Reviews of Important Papers on Forecasting
Before 1985 Reviews
Review of:

Paul Danos and Eugene A. Imhoff (1983), “Factors affecting auditors’ evaluations of forecasts,” Journal of Accounting Research, 21, 473-494.

An experiment consisting of four realistic corporate cases was presented to 81 auditors from the Big Eight accounting firms. The results suggested that auditors tended to have more confidence in forecasting systems that:

(a) had centralized financial planning systems;

(b) rewarded the managers for accurate forecasts;

(c) did not make large revisions from the initial forecast. 

However, the auditors’ confidence in the forecasts was most significantly increased in cases where the forecasters had a good track record in predicting income statement data.