What is the first step in using regression analysis as part of audit data analytics?
A)Estimate the prediction equation using data that is not currently being audited
B)Validate the prediction equation from a statistics point of view
C)Compare the predicted values (auditor's expectation) with the actual values
D)Use the regression equation to make predictions for the data being currently audited

Question

Quizplus · Accepted Answer

The first step in using regression analysis as part of audit data analytics is to estimate the prediction equation using data that is not currently being audited. This involves gathering historical data and identifying the relevant variables to include in the regression model. Once the prediction equation has been estimated, it can be used to make predictions for the data being currently audited and compared with the actual values to assess the effectiveness of the model. However, validating the prediction equation from a statistical point of view is also an important step and should be done before using the model for predictive purposes.

What Is the First Step in Using Regression Analysis as Part