audit-xls

Audit Spreadsheet

Audit formulas and data for accuracy. Scope determines depth.

Step 1: Determine scope

If not given, ask:

Scope?

• selection — currently selected range
• sheet — current active sheet
• model — whole workbook + financial-model integrity checks (BS balance, cash tie-out, roll-forwards, logic sanity)

Use model for DCF, LBO, 3-statement, merger, comps before IC or client delivery.

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Step 2: Formula-level checks (ALL scopes)

Check	What to look for
Formula errors	#REF!, #VALUE!, #N/A, #DIV/0!, #NAME?
Hardcodes inside formulas	=A1*1.05 — 1.05 should be a cell reference
Inconsistent formulas	Breaks the pattern of its row/column neighbors
Off-by-one ranges	SUM/AVERAGE that misses first or last row
Pasted-over formulas	Looks like a formula but is hardcoded
Circular references	Intentional or accidental
Broken cross-sheet links	References to cells that moved or were deleted
Unit/scale mismatches	Thousands mixed with millions, % stored as whole numbers
Hidden rows/tabs	Could contain overrides or stale calcs

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Step 3: Model-integrity checks (MODEL scope only)

Identify the model type (DCF / LBO / 3-statement / merger / comps / custom) and run the appropriate checks.

3a. Structural review

Check	What to look for
Input/formula separation	Inputs clearly separated from calculations
Color convention	Blue=input, black=formula, green=link, applied consistently
Tab flow	Logical order (Assumptions -> IS -> BS -> CF -> Valuation)
Date headers	Consistent across all tabs
Units	Consistent (thousands vs millions vs actuals)

3b. Balance Sheet

Check	Test
BS balances	Total Assets = Total Liabilities + Equity (every period)
RE rollforward	Prior RE + Net Income - Dividends = Current RE
Goodwill/intangibles	Flow from acquisition assumptions (if M&A)

If BS doesn't balance, quantify the gap per period and trace where it breaks first.

3c. Cash Flow Statement

Check	Test
Cash tie-out	CF Ending Cash = BS Cash (every period)
CF sums	CFO + CFI + CFF = delta Cash
D&A match	D&A on CF = D&A on IS
CapEx match	CapEx on CF matches PP&E rollforward
WC changes	Signs match BS movements (delta AR, delta AP, delta Inv)

3d. Income Statement

Check	Test
Revenue build	Ties to segment/product detail (for healthcare services: same-store / de novo / M&A reconciles to total)
Tax	Tax expense = Pre-tax income x tax rate (allow for deferred tax adj)
Share count	Ties to dilution schedule (options, converts, buybacks)

3e. Circular references

• Interest -> debt -> cash -> interest is a common intentional circ in LBO/3-stmt
• If intentional: verify iteration toggle exists and works
• If unintentional: trace the loop and flag how to break it

3f. Logic & reasonableness

Check	Flag if
Growth rates	>100% revenue growth without explanation
Margins	Outside industry norms
Terminal value dominance	TV > ~75% of DCF EV (yellow flag)
Hockey-stick	Projections ramp unrealistically in out-years
Compounding	EBITDA compounds to absurd $ by Year 10
Edge cases	Model breaks at 0% growth, negative EBITDA, negative leverage

3g. Model-type-specific bugs

DCF:

• Discount rate applied to wrong period (mid-year vs end-of-year)
• Terminal value not discounted back
• WACC uses book values instead of market values
• FCF includes interest expense (should be unlevered)
• Tax shield double-counted

LBO:

• Debt paydown doesn't match cash sweep mechanics
• PIK interest not accruing to principal
• Management rollover not reflected in returns
• Exit multiple applied to wrong EBITDA (LTM vs NTM)
• Fees/expenses not deducted from Day 1 equity

Merger:

• Accretion/dilution uses wrong share count (pre- vs post-deal)
• Synergies not phased in
• Purchase price allocation doesn't balance
• Foregone interest on cash not included
• Transaction fees not in sources & uses

3-statement:

• Working capital changes have wrong sign
• Depreciation doesn't match PP&E schedule
• Debt maturity schedule doesn't match principal payments
• Dividends exceed net income without explanation

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Step 4: Report

Output a findings table:

#	Sheet	Cell/Range	Severity	Category	Issue	Suggested Fix

Severity:

• Critical — wrong output (BS doesn't balance, broken formula, cash doesn't tie)
• Warning — risky (hardcodes, inconsistent formulas, edge-case failures)
• Info — style/best-practice

For model scope, prepend a summary:

Model type: [DCF/LBO/3-stmt/...] — Overall: [Clean / Minor Issues / Major Issues] — [N] critical, [N] warnings, [N] info

Don't change anything without asking — report first, fix on request.

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Notes

• BS balance first — nothing else matters until it's fixed
• Hardcoded overrides are the #1 source of silent bugs
• Sign convention errors (cash outflows) are extremely common
• Note VBA-driven calculations that can't be audited from formulas alone