ABREMA: audit sampling and testing: example: qualitative analysis: substantive testing

Audit testing procedures

Example: Qualitative analysis: substantive testing

As part of the qualitative analysis, the auditor determines the cause of each misstatement found and, for each stratum, categories the misstatements as atypical, systematic or random. For example, assume:

no exceptions were found amongst the 18 key items,
2 atypical exceptions were found in the 7 items selected randomly from stratum 1,
one systematic exception was found in the 20 items selected in stratum 2, and
two random exceptions were found amongst the 10 items selected in stratum 3.

The exceptions may be summarized as follows:

Stratum	Exception category/ Product code	Recorded total cost	Audited total cost	Over (under) statement in items selected
Key items				nil
1	Atypical exceptions
	5141	$250,000	$190,000	$60,000
	5877	$72,000	$56,000	$16,000
2	Systematic exception
	4932	$1,250	$1,120	$130
3	Random exceptions
	5089	$1,750	$1,630	$120
	5634	$688	$788	($100)

The auditor then undertakes a quantitative analysis to estimate the extent of the misstatements in the total population.

Audit testing procedures, index page