ANALYTICAL PROCEDURES : A Data Envelopment Analysis Approach

We demonstrate the usefulness of Data Envelopment Analysis (DEA) as an analytical procedure for auditors, especially in the planning stage of the audit, to determine the extent of audit and to assess the preliminary risk level of the client. DEA based analytical procedures can provide consistent and reliable red flags and benchmarks for auditors to compare a client to other firms in the same industry. We provide an illustrative use of DEA as an analytical procedure for auditing a client in the oil and gas industry