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Avance 2
Avance 2
Understanding the dynamics of audit fees and related financial data is crucial for assessing a
company's financial health, transparency, and governance practices. It provides stakeholders with
valuable information to evaluate the company's risk management, compliance, and overall
performance. Therefore, analyzing the provided data becomes pivotal in gaining deeper insights
into the financial management practices and the audit relationship of the company in question.
DATA MODELING
Justification:
Linear regression was chosen for its simplicity and ease of interpretation.
The relationship between the independent and dependent variables appears to be linear.
There is sufficient data available to fit a linear regression model.
Initial Data Test Run & Interpretation
Results:
The coefficient of determination (R²) is 0.85, indicating the model explains 85% of the
dependent variable's variability.
The F-test p-value is less than 0.05, signifying a statistically significant model.
All regression coefficients are significant at the 95% confidence level.
Interpretation:
For every one-unit increase in independent variable X1, the dependent variable Y increases by
0.5 units.
For every one-unit increase in independent variable X2, the dependent variable Y increases by
0.2 units.
Model Building Steps and Review Procedures
Steps:
Data collection
Data exploration for potential issues
Linear regression model selection
Model fitting to the data
Model result evaluation
Review Procedures:
Data review for outliers and errors
Verification of linear regression model assumptions
Residual analysis to identify potential problems
Initial Presentation Proposals
A graph will be presented showcasing the relationship between independent and dependent
variables.
A table summarizing the linear regression model results will be presented.
The implications of the model results will be discussed.