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

While testing a sample of fixed asset additions at Tarn Ltd, the auditor finds one invoice that was misposted due to a one-off system outage that affected only that day, and which management has confirmed in writing did not recur. How should the auditor treat this misstatement under ISA 530?

The auditor may treat it as an anomaly only after obtaining a high degree of certainty, through additional procedures, that it is not representative of the population. Management's confirmation alone is insufficient evidence under ISA 530.

  1. AAs an anomaly only if the auditor obtains a high degree of certainty that it is not representative of the population, by performing additional workCorrect
  2. BAs an anomaly automatically, because management confirmed it was one-off
  3. CAs a normal error to be projected, with no consideration of its cause
  4. DAs irrelevant, because ISA 530 excludes tests of details of assets

Explanation

ISA 530 defines an anomaly as a misstatement demonstrably not representative of the population. The auditor must obtain a high degree of certainty, through additional audit procedures, before treating it as such. Management's representation alone is insufficient, and anomalies are not simply ignored or projected without thought.

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