I have a data set regarding audit and tax takes which I want to do some analysis (possibly clustering and predicting who to audit in the coming year).
The data ranges from 2009-2013. I have (up to) five observations per company (for each year) which contain data financial return data pertaining to each year. Every few years a company gets randomly audited and there is a recorded amount of money yielded or fined from the company.
My question is how do I lay the data out when performing this analysis. Should I roll each company up in to one row with all of the financial return data or should keep each year separate. Obviously any year that the company isn't audited the yield will be 0. However if they were not audited in 2010 but were audited in 2011 and yielded £10,000, how should I deal with the 2010 observation (assuming we have left them as separate observations)? Should I have a variable holding any previous or future yielded amount even if it didn't happen that year?