A Mixed Model for Double Checking Fallible Auditors
AbstractThe paper discusses the problem of a fallible auditor who assesses the values of sampled records, but may make mistakes.To detect these mistakes, a subsample of the checked elements is checked again, now by an infallible expert. We propose a model for this kind of double check, which takes into account that records are often correct; however, if they are incorrect, the errors can take on many different values - as is often the case in audit practice.The model therefore involves error probabilities as well as distributional parameters for error sizes.We derive maximum likelihood estimators for these model parameters and derive from them an estimator for the mean size of the errors in the population.A simulation study shows that the latter outperforms some other - previously introduced - estimators.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2004-82.
Date of creation: 2004
Date of revision:
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Web page: http://center.uvt.nl
auditors; maximum likelihood; distribution;
Find related papers by JEL classification:
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ACC-2004-10-21 (Accounting & Auditing)
- NEP-ALL-2004-10-21 (All new papers)
- NEP-ECM-2004-10-21 (Econometrics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Raats, V.M. & Genugten, B.B. van der & Moors, J.J.A., 2002. "A General Model for Repeated Audit Controls Using Monotone Subsampling," Discussion Paper 2002-10, Tilburg University, Center for Economic Research.
- Raats, V.M. & Genugten, B.B. van der & Moors, J.J.A., 2002. "Multivariate Regression with Monotone Missing Observation of the Dependent Variables," Discussion Paper 2002-63, Tilburg University, Center for Economic Research.
- David J. Laws & Anthony O'Hagan, 2000. "Bayesian inference for rare errors in populations with unequal unit sizes," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 49(4), pages 577-590.
- V. Barnett & J. Haworth & T. M. F. Smith, 2001. "A two-phase sampling scheme with applications to auditing or "sed quis custodiet ipsos custodes"?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 164(2), pages 407-422.
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