Audit schedules in the presence of concealing effort in supply chains

• Applicant: Professor Francis de Véricourt, Ph.D.
• Subject Area: Accounting and Finance
• Term: from 2017 to 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 387250733

This project aims at advancing the theory of operations management on how to uncover issues in supply chains, when suppliers have the capability to evade detection, that is, the ability to exert effort so as to reduce the efficacy of potential audits. Despite the prevalence and practical importance of these evasion capabilities, very few theoretical results exist in the operations and supply chain management literature on this issue. We intend to fill in this gap by developing and analyzing a comprehensive theoretical framework based on stochastic optimization control problems, that captures the essential features of a supplier's evasion capability, as well as the dynamic nature of audit schedules. The results of this study should provide insights into designing efficient remediation and audit strategies for supply chains that have the ability to evade detection. These strategies will be described mathematically in closed form, which should facilitate their implementation. This project should also reveal how the nature of an evasion capability (such as its cost or efficacy) affects the structure of efficient audit schedules.

• DFG Programme: Research Grants
• International Connection: USA
• Cooperation Partners: Professor Peng Sun; Professor Dr. Shouqiang Wang