Forecast Systems: Construction and Attestation.

The issue of the auditor's understanding of clients' forecasting systems is explored by analyzing auditor responses to questions concerning the construction and evaluation o f forecasts, and by comparing auditor responses to those of corporate executives. When asked what information and processes would be employed to develop a financial forecast, the respondents indicated that the informational inputs were very similar for each task, while the processes were dissimilar. Responses of financial planning executives are contrasted with those of the subject auditors. It is concluded that auditors currently may not place as much importance as do financial planning executives on the following forecast systems attributes: (1) the negotiation process, (2) formal models and (3) data input from external sources.