Yesterday I attended an eye-opening webinar led by Dr. Ramesh Ruben Louis on “Risk Assessment and Approach to Set Up Sample Size in Abot auditing software.”

It was a fantastic deep dive into effective audit sampling strategies and using tools like Abot to streamline our work.

Here are my key reflections and learnings that could be useful to any auditor striving for efficiency and accuracy:

Key Learnings:

A. Four Methods to Reduce Sample Size in Abot Software

1. Change of Sampling Methods
   Instead of relying on the default Monetary-Unit Sampling (MUS), auditors can opt for judgmental sampling to adjust the sample size based on specific audit needs, provided there’s strong justification.
2. Increase Performance Materiality (PM) Increasing the PM level (e.g., from 75% to 80% of Overall Materiality) can reduce the required sample size.
3. Conduct Tests of Control (ToC)

By performing a ToC, the control risk can be assessed as lower, which subsequently allows Abot to reduce sample sizes.

4. Assess Low Inherent Risk:

When inherent risk is assessed as low, the sample size can be reduced accordingly, but it must be done ethically and professionally, ensuring credibility.

B : Walk-Through Test vs. Test of Controls

A walk-through test is different from a test of control.

While WT is used to verify the flow of operations (e.g., from sales orders to recognition), ToC evaluates the effectiveness of those controls to potentially reduce substantive testing.

C : Walk-Through Test Procedures in Abot

Dr. Ramesh laid out a clear procedure for conducting a walk-through test for sales accounts. It involves selecting 1-3 samples, noting down transaction details, illustrating the audit procedures using flowcharts, and attaching the results in Abot.

These takeaways offer a glimpse into how effective audit planning and sampling strategies can lead to better assurance and audit quality, all while being more efficient.

Let’s implement smarter sampling techniques to make auditing smoother and more impactful!