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 Retail
Retail audits involve extremely high transaction volumes with individually small amounts — a single store may process thousands of transactions per day. Sampling must be designed to efficiently cover this volume while detecting misstatements in revenue recognition, inventory valuation, and shrinkage estimates that are material in aggregate.
Sampling focus: Retail
Revenue transaction sampling in retail typically uses MUS applied to daily or weekly sales summaries rather than individual transactions, because the population is too large for item-level sampling. For inventory, sampling focuses on both the accuracy of perpetual records (testing counts against the system) and the valuation of goods (particularly markdown and shrinkage provisions).
Key sampling considerations
Revenue transaction populations are massive — consider sampling from daily POS summaries or batch totals rather than individual receipts to make sampling practical. Multi-location retailers require consideration of which locations to visit and how many items to test at each — use a combination of judgmental location selection and statistical item sampling. Inventory shrinkage estimates are a key judgment area — sample historical shrinkage data across locations to assess the reasonableness of the provision. Gift card and loyalty programme liabilities involve estimating breakage (unredeemed balances) — sample redemption patterns to test management's breakage assumptions. Markdown and promotional pricing can create valuation risk for inventory — sample items near season-end to test lower of cost and NRV assertions.
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.