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Interpretation and Application of International Standards on Auditing by Steven Collings

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23

ISA 530 (REDRAFTED) AUDIT SAMPLING

In Chapter 18, we looked at the subject of audit sampling and the way it can be applied in an audit of general purpose financial statements. ISA 530 deals with the responsibility the auditor has when using audit sampling and drawing conclusions about the population from which the sample is drawn. In Chapter 18 we discussed three methods of obtaining audit evidence:

  • 100% sampling.
  • Selecting specific items.
  • Audit sampling.

It is worth pointing out that the selection of specific items is not the same as audit sampling because errors cannot be projected to an entire population in the same way as they can when applying audit sampling.

AUDIT SAMPLING

Audit sampling is a technique used by the auditor in applying audit procedures to less than 100% of an account balance or class of transaction. Its objective is to enable auditors to obtain and evaluate evidence about some of the characteristics of the items selected in order to form a conclusion about the population sampled.

Illustration

Population

An entity produces a list of receivables balances as at 31 December 2010, which is shown below:

Receivable $
Adams J 178,000
Bury L 25,000
Bury P 15,000
Cahill A P 92,000
Heaton J 11,000
Scanlon L 176,000
Westhead L 28,000
Whatmough H 10,000
535,000

This figure is shown in the financial statements as ‘trade receivables’.

This figure is also known as the ‘population’.

Where the auditor uses sampling in the above illustration, ...

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