SYNOPSIS
Full population testing (FPT) has been proposed as an alternative to traditional sampling, enabling auditors to manage a potentially large number of items leveraging advances in data analytics. This study applies FPT to substantive testing in an audit using purchase transaction data. We then evaluate the effectiveness and efficiency of FPT by comparing the outcome of FPT with that of traditional sampling approaches. Our findings show that the FPT approach is more effective and efficient in identifying problematic transactions. Finally, we discuss the costs and benefits of adopting FPT and address the key considerations when applying FPT in an audit environment.
Data Availability: Data are available from the public sources referenced in the text.
JEL Classifications: M41; M42; C55; C88.
