100% testing vs. sampling.


Statements made in a recent article, "Take My Manual Audit, Please" (JofA, June98, page 33), could set a dangerous precedent for auditors. The author wrote that "audit software lends itself to conducting 100% testing—not just sampling—of client data" and went on to describe the benefits of 100% testing.

Replacing sampling procedures with 100% testing of all data could raise expectations for the audit to a level that I think is unacceptable.

Published articles could be a source of authoritative support, and, if the author's views are followed, this could elevate testing standards to a level of practice that practitioners may not choose, or may be unable, to follow.

Our standard audit report tells the statement user, "An audit includes examining, on a test basis." The word test is intended to denote sampling rather than 100% testing. If the standards are to be changed, let the standard setters do it.

Charles Chazen, CPA
Los Angeles

SPONSORED REPORT

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

VIDEO

How to Excel pivot a general ledger

The general ledger is a vast historical data archive of your company's financial activities, including revenue, expenses, adjustments, and account balances. J. Carlton Collins, CPA, shows how to prepare data for, and mine data with, PivotTables.

QUIZ

News quiz: Taking an economic snapshot and looking to the future

Recent news included IRS actions that affect individuals and partnerships and a possibly influential move by a Big Four accounting firm.Take this short quiz to see how much you know about the news.