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.
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Sampling Considerations for Insurance
Insurance audits deal with large, statistically significant populations of policies and claims. Premium income testing covers thousands of policies, while claims sampling must address both reported claims and the incurred-but-not-reported (IBNR) reserve. Under IFRS 17, the components of insurance contract liabilities — fulfilment cash flows, risk adjustment, and contractual service margin — add further sampling requirements.
Sampling focus: Insurance
Claims file sampling is the primary substantive test for insurance liabilities. MUS applied to the population of reported claims selects larger claims with higher probability, but the auditor should also ensure adequate coverage of smaller claims to test for systematic processing errors. Premium income sampling verifies that premiums are correctly recorded, classified, and earned over the policy period.
Key sampling considerations
Stratify the claims population by line of business (motor, property, liability, life) and by status (open, closed, reopened) — each stratum has different characteristics and reserve methodologies. IBNR reserves cannot be tested by sampling individual items — instead, sample the actuarial model inputs (claim frequency, severity, development factors) to test the reasonableness of the aggregate estimate. Premium income sampling should cover the full policy lifecycle — test new business, renewals, mid-term adjustments, and cancellations to verify correct recognition timing. Reinsurance recoveries should be sampled separately to verify that ceded amounts are correctly calculated and that the reinsurer's creditworthiness supports recoverability. Under IFRS 17, sample contracts across measurement models (general, variable fee, PAA) to test the correct classification and initial recognition of insurance contract groups.
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.