Day: December 21, 2021

While conducting an audit, the auditor comes across various matters in respect of which he is not able to obtain sufficient appropriate audit evidence. One such area involves verification of liabilities, in general, and contingent liabilities in particular. In such Read More …

The surprise checks also constitute an important part of normal audit procedures as per the Guidance Note on” “Surprise Checks”. Audit procedures cannot consist merely of any set of rules or precepts to be applied to all and every situation Read More …

AAS-13 on “Audit Materiality” requires that the auditor should consider materiality and its relationship with audit risk when conducting an audit. According to it, information is material if its misstatement (i.e., omission or erroneous statement) could influence the economic decisions Read More …

Audit risk is the risk that an auditor may give an inappropriate opinion on financial information that is materially mis-stated. For example, an auditor may give an unqualified opinion on financial statements without knowing that they are materially mis-stated. Such Read More …

Students may recall that according to AAS-2, on “Objective and scope of Financial Statements”, there is unavoidable risk that even some material misstatements may remain undiscovered due to the test nature and other inherent limitations of any system of internal Read More …

The advantages of statistical sampling may be summarized as follows – 1. The amount of testing (sample size) does not increase in proportion to the increase in the size of the area (universe) tested. 2. The sample selection is more Read More …

Sample should be selected in such a manner that it is representative of the population from which the sample is being selected. It will necessitate that each item in the population has an equal chance of being included in the Read More …

As per AAS 15, “Audit Sampling”, the auditor should select sample items in such a way that the sample can be expected to be representative of the population. This requires that all items in the population have an opportunity of Read More …

Generally, a large manufacturing concern is associated with a large volume of transactions. Also, the nature of the transactions is determined by the nature of the business. For example, one may find numerous purchases of raw materials, stores, spares, etc.; Read More …

Very often we come across this term when an audit is conducted on the basis of a part checking. This, it is said, owes its origin to the statistical theory of sampling. The auditor according to his best judgment, having Read More …