Audit decisions using belief functions: A review

An overview of the audit process is provided along with the belief-function approach to audit decisions. In particular, the article highlights the advantages of using belief functions for representing uncertainties in audit evidence and discusses the audit risk model of the American Institute of Certified Public Accountants as a plausibility model. Also, the article discusses the use of belief functions to represent the strength of audit evidence under various situations: positive evidence, negative evidence, mixed evidence, evidence bearing on one variable, and evidence bearing on more than one variable with the same or different level of support. The article discusses the process of audit planning and evaluation under belief functions in a complex situation with the interdependencies among the audit evidence, and among the assertions and related accounts. Finally, the article discusses how considering the network structure of audit evidence and integrating statistical and non-statistical items of evidence objectively will lead to an efficient audit.