A Knowledge-Based

Within the academic and professional auditing communities, there has been growing concern about how to accurately assess the various risks associated with performing an audit. These risks are difficult to conceptualize in terms of numeric estimates. Models of decision making under conditions of risk are well established in decisiontheory literature. In these models, risk and return (payoffs) are specified in terms of numeric estimates, and the goal is to make a decision that maximizes some expected value. In addition, new information can be combined using a decision rule (such as Bayes' rule) for deriving revised estimates of risk.