*FOURCAST Auditor* improves the auditing process

**Computer Powered Wire(less) Ultra-intelligent Real-time Monitor. Patent pending.**
Then, expand your ideas: utilize more data, quarterly cash flow data,
a user's monograph + case based & research journal references, and much much more!

* Scroll down to: Test Your FOURCAST Auditor IQ. >>>> *

You have entered the accounting page. Here you will find a case study and related data designed to teach the principles of modern time series analysis and forecasting.
Click on the reference below to select the teaching case and/or data set that you wish to download.
*CASE: False Alarms in Auditing Seasonal Cash Flows*

The data for this case (BUD,XON) are designed to work with all versions of the computer software FOURCAST, including the educational version * <(click here to download FOURCAST then install it). *
*DATA: BUD *

*DATA: XON *

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Time series analysis has many applications. How it is applied,
depends very much on the particular application. The following information
is intended as a guide to accounting applications.
Time domain time series models are limited in
their ability to represent cycles in the data. The moving window spectral antithetic (MWSA)
time series model is a frequency domain approach. It is an extension of the
time series concept, to a generalized automatic system that
decomposes the data into trend, periodic components and residuals.
*FOURCAST Auditor* employs the MWSA method and is particulary effective when the time series contains cyclical components.
It uses spectral analysis to perform an in depth analysis of the trend and cyclical components.
A moving time domain window is used to determine how each cyclical component is changing over time.
One component may be growing while another component may be shrinking (no other method can do this).
The cycles are forecast individually, then recombined. The forecast is dynamic.
When the forecast cycles are in alignment, turning points and changes in trend will occur. Also,
antithetic forecasting (combining 2 forecasts with negatively correlated errors) is used to reduce
bias and minimize forecasting error.
The main objective of this information, and the test that follows is a
critical examination of the the way in which we view this application,
and in general, the role of time series analysis and forecasting.

## Summary of accounting time series model building and forecasting

ASSUMPTION: Accounting data are made up of trend, cyclical, and random components.
Plot a time chart of the accounting data. Review the data for trend, cycles and changing variance.
Plot a histogram. Review the histogram for normality or lognormality. Consider what transformations
may be used to make the data stationary. Consider what window length would match the longest
dominant cycle. Select the appropriate transformations and window length then estimate the model.
AUDITING: Review the residuals for large deviations from zero. A large deviation implies a one of a kind
discrepancy for audit investigation.
FORECASTING: The forecast is used for planning purposes and for business valuation.

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Then, expand your ideas: utilize more data, quarterly cash flow data,
a user's monograph + case based & research journal references, and much much more!
# Test your *FOURCAST Auditor* IQ.

**Instructions**

This review is designed to determine how well you understand what *FOURCAST Auditor*
does, and how to put it to work for you. When you are satisfied that you
have answered the questions correctly, you are ready to use the program.
Please feel free to use this self-evaluation test as often as you like
(In order to receive anonymous feedback, click on the score button at the end
of the test.)
**Questions**

Answer each of the following multiple choice review questions by

selecting the response which is most immediately appropriate.

Then, expand your ideas: utilize more data, quarterly cash flow data,
a user's monograph + case based & research journal references, and much much more!
You can create** Special cause** SPC charts of residuals,** Common cause** SPC charts of fitted values
for **clear problem identification and reliable decision making.**

*http://www.fourcast.net*