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A BAYESIAN AUDITING MODEL
Author(s) -
Bailey Andrew D.,
Jensen Daniel L.
Publication year - 1979
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/j.1467-629x.1979.tb00001.x
Subject(s) - audit , computer science , bayesian probability , identification (biology) , set (abstract data type) , compliance (psychology) , test (biology) , data mining , risk analysis (engineering) , operations research , management science , process management , artificial intelligence , psychology , mathematics , engineering , accounting , business , programming language , paleontology , botany , biology , social psychology
A Bayesian procedure is demonstrated that binds together multiple audit tests in a multiple‐stage decision analysis. The analysis uses information provided by one test in the design of subsequent tests even when subsequent tests are directed at a different set of system characteristics. The analysis is applied to compliance and substantive tests undertaken to ascertain the fairness of a particular account balance. Although the analysis is not operational as presented, it provides a logical framework that clarifies the complex conceptual structure of the problem and enables the identification of impediments to its implementation.