Statistical Techniques for Analytical Review in Auditing

Statistical Techniques for Analytical Review (STAR) is a computer program in Deloitte & Touche's audit practice group. This program integrates audit decisions about materiality, reliability, and other audit objectives with regression analysis and other statistical techniques that can be used in analytical review. This volume has been written from the perspective of an external auditor with financial audit experience. It provides a basic foundation of regression for the marketplace without using complicated mathematics. "Statistical Techniques for Analytical Review" in Auditing provides the understanding and implementation of the STAR program in four stages: a description of the audit philosophy behind STAR's success, providing an overview of the program and discussing the analytical review techniques that are used; a description of the basic concepts and formulae needed for regression analysis and other statistical techniques that are incorporated into the program, with explanations of both simple, two-variable models and the more complex multivariate models; a definition of audit and statistical objectives, showing how to design and improve audit models for analytical review, and shows how to use STAR results; details of the statistical tests and transformations performed by STAR and an explanation of the mathematics behind multivariate regression.

Table of Contents:
OVERVIEW; The Audit Environment; Analytical Review; BASIC CONCEPTS OF REGRESSION ANALYSIS; The Simple Regression Model; The General Regression Model; The Audit Interface; AUDITING APPLICATIONS OF REGRESSION ANALYSIS; Designing Audit Models; Completing Audit Applications; MORE ADVANCED STATISTICAL CONCEPTS AND TECHNIQUES; Statistical Tests and Transformations; Multivariate Regression Computations; Appendices; Index.

About the Author :
KENNETH W. STRINGER is a former partner with Deloitte, Haskins & Sells, predecessor of Deloitte & Touche LLP, where he served as director of professional services for the international firm and, earlier, as partner-in-charge of accounting and auditing services for the U.S. firm. Mr. Stringer introduced a number of innovative systems to the firm's audit practice, including the Audit Sampling Plan, STAR, and Auditape--the first generalized audit retrieval software package developed by a national accounting firm. After retiring in 1981, he spent six years as a professor of accounting at the New York University Stern School of Business. Mr. Stringer served on various AICPA com-mittees, including the Committee on Auditing Procedures and the Commission on Auditor's Responsibilities. As chairman of the relevant subcommittee, he introduced an audit risk model that related materiality and reliance on internal control to substantive audit tests of details and analytical review procedures. He also played a leading role in drafting a related pronouncement issued by the committee in 1972. The concepts in that pronouncement underlie the audit philosophy expressed in this book and have been the subject of elaboration in several subsequent statements on auditing standards. In 1981, Mr. Stringer received the first Distinguished Service Award presented by the Auditing Section of the American Accounting Association for "outstanding service to the academic and professional practice of auditing." TREVOR R. STEWART is Director of Accounting & Auditing Technology for Deloitte & Touche LLP, where his responsibilities include the development, support, and implementation of software for the firm's worldwide accounting and auditing practice. Mr. Stewart is a Chartered Accountant (South Africa). He has a B. Com. degree from the University of Port Elizabeth and a B.Sc. degree in mathematics from the University of Cape Town, South Africa. He joined the audit department of Deloitte's Johannesburg office in 1971 and has also served the firm in London and New York.