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| Author: | Chen, Y. Leitch, R. A. |
| Title: | The error detection of structural analytical procedures: A simulation study |
| Journal: | Auditing: A Journal of Practice and Theory
1998 : FALL, VOL. 17:2, p. 36-70 |
| Index terms: | Models Risk Simulation USA |
| Freeterms: | Comparative analysis |
| Language: | eng |
| Abstract: | Given the requirement of the Statements on Auditing Stamdards (SAS) 56 and the increasing pressures to minimize audit costs, there is need for more sophisticated analytical procedures able to increasing the effectiveness and efficiency of an audit. This study extends the work of Wheeler and Pany (1990) and Wild (1987) and investigates the prediction and error detection performance of structural analytical procedures using the monthly financial statements of a large number of simulated companies representing various sales behaviour patterns and degrees of economic stability. There is a generic structural model developed. When compared to the ARIMA, X-11, and Martingale models, the structural model performs better from an overall perspective. However, it does not perform better than the stepwise model which indirectly incorporates information on the structure of an organization's economic activities. |
SCIMA