Conclusion first
“Audit-ready” is not a quality of the number; it is a quality of the evidence behind it. A mark is audit-ready when an auditor can challenge any figure on it and the valuation answers the challenge from stored evidence rather than from recollection. Most marks that fail an audit do not fail because the value is wrong — they fail because the chain from inputs to output cannot be reconstructed. Five tests separate an audit-ready mark from one that merely looks finished.
The five tests
| Test | The auditor's question |
|---|---|
| Calibration | Does the Day-1 fair value equal the price actually paid, and is the spread solved from it? |
| Sensitivity | How does fair value move if each significant unobservable input changes to a reasonably possible alternative? |
| Reproducibility | Can this exact mark be regenerated from the recorded inputs? |
| Independence | Does the valuer have any stake in the outcome — performance fees, a transaction mandate, or being the fund's own team? |
| Documentation | Is every assumption either an explicit input or a documented default, with overrides traced? |
Where marks fail the test
- An uncalibrated Day-1 value. The most common finding: a model value that does not tie to the transaction price, implying a Day-1 gain or loss no one can explain.
- A sensitivity table built by hand at quarter-end. Disclosed because the standard demands it, but not actually produced by the model that set the mark — so it does not reconcile.
- A mark that cannot be re-run. The spreadsheet has moved on; the figure from two quarters ago can no longer be reproduced from its inputs.
- A subjective “own estimate.” A risk-free rate plus an analyst’s view of value, rather than a market-calibrated spread — the classic IFRS 13 objection.
How Verus is audit-ready by construction
- Calibration. The spread is solved from the Day-1 transaction price and carried forward with a traced, sourced drift. See Day-1 calibration.
- Sensitivity. Every run reprices the facility across explicit input bumps and at seven spread percentiles, so the IFRS 13 disclosure is a model output, not an afterthought.
- Reproducibility. Deal terms, assumptions and runs are content-addressed; a historical mark re-runs to the basis point against the engine version that produced it.
- Independence. Markst is a valuation-only provider with no transaction-side interest in the positions it marks. See the conflicts-of-interest policy.
- Documentation. Every figure is an input, a field, or a documented default; overrides leave an explicit trace; method changes ship under versioned methodology releases.
Related
- Deterministic IFRS 13 valuation — the method that makes these tests passable.
- Independent valuation and conflicts of interest — the independence test in depth.
- Model risk — the validation framework behind the method.
- Sample report — an audit-ready output, screen by screen.
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