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(iii) Tolerable rate of deviation – A rate of deviation from prescribed internal control procedures set
by the auditor in respect of which the auditor seeks to obtain an appropriate level of assurance that
the rate of deviation set by the auditor is not exceeded by the actual rate of deviation in the population.

QNO Evaluating Results of Sampling Old Course –(N18M)
530.17 Bhaskar CNO- SA530.260
The auditor shall evaluate the results of the sample and whether the use of audit sampling has provided a

reasonable basis for conclusions about the population that has been tested. Analyse and explain.
Answer ➢ The auditor shall evaluate-
• The results of the sample; and
• Whether the use of audit sampling has provided a reasonable basis for conclusions about the
population that has been tested.

➢ For tests of controls, an unexpectedly high sample deviation rate may lead to an increase in the
assessed risk of material misstatement, unless further audit evidence substantiating the initial
assessment is obtained. For tests of details, an unexpectedly high misstatement amount in a sample
may cause the auditor to believe that a class of transactions or account balance is materially misstated,
in the absence of further audit evidence that no material misstatement exists.

➢ Special Case
In the case of tests of details, the projected misstatement plus anomalous misstatement, if any,
is the auditor’s best estimate of misstatement in the population. When the projected misstatement
plus anomalous misstatement, if any, exceeds tolerable misstatement, the sample does not provide a
reasonable basis for conclusions about the population that has been tested. The closer the projected
misstatement plus anomalous misstatement is to tolerable misstatement, the more likely that actual
misstatement in the population may exceed tolerable misstatement. Also, if the projected
misstatement is greater than the auditor’s expectations of misstatement used to determine the sample
size, the auditor may conclude that there is an unacceptable sampling risk that the actual misstatement
in the population exceeds the tolerable misstatement.

➢ Considering the results of other audit procedures helps the auditor to assess the risk that actual
misstatement in the population exceeds tolerable misstatement, and the risk may be reduced if
additional audit evidence is obtained.

➢ What if no reasonable Basis?
In case the auditor concludes that audit sampling has not provided a reasonable basis for conclusions
about the population that has been tested, the auditor may request management to investigate
misstatements that have been identified and the potential for further misstatements and to make any
necessary adjustments; or 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— Sampling Not Providing Reasonable Basis Old Course – (N23R)
530.17.50 Bhaskar CNO - SA530.260
Chintamani Ltd appoints Chintan & Mani as statutory auditors for the financial year 2022-2023. Chintan &
Mani seem to have different opinion 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 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

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