IDEAS home Printed from https://ideas.repec.org/a/eme/medarp/medar-02-2020-0767.html
   My bibliography  Save this article

Micro Data analytics: a test for analytical procedures

Author

Listed:
  • Pierluigi Santosuosso

Abstract

Purpose - Despite the potential of Big Data analytics, the analysis of Micro Data represents the main way of forecasting the expected values of recorded amounts and/or ratios for small auditing firms and certified public accountants dealing with analytical procedures. This study aims to examine how effective Micro Data analytics are by testing the forecast accuracy of the ratio of the allowance for doubtful accounts to the trade accounts receivable and the natural logarithm of the net sales of goods and services, the first exposed to a greater uncertainty than the second. Design/methodology/approach - Micro Data are low in volume, variety, velocity and variability, but high in veracity. Given the over-fitting problems affecting Micro Data analytics, the in-sample and out-of-sample forecasts were made for both tests. Multiple regression and neural network models were performed using a sample of 35 Italian industrial listed companies. Findings - The accuracy level of the forecasting models was found in terms of mean absolute percentage error and other accuracy measures. The neural network model provided more accurate forecasts than multiple regression in both tests, showing a higher accuracy level for the amounts exposed to less uncertainty. Moreover, no generalized conclusions on predictors included in the models could be drawn. Practical implications - The examination of forecast accuracy helps auditors to evaluate whether analytical procedures can be successfully applied to detect misstatements when Micro Data are used and which model gives the most accurate forecasts. Originality/value - This is the first study to measure the forecast accuracy of the multiple regression and neural network models performed using a Micro Data set. Forecast accuracy is crucial for evaluating the effectiveness of analytical procedures.

Suggested Citation

  • Pierluigi Santosuosso, 2021. "Micro Data analytics: a test for analytical procedures," Meditari Accountancy Research, Emerald Group Publishing Limited, vol. 30(1), pages 193-212, February.
  • Handle: RePEc:eme:medarp:medar-02-2020-0767
    DOI: 10.1108/MEDAR-02-2020-0767
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/MEDAR-02-2020-0767/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.emerald.com/insight/content/doi/10.1108/MEDAR-02-2020-0767/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1108/MEDAR-02-2020-0767?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:medarp:medar-02-2020-0767. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.