31ten was engaged to audit the financial model for Sutton District Energy Network (SDEN), a special purpose vehicle running a district heat network. The Council required assurance that the model projections could be relied upon for ongoing lending, as well as advice on how the model could be improved to aid long-term business planning. Key objectives for the audit included:
31ten’s approach began with mapping out the model’s structure and key outputs to establish a clear understanding of its flow and functionality. The audit was then divided into four primary components: accuracy review, assumptions review, usability review and sensitivity testing. This structured approach ensured that each of the Council’s objectives could be addressed comprehensively.
During the audit, findings were documented in a log file with categories used to highlight to the client the severity of any points raised. This ranged from ‘nice to have’ to ‘calculation error’ to allow effective prioritisation of future model changes. At each milestone of the project, check in sessions were utilised to discuss interim findings. A key part of 31ten’s approach was to work with the owner of the model to ensure that recommendations were appropriate in the context of the project and provide maximum value to the client going forward. Following the conclusion of the review, our findings were presented in a concise report which detailed our recommendations as part of each audit component.
As well gaining an appreciation of the reliability of current forecasts and their sensitivity to the latest government energy price forecasts, the client was able to understand a range of areas for model improvement and take an informed decision on how to proceed to ensure it could be used as an effective business planning tool.