IDEAS home Printed from https://ideas.repec.org/a/kap/rqfnac/v39y2012i4p413-422.html
   My bibliography  Save this article

Ranked set sampling: an auditing application

Author

Listed:
  • Nader Gemayel
  • Elizabeth Stasny
  • James Tackett
  • Douglas Wolfe

Abstract

This study compares the statistical precision of simple random sampling with balanced ranked set sampling in an inventory valuation scenario. Computer simulation is used to calculate standard errors for the ranked set sampling mean, and those standard errors are then compared to the corresponding standard error achieved under simple random sampling. Results indicate that required sample sizes for a given precision are much smaller under ranked set sampling than under simple random sampling. This implies that simple random sampling is inferior to ranked set sampling in auditing scenarios involving the measurement of time consuming or difficult to gather data such as inventory observations, receivable confirmations, etc. Accordingly, auditors using ranked set sampling in lieu of simple random sampling can achieve the significant cost reductions associated with smaller sample sizes without sacrificing audit quality. This is a significant finding because current auditing practice is still using the simple random sampling methodology. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • Nader Gemayel & Elizabeth Stasny & James Tackett & Douglas Wolfe, 2012. "Ranked set sampling: an auditing application," Review of Quantitative Finance and Accounting, Springer, vol. 39(4), pages 413-422, November.
    • Handle: RePEc:kap:rqfnac:v:39:y:2012:i:4:p:413-422
    DOI: 10.1007/s11156-011-0263-y
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11156-011-0263-y
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11156-011-0263-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Haiying Chen & Elizabeth A. Stasny & Douglas A. Wolfe, 2006. "Unbalanced Ranked Set Sampling for Estimating a Population Proportion," Biometrics, The International Biometric Society, vol. 62(1), pages 150-158, March.
    2. Kaplan, Rs, 1975. "Sample-Size Computations For Dollar-Unit Sampling," Journal of Accounting Research, Wiley Blackwell, vol. 13, pages 126-133.
    3. Steven N. MacEachern & Ömer Öztürk & Douglas A. Wolfe & Gregory V. Stark, 2002. "A new ranked set sample estimator of variance," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 64(2), pages 177-188, May.
    4. Wally Smieliauskas, 1986. "Control of sampling risks in auditing," Contemporary Accounting Research, John Wiley & Sons, vol. 3(1), pages 102-124, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. M. Mahdizadeh & Ehsan Zamanzade, 2020. "Estimating asymptotic variance of M-estimators in ranked set sampling," Computational Statistics, Springer, vol. 35(4), pages 1785-1803, December.
    2. Radhakanta Das & Vivek Verma & Dilip C. Nath, 2017. "Bayesian Estimation Of Measles Vaccination Coverage Under Ranked Set Sampling," Statistics in Transition New Series, Polish Statistical Association, vol. 18(4), pages 589-608, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lowell Dworin & Richard A. Grimlund, 1989. "A comprehensive hypothesis testing approach to dollar unit sampling," Contemporary Accounting Research, John Wiley & Sons, vol. 5(2), pages 674-691, March.
    2. Zamanzade, Ehsan & Wang, Xinlei, 2017. "Estimation of population proportion for judgment post-stratification," Computational Statistics & Data Analysis, Elsevier, vol. 112(C), pages 257-269.
    3. repec:exl:29stat:v:20:y:2019:i:3:p:1-30 is not listed on IDEAS
    4. Ehsan Zamanzade, 2019. "EDF-based tests of exponentiality in pair ranked set sampling," Statistical Papers, Springer, vol. 60(6), pages 2141-2159, December.
    5. Matthews, Michael J. & Wolfe, Douglas A., 2017. "Unified ranked sampling," Statistics & Probability Letters, Elsevier, vol. 122(C), pages 173-178.
    6. Omer Ozturk & Steven MacEachern, 2004. "Order restricted randomized designs for control versus treatment comparison," Annals of the Institute of Statistical Mathematics, Springer;The Institute of Statistical Mathematics, vol. 56(4), pages 701-720, December.
    7. Ulrich Menzefricke & Wally Smieliauskas, 1987. "A comparison of the stratified difference estimator with some monetary†unit sampling estimators," Contemporary Accounting Research, John Wiley & Sons, vol. 4(1), pages 240-251, September.
    8. Alfio Marazzi & Yves Tillé, 2017. "Using past experience to optimize audit sampling design," Review of Quantitative Finance and Accounting, Springer, vol. 49(2), pages 435-462, August.
    9. David R. Finley, 1994. "Game Theoretic Analysis of Discovery Sampling for Internal Fraud Control Auditing," Contemporary Accounting Research, John Wiley & Sons, vol. 11(1), pages 91-114, June.
    10. Jesse Frey & Timothy G. Feeman, 2017. "Efficiency comparisons for partially rank-ordered set sampling," Statistical Papers, Springer, vol. 58(4), pages 1149-1163, December.
    11. Ulrich Menzefricke & Wally Smieliauskas, 1988. "On sample size allocation in auditing," Contemporary Accounting Research, John Wiley & Sons, vol. 4(2), pages 314-336, March.
    12. Santu Ghosh & Arpita Chatterjee & N. Balakrishnan, 2017. "Nonparametric confidence intervals for ranked set samples," Computational Statistics, Springer, vol. 32(4), pages 1689-1725, December.
    13. Xinlei Wang & Ke Wang & Johan Lim, 2012. "Isotonized CDF Estimation from Judgment Poststratification Data with Empty Strata," Biometrics, The International Biometric Society, vol. 68(1), pages 194-202, March.
    14. David R. Finley, 1989. "Decision theory analysis of audit discovery sampling," Contemporary Accounting Research, John Wiley & Sons, vol. 5(2), pages 692-719, March.
    15. Frey, Jesse & Wang, Le, 2013. "Most powerful rank tests for perfect rankings," Computational Statistics & Data Analysis, Elsevier, vol. 60(C), pages 157-168.
    16. Cesar Augusto Taconeli & Suely Ruiz Giolo, 2020. "Maximum likelihood estimation based on ranked set sampling designs for two extensions of the Lindley distribution with uncensored and right-censored data," Computational Statistics, Springer, vol. 35(4), pages 1827-1851, December.
    17. Wally Smieliauskas, 1986. "Control of sampling risks in auditing," Contemporary Accounting Research, John Wiley & Sons, vol. 3(1), pages 102-124, September.
    18. Jesse Frey & Timothy Feeman, 2013. "Variance estimation using judgment post-stratification," Annals of the Institute of Statistical Mathematics, Springer;The Institute of Statistical Mathematics, vol. 65(3), pages 551-569, June.
    19. Wally Smieliauskas, 1989. "A note on Bayesian risk models of audit practice," Contemporary Accounting Research, John Wiley & Sons, vol. 5(2), pages 720-732, March.
    20. Radhakanta Das & Vivek Verma & Dilip C. Nath, 2017. "Bayesian Estimation Of Measles Vaccination Coverage Under Ranked Set Sampling," Statistics in Transition New Series, Polish Statistical Association, vol. 18(4), pages 589-608, December.
    21. Zamanzade, Elham & Parvardeh, Afshin & Asadi, Majid, 2019. "Estimation of mean residual life based on ranked set sampling," Computational Statistics & Data Analysis, Elsevier, vol. 135(C), pages 35-55.

    More about this item

    Keywords

    Estimation precision; Simple random sampling; Statistical auditing; Statistical sampling; C83; M42;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:rqfnac:v:39:y:2012:i:4:p:413-422. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.