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

17 Pages Posted: 15 Nov 2002

See all articles by Michael E. Bradbury

Michael E. Bradbury

Unaffiliated Authors

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. Available at SSRN: https://ssrn.com/abstract=320408

Michael E. Bradbury

Unaffiliated Authors ( email )

United States

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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