Combining approaches for evaluating auditing populations: A simulation study

Combining approaches for evaluating auditing populations: A simulation study

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Article ID: iaor2009545
Country: Netherlands
Volume: 178
Issue: 3
Start Page Number: 907
End Page Number: 917
Publication Date: May 2007
Journal: European Journal of Operational Research
Authors: ,
Keywords: heuristics, simulation: applications
Abstract:

This research explores ways of combining four distinct bounds for the mean error in an auditing population. Two competing objectives for a bound are to be close to the true mean being estimated and to be reliable: not less than the true mean in more than 5% of estimations. The optimal combination should provide the best ba1ance of these competing objectives. Estimating the mean error by a single approach is difficult because typically most accounts have no error and the distribution of the errors among those that do is discontinuous and highly skewed. This study reveals that the weights in the optimal combination are not constant but depend on the characteristic of the population being estimated.

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