11.29 The private sector financiers will require due diligence to be undertaken on the financial model as well as on the transaction as a whole. This will require an independent expert, usually a reputable accountant to perform a model "audit" to validate the integrity of the model. The purpose of this is to ensure that the model is adequately constructed and that the assumptions as stated are reflected in the model.
11.30 As the financial model is a complex spreadsheet this is an important stage in the process. However, it is likely that it will only be done towards the end of the process, as it is fairly costly and time consuming. NHS bodies should, therefore, question the participants at an early stage about the effect of inaccuracies in the model on the price. Ideally the participant should underwrite the accuracy of the model and should take the risk that the model audit proves the price to be incorrect, i.e. the additional cost should not be passed onto the NHS body.
11.31 As part of the NHS body's due diligence process, funding parties (bank/bond/equity) should be asked to confirm that the financial models are in accord with the documentation and that the parties themselves are signed up to the contractual/risk transfer position.