Evaluating the Sample Results

Evaluating the Sample Results

62 The auditor shall evaluate the sample results to determine whether the assessment of the relevant characteristic of the population is confirmed or needs to be revised.

63 In the case of tests of controls, an unexpectedly high sample error rate may lead to an increase in the assessed risk of material misstatement, unless further audit evidence substantiating the initial assessment is obtained. In the case of tests of details, an unexpectedly high error 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.

64 If the total amount of projected error plus anomalous error is less than but close to that which the auditor deems tolerable, the auditor ordinarily considers the persuasiveness of the sample results in the light of other audit procedures, and may consider it appropriate to obtain additional audit evidence. The total of projected error plus anomalous error is the auditor’s best estimate of error in the population. However, sampling results are affected by sampling risk. Thus when the best estimate of error is close to the tolerable error, the auditor ordinarily recognises the risk that a different sample would result in a different best estimate that could exceed the tolerable error. Considering the results of other audit procedures helps the auditor to assess this risk, while the risk is reduced if additional audit evidence is obtained.

65 If the evaluation of sample results indicates that the assessment of the relevant characteristic of the population needs to be revised, the auditor may:

(a) request management to investigate identified errors and the potential for further errors, and to make any necessary adjustments;

(b) modify the nature, timing and extent of further audit procedures. 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; and/or

(c) consider the effect on the auditor’s report.