Materiality and Sampling in Audit

Overview

ISA 320 and ISA 530 on Audit Materiality and Audit Sampling respectively are among two of the most problematic audit standards for smaller audit firms.

The audit work by firms using these standards regularly get a less than positive review in Monitoring Inspection reports.

The topics will be covered in the following sequence

 Materiality

• How to calculate materiality

• Different approaches to calculating materiality

• Documenting the professional judgement used to choose the level of

• materiality

• Survey data from the Regulator on the methods used in the larger firms

• Calculating and recording performance materiality

• Using materiality to plan and direct the performance of the audit
  
  

Sampling

• The different methods of sampling

• Using statistical sampling

• Sample sizes for tests of controls

• Using judgemental sampling

• Uding AR and data analytics to reduce sample sizes

• Sampling selection using haphazard or judgement rather than random

• sampling

• Summarising, concluding and recording the sampling
  
  
• Survey data from the FRC on the methods used in the larger firms