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CS Professional · Compliance Management, Audit and Due Diligence · Audit Principles and Techniques

During planning of the audit of Ganga Pharma Ltd, the auditor decides to test a population of 4,000 vendor invoices. Which statement correctly reflects what SA 200 says about how the auditor should examine populations?

The auditor should use testing and other means of examining populations in a manner that gives a reasonable basis for drawing conclusions about the population. SA 200 does not demand testing every item, and management's limits or representations alone cannot replace an appropriately designed approach.

  1. AUse testing and other means of examining populations in a manner that provides a reasonable basis to draw conclusions about the populationCorrect
  2. BTest every invoice because sampling cannot give a reasonable basis for conclusions
  3. CTest only invoices above the management's chosen limit, without considering the population
  4. DRely on management's representation about the population instead of testing

Explanation

SA 200 says the SAs require the auditor to use testing and other means of examining populations in a manner that provides a reasonable basis for conclusions about the population, with SA 500, SA 520 and SA 530 giving the detail. It does not require examining every item. Management limits or representations alone do not give such a basis.

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