Page 137 - CA Inter Audit PARAM

CA Ravi Taori
After performing test population.
of controls, he
concluded that Factors relevant to the auditor’s consideration of the
controls are weak. It expected misstatement amount include the extent, to
appears expected which item values are determined subjectively, the
results of risk assessment procedures, the results of
misstatement is high.
tests of control, the results of audit procedures applied
in prior periods, and the results of other substantive
procedures.
Senior Accountant Stratification of the When there is a wide range (variability) in the monetary
Says that they cannot population when size of items in the population, it may be useful to
generate list of appropriate stratify the population. When a population cannot be
workers’ areas wise or Decrease appropriately stratified, the sample size from the
site-wise or month- population generally will be Higher than the sample
wise joining so size that would have been required to attain a given
stratification is not level of sampling risk, as compared to aggregate of
possible. samples from strata.
His senior calls and An increase in the The greater the level of assurance that the auditor
says he wants higher auditor’s desired requires that the results of the sample are in fact
level of assurance & level of assurance indicative of the actual amount of misstatement in the
lower tolerable that tolerable population, the larger the sample size needs to be.
misstatement misstatement is not
exceeded by actual The lower the tolerable misstatement, the larger the
misstatement in the sample size needs to be.
Population

Decrease in tolerable
misstatement
Further he observes Change in the Negligible effect for large populations, the actual size
number of workers number of sampling of the population has little, if any, effect on sample size.
has increased from units in the Thus, for small populations, audit sampling is often not
1000 to 3000 Population as efficient as alternative means of obtaining sufficient
appropriate audit evidence.

However, when using monetary unit sampling, an
increase in the monetary value of the population
increases sample size, unless this is offset by a
proportional increase in Materiality.

In MUS

= )

From as Population Value increases and also Tolerable
Misstatement increases then effect will be nullified.

Author’s note
Above points are for factors affecting sample size in case of test of details. Similar points are there for
factors affecting sample size in case of test on control. Question may be silent on factors affecting sample
size whether in case of test of details or test of control , so write this common answer. Don’t forget to make
the necessary changes like substituting test of detail with control or vice versa.

QNO Statistical and Non-Statistical Sampling Old Course -- (M18R)
530.07 Bhaskar CNO- SA530.140
Whatever may be the approach non-statistical or statistical sampling, the sample must be representative.
Discuss explaining Statistical and Non Statistical sampling approaches.

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