Inferring About the Average Value of Audit Errors from Sequential Ratio Tests
Grzegorz Sitek, Mariusz Pleszczyński, Boris Ryabko · 2024
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Description
Grzegorz Sitek and co-authors tackle sample size for audit testing in a 2024 paper. Auditors check samples of book amounts to judge the average error across all entries, and they need to know how large a sample a sound test requires. The authors model book amounts as a mix of two groups: correct entries and entries carrying errors.
The mix share stands for the fraction of entries with nonzero error. They apply a sequential probability ratio test, which decides as data arrive rather than fixing the sample in advance, and they estimate its average sample size with Monte Carlo simulation. The problem of pinning down average audit error is common in economic research, and the paper offers a principled way to plan the sampling effort.
Catalog record
| CREATOR | Grzegorz Sitek, Mariusz Pleszczyński, Boris Ryabko |
|---|---|
| YEAR | 2024 |
| COLLECTION | PAPERS |
| FORMAT | TXT |
| FILE SIZE | 37 KB |
| VERSION | 1.0 |
| LICENSE | CC BY 4.0 |
| RIGHTS | CC BY |
| SOURCE | Europe PMC |