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CS Professional · Internal and Forensic Audit · Emerging Issues and Challenges

Sundaram Textiles Ltd's internal auditor wants to test every payment voucher raised during the year instead of picking a sample of 60 vouchers. Which approach makes this practicable?

Running data analytics scripts on the full accounts payable data set makes 100 percent testing practicable, because software can examine every transaction quickly. Manual samples, however large, still leave part of the population untested, and management representations or value cut-offs are not substitutes for testing the entire data.

  1. AIncreasing the sample size to 100 vouchers selected manually
  2. BRunning data analytics scripts on the full accounts payable data setCorrect
  3. CRelying only on management's representation letter
  4. DTesting only vouchers above the audit committee's approval limit

Explanation

Data analytics tools can process the entire population of transactions quickly, which removes the sampling limitation. A larger manual sample is still a sample and does not cover every voucher. Management representations are not audit testing, and limiting to high-value vouchers leaves part of the population untested.

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