Discussion of Assessing Audit Risk from Errors and Irregularities.

This article presents a critique of assessing audit risk from errors and irregularities in auditing as analyzed by Toshiyuki Shibano. His model is based on strategic-testing theory and components of decision-theoretic testing as well. The author questions the use of exogenously given auditee and auditor payoffs. He also believes the results are influenced by endogenizing sample size or allowing sequential sampling. Other questions related to the presumption of common knowledge among the participants.