A Minimum‐cost Audit Sampling Methodology Under Conditions of Predetermined Beta Risk

This paper presents a minimum‐cost methodology for determining a statistical sampling plan in substantive audit tests. In this model, the auditor specifies β, the risk of accepting an account balance as correct when it is not, according to audit evidence requirements. Using β as a constraint, the auditor then selects a sampling plan to optimize the trade‐off between sampling costs and the costs of follow‐up audit procedures. Tables to aid in this process and an illustration are provided.