Analytic Procedures: A Holdback-vetting Forecasting Model

Edward J. Lusk

Applied Finance and Accounting, 2017, vol. 3, issue 1, 65-74

Abstract: Introduction, Forecasting is now a best practices requirement for PCAOB audits. This is clear from AS 5 where Analytic Procedures are now a part of the Planning and Substantive Phases of the certification audits. In this regard, we are encouraged by the ¡°On the Go Stores¡± AP case offered by the AICPA, and have extended their case illustration of AP treatments. Study Pr¨¦cis, In our presentation, we initially consider the OLS Regression model utilized in the AICPA case and offer a vetting protocol to rationalize the use of this forecasting model in the AP phases. Then we move to a disposition analysis stage where the forecast information is posed in relief to the actual client value so as to ascertain if Extended Procedure investigations would be warranted. Results, We offer three Confidence Intervals drawn from the OLS modeling system that are formed from the Fixed Effect, Random Effects, and finally the Excel Platform for the 95% CI parameter set. Impact, The protocol set is programmed in an open-access VBA Decision Support System which is available free as a download with no restriction on its use.

Keywords: OLS regression; disposition; extended procedures (search for similar items in EconPapers)
Date: 2017
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