## Step 1: Analyse Deviations/Misstatements Found

Pattern	Classification	Action
Deviations share common features	Systemic	Observe common features → Extend audit procedures to ALL items with that feature
Deviation is isolated	Anomaly	Obtain high degree of certainty it is NOT representative of the population

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## Step 2: Project Misstatements to Population (TOD)

Auditor must project sample misstatements to the whole population to assess the scale of misstatement
Anomalous misstatements may be excluded from projection — but their uncorrected effect must still be considered separately
TOD: Explicit projection required (sample rate × population)
TOC: No explicit projection needed — sample deviation rate IS the projected rate for the population

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## Step 3: Evaluate Sample Results

Auditor evaluates:

1. The results of the sample

2. Whether sampling has provided a reasonable basis for the conclusion

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## Audit Procedures on Selected Items

Situation	Action
Procedure not applicable to selected item (e.g., cancelled cheque)	Verify cancellation is proper → perform procedure on a replacement item
Procedure cannot be performed and no suitable alternative	Treat as deviation (TOC) or misstatement (TOD)
Documentation is lost	Cannot perform procedure → treat as deviation/misstatement
No reply to positive confirmation	Alternative procedure: examine subsequent cash receipts + evidence of source

> Important distinction: 'Not applicable' → replace the item. 'Unable to perform' → count it as an error.

Worked example

### Example 1

Auditor tests 100 sales invoices. Three show missing authorization signatures, all from Branch X during the week the manager was on leave. Common feature identified → auditor extends testing to ALL Branch X invoices for that week, not just the original sample.

### Example 2

In a debtors confirmation test (sample of 80), one debtor disputes ₹50,000 due to a one-off billing error confirmed by both parties as isolated. Classified as anomaly → excluded from projection to full population. However, if uncorrected, the ₹50,000 is still added to projected misstatement separately when evaluating overall sufficiency.

### Example 3

Invoice #1234 is selected for payment authorization testing. It was cancelled. Auditor verifies cancellation is proper — not a deviation. Selects replacement invoice #1235, performs authorization test on that item instead.

⚠️ Common exam mistakes

Projecting misstatements for TOC — projection is only required for TOD; for TOC the sample deviation rate directly equals the projected population rate
Completely ignoring anomalous misstatements after excluding them from projection — they must still be considered when evaluating aggregate uncorrected misstatements
Treating 'procedure not applicable' the same as 'unable to perform' — the former calls for a replacement item; the latter calls for treating the item as an error

Reference: — SA 530 – Audit Sampling

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Analysing Deviations, Projecting Misstatements, and Evaluating Sample Results

Worked example

⚠️ Common exam mistakes