Proposed Spreadsheet Transparency Definition and Measures
This addresses the problem for auditors and financial modelers who need to evaluate and ensure model transparency, but it is incremental as it builds on existing debates without introducing a new paradigm.
The paper tackles the lack of a clear definition and measures for transparency in financial spreadsheet models, proposing a specific definition that enables the creation of measures and automation tools for auditors and objective comparisons for modelers.
Auditors demand financial models be transparent yet no consensus exists on what that means precisely. Without a clear modeling transparency definition we cannot know when our models are "transparent". The financial modeling community debates which methods are more or less transparent as though transparency is a quantifiable entity yet no measures exist. Without a transparency measure modelers cannot objectively evaluate methods and know which improves model transparency. This paper proposes a definition for spreadsheet modeling transparency that is specific enough to create measures and automation tools for auditors to determine if a model meets transparency requirements. The definition also provides modelers the ability to objectively compare spreadsheet modeling methods to select which best meets their goals.