Audit Decision Model with Limited Resources

Recent developments in the field of auditing require not only the issue of a positive or negative audit opinion, but also greater transparency in the application of procedures. Investors want to be able to find detailed information on the key issues that were raised in the course of the work, as well as test methods and ways to minimize the risks in relation to these cases. The main aim of our research is to construct a model to minimize audit risk that is the adoption of the auditor's decision, under the conditions of limited resources (time, costs, budget and number of staff involved). The subject of our research is the minimization of the risk of an audit in the context of limited resources. Object of research is the companies involved in the audit. Statistical unit is a separate audit. Due to analysis of 50 audits of the Russian market, we have identified factors that have a direct impact on the probability of errors because of resource constraints. Such factors as the level of significance, the costs of the audit of the project and the number of staff involved have a significant impact on the audit risk. Other factors considered are not significantly impacted by the independent variable. Some hypotheses can not be reliably tested because the specificity of the selected companies: the sample contains only 10% of listed companies on the stock exchange. Based on the regression data above we attempted to build a decision-making microeconomic model with limited resources and found the optimum point, depending on the model parameters.