To read this content please select one of the options below:

An Alternative Approach for Controlling Statistical Audit Sampling Risks

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 1 March 1991

220

Abstract

Traditional approaches to risk control used for planning, executing, and evaluating substantive audit tests focus primarily on the risk of accepting a materially misstated amount (β risk) and only consider passively the risk of rejecting a correctly stated amount (α risk). This article discusses an alternative – the trade‐off approach – that formally considers both risks. Although the traditional and the trade‐off approach frequently lead to the same statistical conclusion, there are some applications in which only the trade‐off approach, can provide a statistical conclusion in support of the auditor′s assertion that a client′s balance is correctly stated. The article identifies these applications and suggests that the trade‐off approach merits further consideration.

Keywords

Citation

Thompson, J.H. and Ward, B.H. (1991), "An Alternative Approach for Controlling Statistical Audit Sampling Risks", Managerial Auditing Journal, Vol. 6 No. 3. https://doi.org/10.1108/02686909110000431

Publisher

:

MCB UP Ltd

Copyright © 1991, MCB UP Limited

Related articles