Trend Analysis
From Wikicpa
Trend Analysis is the most commonly used of all analytical review procedures. This analysis is a study of changes, from period to period, of a single account balance, group of accounts or department. This study can be as simple as comparing the amount of an expense account from one year-end to the next or a complex statistical analysis.
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Elements of
There are four elements of trend analysis that must be considered in choosing the correct study.
- Use of a casual or diagnostic approach
- Evaluate prediciton error
- Evaluate the data reliability
- Consider necessary follow-up
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Techniques of
The techniques for trend analysis are either single or multi variable models. The single variable model suggests an amount based upon a historical series of data. The multi-valiable model will often use a multi data steams or multi variables in the prediciton analysis.
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Single Variable Types
- Graphical
- Period-to-period
- Weighted average
- Moving average
- Statistical time-series
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Multi Variable Types
- Algebra equation method
- Linear regression method
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