Improving the Accuracy and Precision of Analytical Procedures Using Multilocation Data

45 Pages Posted: 14 Jan 1998  

Robert D. Allen

University of Utah - School of Accounting and Information Systems

Mark S. Beasley

North Carolina State University

Bruce C. Branson

North Carolina State University - College of Management

Date Written: November 1997

Abstract

According to SAS No. 56, Analytical Procedures, the use of disaggregate, individual location data can improve the effectiveness of analytical procedures used in multilocation audits. Using disaggregate data obtained from a multilocation company, we examine two issues: 1) whether the accuracy and precision of analytical procedures is enhanced by including contemporaneous observations of the account balance in the prediction model, and 2) whether expectations developed using disaggregate data are more accurate and precise than expectations based on aggregate data only. We find that the contemporaneous models are consistently more accurate and precise and that the summation of individual location account balance forecasts based on disaggregate, contemporaneous models are superior to expectations developed using aggregate, company-wide data only. The results indicate that when auditors are generating expectations of company-wide balances, that disaggregate, contemporaneous models will provide predictions that are both more accurate and more precise than company-wide, aggregate models.

JEL Classification: M49, C43

Suggested Citation

Allen, Robert D. and Beasley, Mark S. and Branson, Bruce C., Improving the Accuracy and Precision of Analytical Procedures Using Multilocation Data (November 1997). Available at SSRN: https://ssrn.com/abstract=53200 or http://dx.doi.org/10.2139/ssrn.53200

Robert D. Allen

University of Utah - School of Accounting and Information Systems ( email )

1645 Campus Center Drive
Salt Lake City, UT 84112
United States
801-581-7208 (Phone)
801-581-7214 (Fax)

Mark S. Beasley (Contact Author)

North Carolina State University ( email )

Box 8113
Raleigh, NC 27695-8113
United States
919-515-6064 (Phone)
919-515-4446 (Fax)

Bruce C. Branson

North Carolina State University - College of Management ( email )

Hillsborough Street
Raleigh, NC 27695-8614
United States
919-515-4435 (Phone)
919-515-4446 (Fax)

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