Our sampling tool is a simple, reliable, and statistically robust way for users to create sample data for testing of transactions (either for substantive or controls testing or both).
It works like this:
- On the lead schedules typically there is an option that asks whether transaction testing is required as part of the audit work:
- Selecting "Yes" opens a link to create a sample testing page. These usually allow multiple versions of the testing to be created (for more than one type of payment say):
- The default name of the page may be edited from the default to identify what kind of transactions are to be included:
- Select "Add" and then navigate to the new page (H2 in this case), and select the balances to be included in the testing:
- Then, after selecting the assertions being tested, describe the method used and why, and choose an appropriate sampling interval (you decide this based on performance materiality adjusted for the assessed risk and for weighting being placed on controls testing, analytical procedures and any other factors):
- Next, select the tests to be applied to the sample. Select "Other Test" to add test items not included in the standard options:
- Then, prepare the "raw" data to be added.
- Make sure that if items are excluded from the sample set this is documented and that the reason for this is made clear (for example, rent transactions are excluded as they have been proved in total).
- Supported file types are: XLS, XLSX and CSV
- If extracting data from Xero follow the video below:
- The data must be in .csv, .xls. or .xlsx format. Include column headings.
- All data will be imported so remove any unneeded columns, remove totals, and any other information not to be input.
- If combining several ledger accounts you may wish to add a column that contains the account code as below.
- If combining accounts sort the whole thing into date order:
- Select "Import Data" and link the data file for import.
- Specify the sampling interval. This would normally be your performance materiality, however, this interval may be increased if reliance is placed on internal controls testing already done or analytical review. So say if gross profit percentages are consistent and the entity is stable we may reduce the amount of testing of sales by making the sampling interval PM x 2 say (1/2 of the number of transactions in the sample). Or if controls are great as well and we have tested them we may use PM x 4 (1/4 of the number of transactions)
- If there is a column called "amount" this will be used for the cumulative sampling. If not change the name of the "Sample Column" to correspond with the appropriate column (if data is uploaded and there is no match a dialog will appear asking which column you wish to use for the sample):
- Click "Add" to create the sample and the testing table. This creates the sample based on a random "seed" - a starting value between zero and the sampling interval:
- Follow the link to the testing table (H2-1.4) - the original sample is attached automatically, the result of the sampling is summarised and the tests are added to each item ready to complete. Statistics are added showing the proportion of the population included in the sample by value and by line items:
- Completed tests are shown. Documentation may be attached or additional comments added:
- Once all tests are completed assess the results (as before):
Import all rows:
- Under the "Import Type" selection there is another option to select "All Rows".
- This is used where the whole data set is to be loaded (where all items are to be included or where sampling has already been done using another method).
Random sample option:
Under "import type" select Random Sample from the dropdown:
Upload the data file, and select how many samples you would like - say 20 in this case, then click the Add button:
Clicking the link to the page displays the samples and the data criteria:
- This gives equal priority to each row, so low-value items have an equal chance of being selected as high-value.
If higher-value items are selected, filter the population before sampling to exclude (for example) all items below the trivial level, or items under a factor of performance materiality (for example).
NOTE: if the sampling tool looks different to the above, you may still be using the old tool inherited from older templates. In this case, go back to the top of the page where it asks 'State sample size and selection method and rationale for this decision', delete the response and instead choose 'sampling tool' from the dropdown.