Roshan roshroshan rosh asked 2 years ago
1 Answers
Auditaudit Staff answered 1 year ago

The auditor may decide that it will be most appropriate to examine the entire population of items that make up a class of transactions or account balance (or a stratum within that population). 100% examination is unlikely in the case of tests of controls; however, it is more common for tests of details. 100% examination may be appropriate when, for example:
The population constitutes a small number of large value items;(20 Export Sales)
There is a significant risk and other means do not provide sufficient appropriate audit evidence; or (In absence of remuneration committee, fixed policy and agreements for remuneration to directorsà it is significant riskà100% selection)
The repetitive nature of a calculation or other process performed automatically by an information system makes a 100% examination cost effective. (Depreciation Calculation / Loose Tools Weighing)
 
Auditor do test checking to derive his decision about the whole population having items of similar nature and materiality but items that are highly material/unusual nature/required by law to comment on separately, can’t be audited through test check. You will find more examples in your book/Google. I just discuss the logic behind the question.

Call Back Request