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CMA Intermediate · Corporate Accounting and Auditing · Audit Sampling, Audit Techniques and Analytical Procedure

An auditor of a company tests a sample of 60 purchase invoices from a population for evidence of approval. Two selected items are voided invoices, properly voided and not a deviation. The auditor examines replacement items for them and finds 3 genuine approval deviations among the 60 items examined in total. What is the sample deviation rate that the auditor evaluates under SA 530?

The sample deviation rate is 5%, being 3 genuine deviations out of 60 items examined. Voided invoices that were properly voided are not deviations and are replaced under SA 530, so the sample remains 60 items and the voided items are not counted as errors.

  1. A3 out of 62, about 4.8%
  2. B5 out of 60, about 8.3%
  3. C3 out of 60, i.e. 5%Correct
  4. D3 out of 58, about 5.2%

Explanation

Voided invoices are replaced, so the sample of 60 items examined is intact. Deviations are 3 genuine ones, so rate = 3/60 = 5%. Counting the voided items as deviations (5/60) is wrong because they are not deviations, and subtracting them (3/58) ignores the replacement requirement.

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