Modelling Audit Risk Assessments: Exploration of an Alternative to the Use of Knowledge‐based Systems

Abstract

This paper compares decision‐modelling approaches. The decision modelled is the assessment of inherent and control risk in the purchases, accounts payable and inventory cycle. It is modelled using two different approaches. Firstly, knowledge‐based models are constructed using established development shells. Secondly, a model is constructed using a conventional procedural programming language. Both modelling approaches are tested against the output of human practitioners and compared to each other to determine if the more restrictive, assumption‐laden approach offered by the procedural model is adequate to deal with the decision problem under examination, or if the greater flexibility offered by the knowledge‐based approach is required. This comparison yields positive results. The procedural model is able to reproduce satisfactorily the output of the human decision makers and the knowledge‐based models for the chosen decision problem. This result emphasises the importance of devoting time to the selection of the most appropriate modelling approach for a given decision problem.