Para 2.1.19 — MSO

2.1.19 Predictive analysis: This involves the creation of an expectation using not just financial data but also operating or external data, independent of the accounting system. The key word is “independent”; predictive testing can be used only where sufficient information independent of the accounting system is available. Therefore, it is also referred to as an “independent test of reasonableness”. For example, volume of imports and import duty rate may be used to predict import duty revenue. This is generally used in the execution stage. It often requires more time than simpler analytical procedures, especially since it involves collection of reliable data from outside the accounting system.