Acca aa s21 Notes

V
aluation. That the receivable has been appropriately measured, taking into account the risk of 
non-recoverability.
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E
xistence. That the receivable balance actually exists.
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R
ights and obligations. That the client owns the receivable, that it hasn’t, for example, been 
assigned to a third party.
Note that these assertions can be remembered as ‘ACCA COVER’.
We return to assertions in Chapter 16.
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Chapter 11
AUDIT SAMPLING
1. Introduction
Unless an audit client is very small almost all audit 'testing' relies on sampling. This is because there 
simply isn’t time to examine all documents, transactions and balances and it wouldn’t be 
economically viable to do so. If, however, valid statistical conclusions are to be drawn about a 
population based on a sample, then the sample must be free from bias. In other words every 
document, transaction or balance in the population has an equal chance of being included in the 
sample. This is known as audit sampling.
2. Audit sampling
The process involves:
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Sample design – includes specify the population (is it complete?)
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Sample size – must be sufficient to reduce sampling risk (as explained in Chapter 9)
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Sample selection – choose a selection method (see below)
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Performing audit procedures – test the selected items. This will be either a test of controls or a 
test of details (a substantive procedure).
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Evaluate sample results – investigate all ‘errors’ (see later) and conclude on the population.
In