Audit sampling, under ISA 530, is the application of audit procedures to less than 100% of items within a population of audit relevance, such that all sampling units have a chance of selection, in order to provide the auditor with a reasonable basis on which to draw conclusions about the entire population.
What Must the Auditor Consider When Designing a Sample?
When designing an audit sample, the standard requires the auditor to consider the purpose of the audit procedure and the characteristics of the population from which the sample will be drawn.
What Is "Sampling Risk"?
The standard defines sampling risk as the risk that the auditor's conclusion based on a sample may be different from the conclusion if the entire population were subjected to the same audit procedure.
What Is the Difference Between Statistical and Non-Statistical Sampling?
The standard defines statistical sampling as an approach to sampling that has the following characteristics: random selection of the sample items; and the use of probability theory to evaluate sample results, including measurement of sampling risk. A sampling approach that does not have both these characteristics is considered non-statistical sampling.
How Does the Auditor Determine Sample Size and Select Items?
The standard requires the auditor to determine a sample size sufficient to reduce sampling risk to an acceptably low level, and to select items for the sample in such a way that each sampling unit in the population has a chance of selection.
What If an Audit Procedure Cannot Be Applied to a Selected Item?
If the auditor is unable to apply the designed audit procedures, or suitable alternative procedures, to a selected item, the standard requires the auditor to treat that item as a deviation from the prescribed control, in the case of tests of controls, or a misstatement, in the case of tests of details.
What Is "Tolerable Misstatement"?
Tolerable misstatement is a monetary amount set by the auditor in respect of which the auditor seeks to obtain an appropriate level of assurance that the monetary amount set by the auditor is not exceeded by the actual misstatement in the population; it is the application of performance materiality to a particular sampling procedure.
What Does the Auditor Do With Sample Findings?
For tests of details, the standard requires the auditor to project misstatements found in the sample to the population. In the extremely rare circumstances when the auditor considers a misstatement or deviation discovered in a sample to be an anomaly, the standard requires the auditor to obtain a high degree of certainty that such misstatement or deviation is not representative of the population.
How Does the Auditor Ultimately Evaluate the Sample's Results?
The standard requires the auditor to evaluate the results of the sample, and to evaluate whether the use of audit sampling has provided a reasonable basis for conclusions about the population that has been tested.
Legal References
- ISA 530 — Audit Sampling, Paragraphs 5, 6, 7, 8, 13, 14 and 15.
For questions about your specific situation, you can ask the Private Sector Accounting Helper on Helpers, or consult a licensed chartered accountant.