Which items should be included in model footnotes to aid understanding and auditability?

• A. Only inputs and outputs with no methodology.
• B. Marketing terms and brand logos.
• C. Assumptions with sources, driver definitions, rounding rules, version history, data sources, and non-standard treatments or adjustments.
• D. Unrelated corporate policies.

Answer: (C)

Footnotes in a financial model should document the how and why behind the numbers so the model is transparent and reproducible. The best footnotes include the assumptions with sources, definitions for the drivers, rounding rules, version history, data sources, and any non-standard treatments or adjustments. This combination provides a clear trail: you can see where inputs come from, how each driver maps to outputs, how values are rounded, who made changes and when, and exactly what adjustments were applied beyond standard calculations. That level of detail makes the model easier to understand, review, and audit, because someone else can trace results back to original sources and reproduce the calculations.

Including only inputs and outputs with no methodology leaves the arithmetic and rationale opaque, making verification and replication difficult. Marketing terms and brand logos have no bearing on the model’s calculations or audit trail. Unrelated corporate policies don’t inform how the model produces numbers or how assumptions were chosen, so they would clutter rather than aid understanding.