AN EMPIRICAL-EXAMINATION OF THE SENSITIVITY OF THE ANALYTIC HIERARCHY PROCESS TO DEPARTURES FROM RECOMMENDED CONSISTENCY RATIOS

We use the Analytic Hierarchy Process to examine the judgments of 126 professional internal auditors regarding the importance of 14 factors (called red flags) that may signal the potential for financial fraud within a business organization. The red flags are separated into three categories: management characteristics, firm characteristics, and industry characteristics. The professional internal auditors rated management characteristics as the most important category of characteristics, with five specific characteristics having local weights of 0.117-0.283. Additionally, and perhaps more importantly, we examine whether the global weights for the 14 red flags are different for subsamples of 61 responses with individual consistency ratios of less-than-or-equal-to 0.10, and 65 responses with consistency ratios of > 0.10. The results indicate that the global weights of the two subsamples are not significantly different. This finding provides preliminary evidence that researchers may be able to use responses with consistency ratios of > 0.10 without affecting the overall findings.