Chapter 16, Problem 28SE

A study investigated the relationship between audit delay (Delay), the length of time from a company’s fiscal year-end to the date of the auditor’s report, and variables that describe the client and the auditor. Some of the independent variables that were included in this study follow.

A sample of 40 companies provided the following data.

1. a. Develop the estimated regression equation using all of the independent variables.
2. b. Did the estimated regression equation developed in part (a) provide a good fit? Explain.
3. c. Develop a scatter diagram showing Delay as a function of Finished. What does this scatter diagram indicate about the relationship between Delay and Finished?
4. d. On the basis of your observations about the relationship between Delay and Finished, develop an alternative estimated regression equation to the one developed in (a) to explain as much of the variability in Delay as possible.