ASA 530 - Audit Sampling and Other Means of Testing - April 2006
Projecting ErrorsProjecting Errors
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Projecting Errors
58 For tests of details, the auditor shall project monetary errors found in the sample to the population, and shall consider the effect of the projected error on the particular audit objective and on other areas of the audit.
59 Under paragraph 58 of this Auditing Standard, the auditor needs to project the total error for the population to obtain a broad view of the scale of errors, and to compare this to the tolerable error. For tests of details, tolerable error is the tolerable misstatement, and will be an amount less than or equal to the auditor’s materiality used for the individual class of transactions or account balances being audited.
60 Under paragraph 58 of this Auditing Standard, when an error has been established as an anomalous error, the auditor needs to exclude the error when projecting sample errors to the population. Under paragraph 58, the auditor needs to consider the effect of any such error, if uncorrected, in addition to the projection of the non-anomalous errors. If a class of transactions or account balance has been divided into strata, the error is projected for each stratum separately. Projected errors plus anomalous errors for each stratum are then combined when considering the possible effect of errors on the total class of transactions or account balance.
61 For tests of controls, no explicit projection of errors is necessary since the sample error rate is also the projected rate of error for the population as a whole.