Proposed Spreadsheet Transparency Definition and Measures

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.