RSM423H1 Lecture Notes - Lecture 3: Availability Heuristic, Argumentation Theory, Motivated Reasoning
12 Feb 2017
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Class 3: professional judgment and skepticism, audit reasoning process and related basic. Larger sample size, the curve will shift upwards, because its getting close to perfection k=3. Efficiency risk will reduce, effectiveness risk stays the same because confidence level stays the same. k=0. One technique for controlling efficiency risk is to plan for k>0 in mus formula. Another is to use k=0 but planned p (achieved p) is less than mm. So to control effectiveness risk we can control the confidence level. Bayesian approach is probability of mm > planned risk; then reject. Assume a population of 10000 invoices in applying aug 41 para 42. The more you sample, the less assurance you get per sample (pg. To eliminate the last bit of uncertainty is uneconomical. Inductive logic: being able to come to a conclusion about items we haven"t sampled. How does that work from the calculations we"ve done -- its done through randomization.
