Audit Sampling

How the sample is selected

• Material financial statement items and higher-risk areas are identified
• The largest transactions are usually tested in full
• For the rest a sample is drawn — random or targeted at risk indicators
• Sample size depends on the risk assessment and the reliability of internal control

What an error found means

An error in the sample is not an isolated fact. The auditor assesses whether it is random or systemic and projects the result onto the whole population. A single error in the sample may indicate a material misstatement of the item as a whole.

That is why finding an error usually leads not to a one-off correction but to extended testing in that area.

How a company can reduce the sample

The only legitimate way is reliable internal control. If the auditor is satisfied that the company's controls operate effectively, they may reduce the extent of substantive testing. Weak controls have the opposite effect.

Sampling methods (ISA 530)

• statistical — items are selected at random and the result is evaluated using probability theory; non-statistical — based on professional judgement;
• selection methods: random, systematic (every n-th item), monetary unit — the larger the amount, the higher the chance of being selected;
• key and large items are tested in full, sampling is used for the remaining population;
• tolerable misstatement is set before testing, and any error found is projected onto the whole population.

Example of projection

Receivables total UZS 2 billion; large balances of UZS 800 million are tested in full, and of the remaining UZS 1.2 billion, UZS 300 million is tested and an overstatement of UZS 6 million (2%) is found. The projected misstatement in the untested part is about UZS 18 million (2% of UZS 900 million). If the amount approaches materiality, the auditor extends testing or asks for the financial statements to be corrected.

Legal basis

The audit firm determines the forms and methods of the audit independently (Art. 28 of Law ZRU-677 on Audit Activity), guided by International Standards on Auditing (Art. 9).