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Audit Effectiveness Versus Audit Efficiency: Are The Two in Conflict?
Author(s) -
Pincus Karen V.,
Bernardi Richard A.,
Ludwig Stephen E.
Publication year - 1999
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/1099-1123.00053
Subject(s) - audit , accounting , business , audit evidence , joint audit , walk through test , audit substantive test , internal audit
A recent analysis using signal detection theory held that there is an unacceptably high trade‐off between audit effectiveness and audit efficiency when the auditor bears responsibility for fraud detection. This study re‐examined the data sets from two previous studies of fraud detection effectiveness for evidence about the relationship between effectiveness and efficiency. The variables included auditors' prior probabilities concerning fraud, staff level (experience), and the amount and type of audit information examined. While increased sensitivity to fraud was associated with increased effectiveness and some differences in the types of information examined could marginally increase audit costs, the evidence did not support a significant effectiveness—efficiency tradeoff.