Predicting The Fit - Statistical Analysis

Vanessa Winspeare and Sam Green examine whether basic linear regression reduces the inherent uncertainty when predicting the future.

When forensic accountants quantify damages they may need to analyse accounting and non-accounting information in order to answer the question: "What has the claimant lost as a result of the defendant's actions?"

A major barrier to answering this is the inherent uncertainty in predicting future events and their impact, for example, on future income or profit. In order to reduce this uncertainty, forensic accountants sometimes apply statistical techniques. But how accurate are these techniques and can the results be misleading?