Page 115 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
selected.

(CNO-SA530.140) Step 4 - Performing Audit Procedures
Auditor shall perform audit perform audit procedures on each item selected.
If audit procedure is not applicable on any item (Item not suitable/relevant)
• Replace it with new item & perform procedure on it (Unit not suitable) E.g., Cancelled cheque get selected
while auditing payments
If auditor is unable to apply audit procedure on selected item (Audit procedure not suitable)
• Perform alternative procedure. If there is no suitable alternative, then it is deviation / misstatement
(Procedure not suitable) E.g., Unable to apply audit procedure on debtors.
• Because documents are lost, or no reply received for positive confirmation request.
• Checking subsequent receipts is alternative audit procedure

(CNO-SA530.160) Step 5 - Nature & Cause Of Deviation And Misstatements
Investigate: Investigate nature or cause (Qualitative Aspect) f of any deviation or misstatement
Nature:
• Rarely auditor may come across ANOMALY perform additional procedure to ensure that it is not
representing population.
• Common feature- Identify all items with common feature & extend audit procedures.
(Shortcut: T PL)
2
o Type of Transaction
o Period of Time
o Product Line
o Location
• Cause: Unintentional or Intentional
• Effect: Consider Possible effect on defined audit objective and Effect on other areas

(CNO-SA530.180) Step 6 - Projecting Misstatement
For tests of controls
No Explicit Projection: For tests of controls, the sample deviation rate is the projected deviation rate for the
entire population; no explicit projection needed.
SA 330: SA 330 provides guidance when deviations from controls are detected, upon which the auditor intends
to rely.
For tests of details
Make Projection: For tests of details, the auditor shall project misstatements found in the sample to the
population to obtain a broad view of the scale of misstatement.
Cannot Account: The projection may not be sufficient to determine an amount to be recorded.
Anomaly: When a misstatement is established as an anomaly, it may be excluded in projecting misstatements
to the population, but its effect, if uncorrected, still needs to be considered in addition to the projection of non-
anomalous misstatements.

(CNO-SA530.200) Step 7 - Evaluating Sampling Results
I. Projected Levels Below Expected Levels
• TOC: Controls are reliable and low RMM.
• TOD: No material misstatement (MMST)
Reasonable basis for conclusions
II. Projected Levels Above Expected Levels but Below Tolerable Level
• TOC- Assume controls are not reliable and high RMM unless there is further audit evidence to prove

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