Subsection 2: Certification of accounts

The professional practice standard relating to the selection of items to be audited, approved by the Minister of Justice, is set out below:

PROFESSIONAL PRACTICE STANDARD RELATING TO THE SELECTION OF ITEMS TO BE AUDITED

Introduction

1. When, as part of the audit of financial statements, the auditor performs tests of procedures or tests of details, the auditor selects the items to be covered by those audit procedures.

2. The purpose of this standard is to define the principles relating to the auditor's use of selection methods in the audit of accounts.

Definition

3. Population: the set of data from which the statutory auditor selects a sample and on which he wishes to reach a conclusion. A population may, for example, consist of all the items in an account balance or a category of transactions.

Methods for selecting items to be audited

4. When designing the audit procedures to be performed, the statutory auditor determines, on the basis of his professional judgement, the appropriate methods for selecting the items to be audited.

Depending on the characteristics of the population to be audited, the statutory auditor uses one or more of the following selection methods:

- selection of all items;

- selection of specific items;

- testing.

Selection of all items

5. This selection method is mainly used when the population consists of a small number of elements.

Selection of specific elements

6. Depending on the auditor's knowledge of the entity and its environment and his assessment of the risk of material misstatement, the auditor may decide to use this selection method in particular when he considers it relevant:

- to cover, by value, a large proportion of the population. In this case and when the characteristics of the population allow it, the statutory auditor selects the items whose amount is greater than a given amount that it sets for this selection, in accordance with the principles defined in the standard relating to material misstatements and the materiality threshold;

- to audit items that are unusual due to their size or nature.

Surveys

7. A survey gives all items in a population a chance of being selected.

Sample selection techniques in surveys may be statistical or non-statistical.

Analysis of audit results and audit implications

8. Regardless of the method used to select the items to be audited, the statutory auditor, based on the results of the procedures performed:

- assesses whether the assessment of the risk of material misstatement at the level of assertions, which he had defined for this population, remains appropriate;

- concludes on the sufficiency and appropriateness of the items collected;

- draws the consequences, on his engagement, of the misstatements identified in accordance with the principles defined in the professional practice standards relating to material misstatements and materiality.

9. In addition, where the statutory auditor has selected items from a population on a test basis, the statutory auditor draws a conclusion on the entire population from the audit of these items.

Where the results of this audit reveal misstatements, the statutory auditor assesses the nature and cause of these misstatements.

Whether the auditor considers the situation to be a one-off that arises from an isolated event or representative of similar situations in the population, the auditor assesses the consequences for the population as a whole.