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 Financial Services
Financial services audits deal with large homogeneous populations — loan portfolios with thousands of individual facilities, payment transactions numbering in the millions, and investment portfolios with diverse instrument types. Effective sampling design is critical because testing every item is impossible, yet the populations carry significant inherent risk due to credit, market, and operational exposures.
Sampling focus: Financial Services
Loan portfolio testing is the primary sampling challenge in banking audits. MUS is particularly effective for testing loan balances because it naturally selects larger exposures with higher probability. For credit loss provisioning under IFRS 9, auditors typically sample individual facilities across staging categories (Stage 1, 2, and 3) to test both the staging classification and the loss calculation.
Key sampling considerations
Stratify loan portfolios by product type (mortgages, commercial loans, consumer credit) and by IFRS 9 stage — each stratum has fundamentally different risk characteristics. For transaction testing (payments, transfers), extremely high volumes mean attribute sampling with statistical confidence levels is essential to project error rates. Investment portfolio valuation sampling should separate Level 1 (quoted prices), Level 2 (observable inputs), and Level 3 (unobservable inputs) — Level 3 instruments require targeted testing rather than statistical sampling. Regulatory compliance testing (KYC, AML, capital adequacy) often uses attribute sampling to estimate the rate of non-compliance across the population. Expected credit loss model testing requires sampling both the inputs (PD, LGD, EAD parameters) and the outputs (calculated provisions) across segments.
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.