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Audits and logistic regression, deciding what really matters in service processes: a case study of a government funding agency for research grants

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Listed:
  • Samohyl, Robert

Abstract

Governmental agencies, the back office of private firms and nongovernmental organizations experience bureaucratic processes that are often repetitive and out-of-date. These imperfections cause resource misuse and support activities that diminish to the value of the process. An important element of these bureaucratic processes is checking whether certain projects approved by the office have actually been successful in their proposed objectives. Banks and credit card companies must evaluate whether creditors have fulfilled their supposed financial worthiness, tax authorities need to classify sectors of the economy and types of tax payers for probable defaults, and research grants approved by government funding agencies should verify the use of public funds by grant recipients. In this study, logistic regression is used to estimate the probability of conformity of research grants to the financial obligations of the researcher analyzing the correlation between certain characteristics of the grant and the grant´s final status as approved or not. The logistic equation uncovers those characteristics that are most important in judging status, and supports the analysis of results as false positives and false negatives. A ROC curve is constructed which reveals not only an optimal cutoff separating conformity from nonconformity, but also discloses weak links in the chain of activities that could be easily corrected and consequently public resources preserved.

Suggested Citation

  • Samohyl, Robert, 2012. "Audits and logistic regression, deciding what really matters in service processes: a case study of a government funding agency for research grants," MPRA Paper 41557, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:41557
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    File URL: https://mpra.ub.uni-muenchen.de/41557/1/MPRA_paper_41557.pdf
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    References listed on IDEAS

    as
    1. Georges Dionne & Florence Giuliano & Pierre Picard, 2009. "Optimal Auditing with Scoring: Theory and Application to Insurance Fraud," Management Science, INFORMS, vol. 55(1), pages 58-70, January.
    2. Eva Regnier, 2008. "Public Evacuation Decisions and Hurricane Track Uncertainty," Management Science, INFORMS, vol. 54(1), pages 16-28, January.
    3. Cohen, Jacqueline & Garman, Samuel & Gorr, Wilpen, 2009. "Empirical calibration of time series monitoring methods using receiver operating characteristic curves," International Journal of Forecasting, Elsevier, vol. 25(3), pages 484-497, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Logistic regression; ROC curve; probability; audits; government; research grants;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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