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Auditsamplingmanuals 11

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3 views1 page

Auditsamplingmanuals 11

Uploaded by

jaimedejesus
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BY NATURE OF THE TEST - Another way to stratify a population is to divide the items into groups

according to the nature of the test to be performed. For instance, if the auditor is testing deductions for
supporting documentation, the population could be divided into groups where an NTTC is required and where
one is not required.

The methods for stratifying described above may be used separately or in combination. For instance, the
auditor may stratify first by the nature of the items, then by dollar amount.

STRATIFICATION EXAMPLE:

Taxpayer A sells three types of computer equipment: laptops, desktops and network servers. The auditor
decides to stratify the total population of sales by type of computer equipment, since that tends to create more
homogeneous sub-populations. Since this is still a non-homogeneous, stratified population the sample size
computed from the Sampling Size Table is 100 per strata.

There were $2,000,000 total laptop sales during the period, $3,000,000 total desktop sales and $5,000,000
server sales. The auditor should allocate the total sample size as follows:

100 from laptop sales


100 from desktop sales
100 from network sales

The results were as follows:

5% under-reported laptop sales X $2,000,000 = $100,000


5% over-reported desktop sales X $3,000,000 = ($150,000)
10% under-reported network sales X $5,000,000 = $500,000

The total exception in this case would be the sum of the separately extrapolated sample results, the net amount
of $450,000 under reported.
(Note: this is another example of a credit reducing an exception total)

IDENTIFYING INDIVIDUALLY SIGNIFICANT ITEMS

When planning a sample for a substantive test, the auditor uses his or her judgment to determine which items,
if any, in an account balance or class of transactions should be tested individually and which items, if any,
should be subject to sampling. The auditor should perform a detailed test of each item for which, in his
judgment, acceptance of some sampling risk is not justified. The auditor might also identify unusual balances
and transactions as individually significant items.

Any items that the auditor has decided to test 100 % are not part of the items subject to sampling.

EVALUATING THE SAMPLING RESULTS-STEP 8

After completing the examination of the sampling units and summarizing the deviations from prescribed
control procedures, the auditor evaluates the results. Whether the sample is statistical or non-statistical, the
auditor uses judgment in evaluating the results and reaching an overall conclusion.

INTERPRETING RESULTS

The auditor must determine how the outcome of the sample affects the test conclusions and the overall audit
approach. If the auditor is testing the reliability of a certain record, the outcome of the attribute sample will
either show deviations or no deviations. It there are deviations, the auditor must expand the sample as
described under Step 6 for attribute sampling or reject the record as unreliable. This in turn may affect the
audit approach.

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