Abstract
Auditor travel can significantly complicate the scheduling process and have an important impact on audit cost, especially for audits of multinational companies. This paper formulates an optimization model that specifically incorporates auditor travel time and costs in the determination of the overall optimal audit schedule. From a more theoretical perspective, this research extends the method of cost control by proposing a method by which a sequence-dependent setup cost (i.e., travel cost) and an associated variable cost (i.e., out-of-town cost) can be programmed into an optimization process for audit planning. The proposed model provides an optimal schedule considering such costs in a multiple nonidentical manpower (i.e., different auditors) environment. Previous research on manpower scheduling has not dealt with sequence-dependent travel costs. The out-of-town time and cost elements are unique for manpower scheduling and not applicable for machine scheduling. An implementation of the model to an actual empirical audit is presented.
| Original language | English |
|---|---|
| Pages (from-to) | 67-98 |
| Number of pages | 32 |
| Journal | Journal of Accounting, Auditing and Finance |
| Volume | 13 |
| Issue number | 1 |
| Publication status | Published - 1 Jan 1998 |
| Externally published | Yes |
Bibliographical note
Constructive comments from Professors Barry Cushing, Chee Chow, Ira Horowitz, Rudy Hung, Herb Jensen, Samuel Tung, Robert Knechel (referee) and Steven Lynn (referee) were appreciated. Part of this research was conducted while K. Hung Chan was on leave from the University of California, Riverside.Funding
K. Hung Chan acknowledges the partial support of a research grant Hong Kong UGC (RGC) Grant CUHK 118/93H for this research.