Test-Checking and the Poisson Distribution.

The article contains an explanation of a simple and quick method of developing probabilities with which to arrive at an objective evaluation of the sufficiency of evidence needed to support an auditor's opinion. The reliability of probabilities derived from the Poisson distribution and two methods of using economist E.C. Molina's Cumulative Terms of the Poisson Formula are presented in outline form. The purpose of the article is to suggest to the auditing profession, internal and external, the manner in which Molina's tables of probabilities can be used. The use of the Poisson distribution will eliminate three major obstacles of probability utilization. The necessity of making laborious and tedious combinatorial probability computations will be eliminated. The Poisson distribution permits a high degree of flexibility. The auditor can vary easily and quickly the confidence limits or probabilities of a testing plan. The use of published tables would not permit the same high degree of flexibility because the confidence or probability limits of published tables and plans are fixed.