Sampling Audit Evidence Using a Naive Bayes Classifier

Abstract: Taiwan's auditors have suffered from processing excessive audit data, including drawing audit evidence. This study advances sampling techniques by integrating machine learning with sampling. This machine learning integration helps avoid sampling bias, keep randomness and variability, and target risker samples. We first classify data using a Naive Bayes classifier into some classes. Next, a user-based, item-based, or hybrid approach is employed to draw audit evidence. The representativeness index is the primary metric for measuring its representativeness. The user-based approach samples data symmetric around the median of a class as audit evidence. It may be equivalent to a combination of monetary and variable samplings. The item-based approach represents asymmetric sampling based on posterior probabilities for obtaining risky samples as audit evidence. It may be identical to a combination of non-statistical and monetary samplings. Auditors can hybridize those user-based and item-based approaches to balance representativeness and riskiness in selecting audit evidence. Three experiments show that sampling using machine learning integration has the benefits of drawing unbiased samples, handling complex patterns, correlations, and unstructured data, and improving efficiency in sampling big data. However, the limitations are the classification accuracy output by machine learning algorithms and the range of prior probabilities.