Document ID: chunk:federal_register_of_legislation:F2021C01255:body:0:p8
Version: federal_register_of_legislation:F2021C01255
Segment Type: other
Provision Reference: 
Character Range: 20693–23638

non-statistical sampling, judgement is used to select sample items.  Because the purpose of sampling is to provide a reasonable basis for the auditor to draw conclusions about the population from which the sample is selected, it is important that the auditor selects a representative sample, so that bias is avoided, by choosing sample items which have characteristics typical of the population.

A13.         The principal methods of selecting samples are the use of random selection, systematic selection and haphazard selection.  Each of these methods is discussed in Appendix 4.

Performing Audit Procedures (Ref: Para. 10-11)

A14.         An example of when it is necessary to perform the procedure on a replacement item is when a voided cheque is selected while testing for evidence of payment authorisation.  If the auditor is satisfied that the cheque has been properly voided such that it does not constitute a deviation, an appropriately chosen replacement is examined.

A15.         An example of when the auditor is unable to apply the designed audit procedures to a selected item is when documentation relating to that item has been lost.

A16.         An example of a suitable alternative procedure might be the examination of subsequent cash receipts together with evidence of their source and the items they are intended to settle when no reply has been received in response to a positive confirmation request.

Nature and Cause of Deviations and Misstatements (Ref: Para. 12)

A17.         In analysing the deviations and misstatements identified, the auditor may observe that many have a common feature, for example, type of transaction, location, product line or period of time.  In such circumstances, the auditor may decide to identify all items in the population that possess the common feature, and extend audit procedures to those items.  In addition, such deviations or misstatements may be intentional, and may indicate the possibility of fraud.

Projecting Misstatements (Ref: Para. 14)

A18.         The auditor is required to project misstatements for the population to obtain a broad view of the scale of misstatement but this projection may not be sufficient to determine an amount to be recorded.

A19.         When a misstatement has been established as an anomaly, it may be excluded when projecting misstatements to the population.  However, the effect of any such misstatement, if uncorrected, still needs to be considered in addition to the projection of the
non-anomalous misstatements.

A20.         For tests of controls, no explicit projection of deviations is necessary since the sample deviation rate is also the projected deviation rate for the population as a whole.  ASA 330[3] provides guidance when deviations from controls upon which the auditor intends to rely are detected.

Evaluating Results of Audit Sampling (Ref: Para. 15)

A21.         For tests of controls, an unexpectedly high sample