Audit scheduling with overlapping activities and sequence-dependent setup costs

Abstract

Audit firms are faced with the complex job of scheduling auditors to audit tasks. The scheduling becomes more complex as the firm needs to consider real life issues in determining an optimal schedule. Among these issues are the setup times and costs emanating from changing the assignments of the auditors and the lead and lag relationships between the audit tasks. Audit scheduling with overlapping activities and sequence-dependent setup cost has not been treated in literature. This paper presents a formulation and a solution approach for this audit scheduling problem. First, the problem is represented by an activity network with lead/lag relationships. Then the network is analyzed to determine the early and late finish times of activities. An integer linear program (ILP), which uses the early and late finish times of activities to reduce the number of decision variables, is formulated. A four-auditor two-engagement example is used to illustrate the ILP model and its solution. The results indicate that incorporating the setup cost and the overlapping of activities yields lower cost schedules leading to sizable savings in the cost of audits. The proposed treatment is of merit in providing realistic schedules that can be easily implemented