Selecting Items for Testing (2)

Question 1

Selecting all items (common)

Answer 1

More common for substantive procedures than tests of controls

Question 2

Selecting all items appropriate for (population)

Answer 2

Population with small number of high value items

Question 3

Selecting all items appropriate for (significant risk)

Answer 3

Significant risk of material misstatement and other means do not provide sufficient, appropriate audit evidence

Question 4

Selecting all items appropriate for (calculations)

Answer 4

Repetitive calculations performed using automated tools and techniques

Question 5

What may an auditor want to ensure?

Answer 5

They test certain items within a population

Question 6

Example of stratification?

Answer 6

Receivables population divided into two discrete sub-populations.

One sub-population has the ten largest balances in it and each of these will be tested.

Second sub-population contains all remaining receivables and auditor may test a sample of these balances