Activity Based Risk Evaluation Model of Auditing

HOME | AUDIT TESTING AND SAMPLING

Audit testing and sampling procedures

There are five primary tasks that auditors undertake when performing audit sampling and testing procedures. These tasks, linked to the underlying theory, are summarized in the first column below.

In the second and third columns are practical examples which may be viewed independently of the links to the theory.

Note that the web pages dealing with audit testing, including audit sampling, (i.e. those pages underlying this page) assume an understanding of basic auditing concepts: there are no links in these pages to the ABREMA model and its glossary. The only links are to pages related to terms used in audit testing. Additionally, the pages on audit testing do not refer to statistical techniques: they only deal with non-statistical sampling and testing procedures.

Primary tasks	Control testing	Substantive testing
1. Preparation of the audit testing plan The preparation of the audit testing plan includes the identification of the population to be tested, the definition of what comprises an exception, and the determination of the sample size.	Example	Example
2. Selection of the items to be tested Consideration of one of the following methods of selection [fn] will determine which items in the population are to be selected for examination: random number selection, systematic selection, or haphazard selection.
3. Performance of the audit procedures Following selection of the items, the auditor performs the relevant audit procedure(s) on those items. Any exceptions (which, in the case of tests of control are control deviations and in the case of substantive procedures are misstatements) are noted for subsequent evaluation.	Example	Example
4. Evaluation of exceptions The auditor evaluates the nature and extent of exceptions found in both the key items and other items selected for the purpose of estimating the actual level of exceptions that exist in the total population. This requires firstly:
qualitative evaluation of exceptions and secondly	Example	Example
quantitative evaluation of exceptions.	Example	Example
5. Comparison of tolerable level with estimated actual level The formation of a conclusion on the work performed requires a comparison of the tolerable level of exceptions with the actual level of exceptions estimated by the auditor as part of the quantitative analysis of exceptions.	Example	Example

Copyright, Australian Educational Research Pty Ltd. Any person accessing this site agrees to the Terms of Use.