Prioritization of Risks Detected in Comprehensive Audits Using Neutrosophic TOPSIS and Hausdorff Distance

Abstract

This study addresses the phenomenon of prioritization of risks during large-scale audits as risks evident in the complicated environment and uncertain information are challenging to mitigate. The importance of the topic is that for complicated entities with high uncertainty, high impact, and low/high probability of audit detection, proper allocation in this resource sensitive 21st century is needed for effective audit. The literature demonstrates means to assess and rank risk for subsequent corrective actions; however, no means exist which use uncertainty from imprecise or subjective assessment, thus rendering such studies and findings less than helpful in practice. The gap is filled by using a neutrosophic TOPSIS approach blended with Hausdorff distance—both novel as the first offers a solution based on neutrality of values while the second does so with definitive mathematical distance findings. The findings indicate that both offer a more reliable ranking of risks for this study to focus upon with emphasis on those findings which could do the most harm to assessed processes. The contribution to the literature is twofold 1) risk assessment techniques which use advanced neutrosophic assessments and 2) provide the auditor with a comprehensive and ranked means for future corrective action for the best decision-making in complicated and evolving organizational situations.