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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Evidence and testing considerations

During a test of details on sales transactions at Elmcroft Co, the auditor finds one error in the sample that arose because a clerk, on one specific day, used a backup system during a power outage that has since been decommissioned. The auditor wishes to treat it as an anomaly. What is required under ISA 530?

The auditor must obtain a high degree of certainty, through additional procedures, that the error is not representative of the population before treating it as an anomaly and excluding it from projection. Management's assertion alone is insufficient evidence under ISA 530.

  1. AThe auditor must obtain a high degree of certainty that the misstatement is not representative of the population, by performing additional proceduresCorrect
  2. BThe auditor may exclude it from projection if management confirms it is isolated
  3. CThe auditor must always project it, as anomalies cannot exist in sampling
  4. DThe auditor may exclude it provided the amount is below clearly trivial

Explanation

ISA 530 allows a misstatement to be treated as an anomaly only when the auditor has a high degree of certainty that it is not representative of the population, which needs additional audit procedures to obtain. Management confirmation alone is not sufficient evidence. Anomalies can exist, so it is wrong to say they must always be projected. Being below a trivial threshold is not the test for anomalies.

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