Abstract
This study investigates the potential effects of the inappropriate agreement, with the book value of some sampled units, on the behavior of statistical estimators and on the possible inferences that may be made by auditors. The results indicate that the resultant dependently occurring errors will adversely affect the inferences made by an auditor about the account balance of an account receivable population with a moderate book error rate. While the potential for an adverse effect from this type of error should be well known, the results of this paper indicate that the problem may be more serious than previously thought. A few dependently occurring measurement errors can have a significant impact on the appropriateness of an auditor's inferences. The results also indicate that dependently occurring and independently occurring measurement error may have conflicting effects, where the direction and significance of their combined effect depends on the account population being audited.
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