Proposed Spreadsheet Transparency Definition and Measures

TL;DR

This paper introduces a clear definition of spreadsheet transparency, enabling the creation of measures and tools for objective evaluation and comparison of modeling methods to meet transparency standards.

Contribution

It proposes a specific transparency definition for spreadsheets, facilitating the development of measures and automation tools for assessment and comparison.

Findings

A formal transparency definition is established.

Measures and tools for transparency assessment are enabled.

Modelers can objectively compare spreadsheet methods.

Abstract

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.