Auditors' prior probability distributions for account balances |
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| Authors: | Ira Solomon Jack L Krogstad Marshall B Romney Lawrence A Tomassini |
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| Institution: | College of Business & Public Administration, The University of Arizona, USA;College of Business Administration, Creighton University, USA;Institute of Professional Accountancy, Brigham Young University, USA;Graduate School of Business Administration, The University of Texas, USA |
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| Abstract: | This paper reports the results of a study in which practicing auditors assessed prior probability distributions (PPDs) for account balances. Assessed PPDs are found to exhibit desirable characteristics, including a sensitivity to the relative strength of internal controls. The study establishes that it is possible for auditors to assess account balance PPDs and, thereby, paves the way for cost effectiveness comparisons of the Bayesian and classical approaches to audit inference. |
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