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TECHNOLOGY

Improve audit

sampling efficiency

with Excel’s

Solver tool

Artificial intelligence capability can significantly
reduce the time and effort auditors devote to

sampling estimation tasks.

By Thomas W. Hall, CPA, Ph.D.; Lucas A. Hoogduin; and
Bethane Jo Pierce, Ph.D.

tratified mean-per-unit indicate the method used to
sampling is a key tool used select strata boundaries is the About the
Sby auditors. The popularity single most important decision authors
of this statistical procedure arises affecting sampling efficiency. In
Thomas W. Hall,
from its unique ability to produce tests comparing conventional
CPA, Ph.D., is a
trustworthy confidence intervals stratum boundary selection professor in the
when examining populations with methods to a new method based Department of
low error rates. Other sampling on artificial intelligence (AI), Accounting at
techniques such as difference, ratio, we found that strata boundaries the University of
and regression estimation yield un- selected via AI yielded material Texas, Arlington;
reliable confidence intervals unless improvements in sampling Lucas A. Hoogduin
many sample errors are detected. efficiency. Although results varied is an audit
Given the low error rates exhibited with the population examined, on professional at
by most accounting populations, average, strata boundaries selected KPMG Netherlands
stratified mean-per-unit sampling via the new method yielded a and is based
is the technique of choice when 40% reduction in the width of in Amsterdam;
estimating monetary values. confidence intervals for a given and Bethane Jo
Our research has identified sample size. This translates into Pierce, Ph.D., is an
a new method to select strata more than a 50% reduction in associate professor
boundaries that can significantly sample size while yielding the in the Department
reduce the time and effort same confidence intervals as of Accounting at
auditors devote to sampling conventional stratum boundary the University of
estimation tasks. Our findings selection methods. Texas, Arlington.
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