Sample Size Calculator for Construction
Pre-configured sampling guidance for construction audits. Covers contract revenue testing, WIP valuation sampling, and subcontractor cost verification with ISA 530 methodology.
Sampling Method
↳ ISA 530.A4: items selected proportional to monetary value. Standard for overstatement testing.
Confidence Level
Reflects the assessed risk of material misstatement. Higher confidence = larger sample.
Population & Materiality
Prior year misstatements or current estimate. 0 if none.
Enables finite population correction when sample > 10%.
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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.
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.