Monetary unit sampling: a belief-function implementation for audit and accounting applications

Audit procedures may be planned and audit evidence evaluated using monetary unit sampling (MUS) techniques within the context of the Dempster-Shafer theory of belief functions. This article shows: (1) how to determine an appropriate sample size for MUS in order to obtain a desired degree of belief that the upper bound for misstatements lies within a given interval; and (2) what level of belief in a specified interval is obtained given a sample result. The results are consistent with the view that a specified level of belief in an interval is semantically a stronger claim than the same numerical level of probability. The paper describes two variants of MUS in both probability and belief-function forms, emphasizing the systematic similarities and the numerical differences between the two frameworks. The results, based on the Poisson distribution, extend results already available for mean-per-unit variables sampling, and may readily be developed to give similar results for the binomial distribution. (C) 2000 Elsevier Science Inc. All rights reserved.