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ISA 230 requires a minimum period of 5 years from the date of report.
Companies Act, 2017 specifies a 10 years retention requirement
As per the auditing standards;
Contents are kept confidential
Available to third party as per the ethical guidelines.
2. AUDIT SAMPLING: ISA 530
3.1 The nature of sampling
Checking 100% population
They select a sample of items for testing and test the sample for accuracy/reliability.
Sampling is not always appropriate for auditing
If a sample consists of small items of large items
Sample is only appropriate when the population is homogenous
Uses of Sampling
Sampling in auditing involves applying audit procedures to less than the entire population of items subject to audit.
Sample should be representative of the population
Reflect the characteristics of the population as a whole.
The larger the sample, the more likely it will be representative
Large sample are more time-consuming
Using Sampling
2. AUDIT SAMPLING: ISA 530
3.2 The relationship between sampling and the audit risk
model
Sampling risk can be analyzed into sub-risks:
Sampling risk: the risk that the auditor’s conclusion based on a sample may be different
from the conclusion had he tested the entire population.
Sample not representative of population
Conclusion drawn are unjustified and incorrect
Higher sampling risk
Non-sampling risk: the risk that the auditor reaches an incorrect conclusions for reasons
other than the sampling risk.
Occurs due to factors involving errors
Incompetence of the audit team
Tight deadlines
2. AUDIT SAMPLING: ISA 530
3.3. Sampling risk and Statistical sampling: Objective of the auditor in sampling is;
To provide a reasonable basis for the auditor to draw conclusions about the
population from which the sample is drawn.
Acceptance of Wrong Rejection of Right
Test of Controls Controls are more effective Controls are less effective they
then they actually are actually are