Abstract

http://ssrn.com/abstract=312186
 


 



Multiple Hypothesis Evaluation in Auditing


Rajendra P. Srivastava


University of Kansas - Accounting and Information Systems Area

Arnold Wright


Northeastern University - Accounting Group

Theodore J. Mock


University of Southern California; University of California, Riverside


Accounting and Finance, Vol. 42, No. 3, November 2002

Abstract:     
In many audit tasks, auditors evaluate multiple hypotheses to diagnose the situation. Research suggests this is a complex task that individuals have difficulty performing. Further, there is little guidance in professional standards or literature dealing with the many complexities present in the audit environment.

Using probability theory, this study derives the appropriate revision of likelihoods for multiple hypotheses given different realistic audit conditions. The analysis shows that the relationships among the hypotheses dramatically impact the use of audit evidence and the resulting pattern of probability revisions. We also identify testable hypotheses to guide future research and discuss practice implications regarding ways to improve the effectiveness of analytical procedures.

Keywords: analytical procedures, multiple hypothesis evaluation, audit evidence

JEL Classification: M49

Accepted Paper Series





Not Available For Download

Date posted: July 24, 2002  

Suggested Citation

Srivastava, Rajendra P. and Wright, Arnold and Mock, Theodore J., Multiple Hypothesis Evaluation in Auditing. Accounting and Finance, Vol. 42, No. 3, November 2002. Available at SSRN: http://ssrn.com/abstract=312186

Contact Information

Rajendra Prasad Srivastava
University of Kansas - Accounting and Information Systems Area ( email )
1300 Sunnyside Avenue
Lawrence, KS 66045
United States
Arnold Wright
Northeastern University - Accounting Group ( email )
406 Hayden Hall
United States

Theodore J. Mock (Contact Author)
University of Southern California ( email )
Los Angeles, CA 90089-0441
United States
University of California, Riverside ( email )
Riverside, CA 92521
United States
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