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QNO Sampling Not Providing Reasonable Basis to Support Conclusion Old Course – (N22R)
78.500 TITANIUM CNO--SA530.200 New Course – (SM23)
Chintamani Ltd appoints Chintan & Mani as statutory auditors for the financial year 2021 - 2022. Chintan
& Mani seem to have different opinions on Audit approach to be adopted for audit of Chintamani Ltd.
Mani is of the opinion that 100% checking is not required and they can rely on Audit Sampling techniques
in order to provide them a reasonable basis on which they can draw conclusions about the entire

population. Chintan is concerned that whether the use of audit sampling has provided a reasonable
basis for conclusions about the population that has been tested.
You are required to guide Chintan about his role if audit sampling has not provided a reasonable basis for
conclusions about the population that has been tested in accordance with SA 530.
Answer As per SA 530, “Audit Sampling”, the auditor shall evaluate:

(a) The results of the sample; and
(b) Whether the use of audit sampling has provided a reasonable basis for conclusions about the population
that has been tested.

If the auditor concludes that audit sampling has not provided a reasonable basis for conclusions about the
population that has been tested, the auditor may:

(I) Request management to investigate misstatements that have been identified and the potential for further
misstatements and to make any necessary adjustments; or

(II) Tailor the nature, timing and extent of those further audit procedures to best achieve the required
assurance. For example, in the case of tests of controls, the auditor might extend the sample size, test an
alternative control or modify related substantive procedures.

QNO Uses of Stratification Old Course – (M23E)
79.500 TITANIUM CNO--Unique

While conducting audit of PC Ltd., CA. T decided to use sampling technique to test the trade receivables
at the planning stage. He directed his team members to divide the whole population of trade receivables
balances to be tested in a few separate groups called 'strata'. He directed to treat each stratum as if it was
a separate population and divided the trade receivables balances of PC Ltd. for the Financial Year 2022 -
23 into groups on the basis of personal judgment as follows:

Sr. No Particulars
1 (a) Balances in excess of ₹ 50,00,000;
2 (b) Balances in the range of ₹ 40,00,001 to ₹ 50,00,000;
3 (c) Balances in the range of ₹ 30,00,001 to ₹ 40,00,000;
4 (d) Balances in the range of ₹ 20,00,001 to ₹ 30,00,000;
5 (e) Balances in the range of ₹ 10,00,001 to ₹ 20,00,000;
6 (f) Balances ₹ 10,00,000 and below

From the above mentioned groups, CA. T directed to pick up different percentage of items for examination
from each of the group. One of the team members, Mr. Neel, wants to use some other technique of
sampling for the above purpose as the concept of stratification is not clear to him. You are required to
explain the concept of stratification and its uses to Mr. Neel.
Answer ➢ Concept of Stratification:
Stratification is the process of dividing a population into subpopulations, each of which is a group of
sampling units which have similar characteristics (often monetary value).

➢ Uses of Stratification
1. Audit efficiency may be improved if the auditor stratifies a population by dividing it into discrete
sub-populations which have an identifying characteristic. The objective of stratification is to

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