Auditor Change Prediction Using Data Mining and Audit Reports

Abstract

Data mining applications in accounting and finance areas are increasing; however, there are still not many classification or prediction studies in the auditing area. This article revisits the prediction of auditor changes upon the receipt of a qualified opinion using data mining approaches in U.S. companies. Overall, the prediction rates of several data mining approaches show reasonably well using financial and other data. The authors hope to see more applications of data mining tools in accounting or finance areas in the future. However, a qualified audit opinion does not add significant incremental information value in predicting auditor changes.