Abstract This study investigates the nonsampling risk which is present due to nondetection of deviations from control procedures by auditors in a test of controls over a disbursement system. Twenty-five subjects employed on the audit staffs of four Big Eight accounting firms participated in the study. Research questions concerned (1) the extent of non-detection and (2) whether certain deviations from control procedures are more likely to be detected than others. The results indicate that a large percentage of undetected deviations remain after tests of controls have been completed, leading to increased audit risk. The results also indicate that auditors are more likely to detect certain types of deviations than others. These results cast doubt on the Auditing Standards Board's assumption that nonsampling risks are negligible and have significant implications for the auditor's assessment of audit risk and its components.
Jeri Brockett Waggoner (Thu,) studied this question.