Audit. Audit sample size. mistakes and risk. evaluation of sample results (most important)

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Audit. Audit sample size. mistakes and risk. evaluation of sample results (most important)

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25. SCOPE OF THE AUDITOR'S SAMPLE. ERRORS AND RISK. EVALUATION OF SAMPLE RESULTS

When determining the volume (size) of the sample, the audit organization must establish the risk of the sample, the permissible and expected errors. The sample size is determined by the amount of error that the auditor considers acceptable. The lower the value, the larger the required sample size.

Permissible error determined at the planning stage of the audit in accordance with the level of materiality chosen by the auditor. The smaller the size of the allowable error, the larger should be the size of the audit sample. When testing the means of the control system, an acceptable error is the maximum degree of deviation from the control procedures established by the economic entity, which the audit organization determined at the planning stage.

When checking the correctness of turnovers and account balances, an acceptable error is the maximum error in the balance or in a certain class of transactions that the audit organization agrees to allow so that the cumulative effect of such errors on the entire audit process allows it to assert with a sufficient degree of certainty that the financial statements do not contain significant errors. If the auditor believes that there is an error in the population under test, he needs a large sample in order to verify that the total amount of such errors in the population does not exceed the size of the allowable error. A small sample size is used if the auditor assumes that the population is free from error.

For any sample, the audit the organization must:

1) analyze each error in the sample;

2) to extrapolate the results obtained during the sampling to the entire tested population;

3) assess the risks of the sample.

When forming a sample, it is necessary to describe the specific goals for which it is carried out, and to evaluate the errors found in the sample in relation to these goals. If the audit objectives were not achieved through sampling, the audit firm may perform alternative audit procedures.

The audit organization can evaluate the qualitative aspect of errors, i.e. their nature, their cause, and also establish their impact on other areas of the audit.

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