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An Application of Data Envelopment Analysis to the Evaluation of Audit Risk

Abacus, Vol. 38, No. 2, pp. 263-279, 2002

17 Pages Posted: 15 Nov 2002

See all articles by Michael E. Bradbury

Michael E. Bradbury

Massey University

Paul Rouse

University of Auckland - Business School

Abstract

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.

Keywords: analytic hierarchy process, audit risk, data envelopment analysis

JEL Classification: M49

Suggested Citation

Bradbury, Michael E. and Rouse, Paul, An Application of Data Envelopment Analysis to the Evaluation of Audit Risk. Abacus, Vol. 38, No. 2, pp. 263-279, 2002. Available at SSRN: https://ssrn.com/abstract=320408

Michael E. Bradbury

Massey University ( email )

School of Accountancy
Private Bag 102 904
Auckland
New Zealand
64 9 414 0800 (Phone)
64 9 441 8133 (Fax)

Paul Rouse (Contact Author)

University of Auckland - Business School ( email )

Private Bag 92019
Auckland
New Zealand
+64 9 373 7599 (Phone)
+64 9 373 7406 (Fax)

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