## SA 530 – Performing Procedures & Evaluating Results

### Step 1: Performing Audit Procedures on the Selected Sample

The decision tree when audit procedures cannot be applied to a selected item:

```

Can audit procedures be applied to selected item?

│

├─ YES → Apply procedures → Obtain SAAE → Express opinion

│

└─ NO → Can a replacement item be tested?

│

├─ YES → Test replacement → Obtain SAAE → Express opinion

│

└─ NO → Can Alternate Audit Procedures (AAP) be applied?

│

├─ YES → Apply AAP → Obtain SAAE → Express opinion

│

└─ NO →

TOC: Treat as DEVIATION

TOD: Treat as MISSTATEMENT

```

> SAAE = Sufficient and Appropriate Audit Evidence

---

### Step 2: Projection of Misstatements

Test	Projection Required?
Test of Controls (TOC)	No – deviations are not projected
Test of Details (TOD)	Yes – misstatements are extrapolated to the full population, except anomalies

#### What about Anomalies?

An anomaly is a misstatement that is isolated — not expected to recur across the population.

If the anomaly does not continue → Do NOT project
If the anomaly continues → Project it

---

### Step 3: Evaluation of Sample Results

The auditor must evaluate:

1. The results of the sample

2. Whether the sample provides a reasonable basis for conclusions about the population

#### For Test of Controls:

> If a high rate of deviation is found → May lead to increase in ROMM (Risk of Material Misstatement)

#### For Test of Details:

Condition	Conclusion
Projected misstatement + anomalous misstatement > Tolerable misstatement	Sample does not provide reasonable basis for conclusion
Projected misstatement > Expected misstatement	There is an unacceptable sampling risk
High material misstatement found	Transactions and balances are materially misstated

Worked example

### Example 1

Example – Replacement Item:

An auditor selects invoice #347 for testing, but it has been destroyed in a fire. The auditor picks a replacement item (invoice #412) and applies the same procedures. This is valid — the auditor gets SAAE and can express an opinion.

### Example 2

Example – Projection of Misstatements (TOD):

Sample of 50 invoices from a population of 1,000. Total population value = ₹50 lakh. In the sample, misstatements total ₹2,500 (on sample value of ₹2,500). Projected misstatement = (₹2,500 / ₹2,500) × ₹50,00,000 = ₹50,000. The auditor compares ₹50,000 against tolerable misstatement (e.g., ₹30,000). Since ₹50,000 > ₹30,000, the sample does not provide a reasonable basis — further action is needed.

### Example 3

Example – Anomaly:

During TOD testing of debtors, an auditor finds one account overvalued by ₹8 lakh due to a one-time data entry error that has already been corrected. This is an anomaly. If the auditor confirms the error is isolated and corrected, it is not projected. However, the ₹8 lakh itself must still be added separately to the projected misstatement total for comparison with tolerable misstatement.

⚠️ Common exam mistakes

Projecting deviations found in Test of Controls — deviations in TOC are NOT projected to the population; only TOD misstatements are.
Ignoring anomalous misstatements in the final comparison — even if not projected, the anomaly's actual amount must be added to projected misstatement when comparing against tolerable misstatement.
Treating a missing document as automatically a 'misstatement' without first trying replacement items or alternate audit procedures.
Confusing 'evaluation of results' with 'projection' — projection is one input into evaluation; evaluation also considers qualitative factors and whether the sample design was appropriate.

Reference:

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SA 530 – Audit Procedures on Sample, Projection of Misstatements, and Evaluation of Results

Worked example

⚠️ Common exam mistakes