Bank on Wipfli - Blog and Podcast


Back to Basics

May 03, 2017
By: Sheila R. Fisher
Financial Institutions

As a mother with my first school-aged child, I have realized no one warned me about the amount of patience I was going to need once my child brought home homework, especially since my five-year-old already “knows it all”—just ask him! He completed a nightly assignment and was proud to show me. As I reviewed it, I pointed out to him that cucumbers is not spelled Qcumbrs, there should not be a capital “T” in with, and his period should not be the same size as his lowercase “a.” His response was, “I know.” While it is good to have confidence that something is done right, it is even better to have validation!

Financial institutions prepare numerous reports and run various models that provide essential information for making important decisions. Are you confident the information received is accurate because you believe it to be true or because someone has checked it over?


Institutions may run a number of different models today, including models for the allowance for loan and lease losses (ALLL) and asset/liability management (ALM). These models can assist management with loan loss estimates and managing interest rate risk, but they can help us only if we know they are presenting accurate information. We may believe we can trust the model because we know the vendor’s product or we believe our processes and controls are operating effectively, but without checking it, we can’t know for sure whether we should be using the information in our decision making. Model validations evaluate internal controls surrounding the model, compare the policy in place to the inputs and methodology used in the model, and test the accuracy of the model’s output.


Have you checked your “assignment” recently? If not, let us know. A Wipfli model validation can give you the confidence to say, “I know it’s right!” 


Sheila R. Fisher, CPA
Senior Manager
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