primary purpose, an insurance policy, it is for reducing the financial risk that is being taken on.
Model auditors may undertake a detailed 'bottom-up' review (cell-by-cell checks) of each unique formula, and/or combine a 'top-down' analysis such as the performance of calculations based upon the project's documentation There is some debate as to whether a "cell-by-cell" or performance approach is most appropriate.
In some cases, these will have almost the same scope as a financial close model audit (but with documentation review limited as this will still be being drafted), but in other cases, the pre-preferred bidder review will be limited to an agreed scope of procedures with the objective of maximizing risk mitigation whilst minimizing the fee.
The benefits of a pre-preferred bidder review is that it should lead to a reduced model audit fee at financial close.