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

When designing audit procedures for Halden Co, the auditor must choose the means of selecting items for testing. Which statement about selecting items for testing under ISA 500 is correct?

Selecting specific items such as high-value or unusual items is a permitted method under ISA 500, alongside testing all items and audit sampling. However, the results from specific items cannot be projected to the whole population, unlike results from audit sampling.

  1. ASelecting all items is never permitted because it is impractical
  2. BSelecting specific items, such as high-value or key items, is a permitted means and the results cannot be projected to the whole populationCorrect
  3. CAudit sampling must always be used and specific item selection is prohibited
  4. DSpecific item selection allows the auditor to project errors to the whole population

Explanation

ISA 500 identifies three means: selecting all items, selecting specific items, and audit sampling. Specific items, such as high-value or key items, may be tested, but the results cannot be projected to the population as sampling results can. Testing all items is allowed where appropriate, such as for small populations.

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