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The 'best practice described here are generally accepted principles in the financial modelling community.
The big four accounting firms and financial modelling specialists would all come up with a similar list.
Risk in Spreadsheet modelling
Building spreadsheet models is a high risk activity. There are legendary horror stories about the consequences of getting it wrong, many of which can be found at www.panko.com, a website maintained by Ray Panko of
the University of Hawaii. He has made extensive studies of the risks of poor modelling and how to avoid it. There are software packages available to assist in designing or auditing spreadsheet models, whose software is designed to find areas of a spreadsheet that do not conform to the following golden rules. One of my favourites can be found at www.themodelanswer.com
Where to start
Before you start out with a model, think about its objectives. Too
many models evolve over a period and the result is often something that wasn't designed for its current purpose.
There are some golden rules which will help to build more robust and easily maintained models. Click here for specifics on Balance Sheets, keeping inputs separate (including no hard coded numbers) and building single formulae for a whole row -why and how.
If you are looking for examples of how to do some of the more difficult things a typical model will require, you can download a workbook of examples.
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