An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Chan Li
University of Kansas

Rajendra Srivastava
University of Kansas

Abstract: This paper develops a decision theoretical approach for cost-benefit analysis of internal control consulting services in belief function framework. Based on the expected value approach, we performed the cost-benefit analysis to show the break-even point for a company to obtain the consulting services. The model shows the amount that a company is willing to pay for the consulting services depends on the following factors: the management’s own beliefs on its internal control effectiveness before the service, the management’s own beliefs on its internal control effectiveness after the service, the loss associated with each principle of COSO framework if it is not met, and the management’s attitude towards being most conservative or least conservative.

Back to Session Listing

AAA Home Page