Open AccessAn Analytic Hierarchy Process Approach To Assessing The Risk Of Management Fraud
Author(s) -
Ashutosh Deshmukh,
Ido Millet
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v15i1.5693
Subject(s) - analytic hierarchy process , audit , computer science , risk management , process (computing) , scale (ratio) , empirical research , risk analysis (engineering) , accounting , operations research , business , engineering , statistics , mathematics , finance , physics , quantum mechanics , operating system
The purpose of this study is to demonstrate how the Analytical Hierarchy Process (AHP) can be employed to assess the risk of management fraud. The paper illustrates how the AHP can be used to measure red flags on a scale of varying intensities, to aggregate various red flags, and to derive a single measure of risk of management fraud. The significant red flags identified in past empirical research are used in this study for illustrative purposes and the AHP models are implemented in Expert Choice (1997) software. The AHP allows auditors to customize their approaches in assessing the risk of management fraud for each audit engagement. Auditors can use significant red flags identified in the earlier studies, and also add or delete certain red flags if the engagement warrants it. The AHP can be used as a viable auditing tool in situations where auditors perceive the need to exercise judgment and or to arrive at a group consensus.