Scheduling internal audit activities: a stochastic combinatorial optimization problem

Abstract

The problem of finding the optimal timing of audit activities within an organisation has been addressed by many researchers. We propose a stochastic programming formulation with Mixed Integer Linear Programming (MILP) and Constraint Programming (CP) certainty-equivalent models. In experiments neither approach dominates the other. However, the CP approach is orders of magnitude faster for large audit times, and almost as fast as the MILP approach for small audit times. J Comb Optim (2010) 19: 325-346 This work generalises a previous approach by relaxing the assumption of instantaneous audits, and by prohibiting concurrent auditing.

Tactical Audit Planning

“…The workforce should then be sized according to the risk an organization is willing to tolerate and its budget. Assuming the tasks per type of audit have been determined, the strategic question of determining the time between audits of each type, to which much work has been devoted to (Morey and Dittman 1986;Knechel and Benson 1991;Carey and Guest 2000;Rossi et al 2010;Boritz and Broca 1986). Nevertheless, this survey overlooks papers tackling this decision.…”

Determining expected behaviour of fraudsters for a continuous audit system

“…Previous studies in the area of audit timing (Boritz & Broca, 1986;Hughes, 1977;Morey & Dittman, 1986;Rossi, Tarim, Hnich, Prestwich, & Karacaer, 2010;Wilson & Ranson, 1971) have been concerned with fixing the time interval for internal audits. All these papers assume that in the absence of audit, errors in the accounting system will occur and that the number of such errors will accumulate with time until the audit detects and corrects them.…”