Forecasting Issue in Federal Audit of State Social Services Department

Problem

A state ran afoul of a federal audit when, for several months, the customary sample of social workers' time use was not collected due to a transition in the state department. When the federal audit disallowed a portion of federal aid for one of the state's human services programs, the state turned to statistical consulting firm Analysis & Inference. Could the missing records be estimated with a reasonable degree of precision?

Procedure

To estimate the missing records with maximum accuracy, A+I drew on past years' data from the same period to forecast the time in question. The A+I team also backcast from data that became available subsequently.

Result

Testifying before the federal Departmental Appeals Board, a senior A+I statistician explained the commonly accepted uses of forecasting in financial fields, then showed how time series analysis could be reliably applied to the given data.

The federal position allowed no substitute for the sample of time uses, and the Board did not decide for the state. However, the Assistant Attorney General said: "Notwithstanding the result, I appreciate the excellent job you did for the State."