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An Application of Data Envelopment Analysis to the Evaluation of Audit Risk
Author(s) -
Bradbury Michael E.,
Rouse Paul
Publication year - 2002
Publication title -
abacus
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.632
H-Index - 45
eISSN - 1467-6281
pISSN - 0001-3072
DOI - 10.1111/1467-6281.00108
Subject(s) - data envelopment analysis , audit , analytic hierarchy process , benchmark (surveying) , envelopment , computer science , range (aeronautics) , risk analysis (engineering) , actuarial science , operations research , business , statistics , operations management , accounting , engineering , mathematics , geodesy , aerospace engineering , geography
This article demonstrates how data envelopment analysis can be used to weight audit risk factors. Data from a previously reported study applying the analytic hierarchy process is used to facilitate a comparison between these two methods. Data envelopment analysis (DEA) has several advantages, including the ability to accommodate a range of expert opinions on the importance of a specific risk factor, rather than using the median or mean value. DEA can be used to provide high‐risk and low‐risk assessments and provides benchmark audit units from which other units can be evaluated.