Sampling Method
MUS is standard for substantive overstatement testing. Classical is used when items are similar in size or when testing for understatement.
↳ ISA 530.A4 — items are selected proportional to their monetary value. Larger items have a higher probability of selection. Standard for overstatement testing.
Confidence Level
Reflects the assessed risk of material misstatement. Higher confidence = larger sample.
↳ Risk of incorrect acceptance: 10%. Confidence factor (CF): 2.31.
Population & Materiality
Enter the total monetary value of the population being sampled and the materiality thresholds from your planning.
Total monetary value of the account or class of transactions
Typically performance materiality or a fraction of it
Prior year misstatements or current estimate. Leave blank or enter 0 if none.
ISA 530 Sampling Cheat Sheet — free PDF
MUS formula, confidence factor table, and a fully worked example — one page for your planning folder. Plus one practical audit insight per week.
No spam. Unsubscribe anytime.
Sampling Considerations for Construction
Construction audits centre on long-term contracts recognised over time under IFRS 15. Each contract involves significant estimation — percentage of completion, forecast costs to complete, variation orders, and claims. While the number of active contracts may be small enough for 100% testing in some firms, larger contractors with dozens or hundreds of active projects require a sampling approach.
Sampling focus: Construction
Contract-level sampling is the primary approach for construction audits. MUS is applied to the population of contract revenue or contract assets/liabilities, naturally selecting the largest contracts. For cost testing within individual contracts, a separate sample of cost invoices and subcontractor certificates is typically drawn to verify costs incurred against the project ledger.
Key sampling considerations
For entities with a manageable number of contracts (under 20–30), consider testing all contracts above a threshold rather than using statistical sampling — the population may be too small for MUS to be effective. Within each sampled contract, separately test the key estimates: total forecast costs, percentage of completion method, and revenue recognised to date. Subcontractor costs are typically the largest cost category — sample subcontractor invoices and payment certificates to verify both occurrence and accuracy. Variation orders and claims in various stages of approval create revenue recognition risk — sample these separately to assess whether recognition criteria under IFRS 15 are met. Retention receivables should be sampled with attention to ageing and historical recoverability — older retentions may indicate disputed work or client financial difficulty.
ISA 530.5 — Audit sampling means applying audit procedures to less than 100% of items within a population so that all sampling units have a chance of selection.
ISA 530.A4 — MUS uses monetary units as the sampling unit, giving each monetary unit an equal probability of selection.
ISA 530.A11 — Sample size is affected by the tolerable misstatement, expected misstatement, and the required level of confidence.