The Role of Audit Evidence in a Strategic Audit

Posted: 22 Aug 2008 Last revised: 28 Dec 2008

Multiple version iconThere are 2 versions of this paper

Date Written: August 22, 2008

Abstract

This study examines how audit risk (the probability of false acceptance) and its components change when the auditor obtains audit evidence in an acceptance-sampling model. Inherent risk and audit risk increase with audit evidence if the auditee has a sufficiently strong incentive for committing fraud. Detection risk always increases when audit evidence is introduced. If the auditor has a sufficiently strong incentive for avoiding false rejection, audit risk also increases with audit evidence. The analysis indicates that requiring auditors to obtain information is not effective in preventing material misstatements in at least some instances.

Keywords: Strategic audits, Audit risk, Audit evidence, Acceptance sampling

JEL Classification: C72, D81, D82, M49

Suggested Citation

Ohta, Yasuhiro, The Role of Audit Evidence in a Strategic Audit (August 22, 2008). Journal of Accounting and Public Policy, Vol. 28, No. 1, pp. 58-67, January-February 2009, Available at SSRN: https://ssrn.com/abstract=1247082

Yasuhiro Ohta (Contact Author)

Keio University ( email )

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Yokohama, Kanagawa 223-8526
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