Ministry of Justice
On September 3, 1999 No. 815
Approved by the Ministry of Finance of the Republic of Uzbekistan of July 27, 1999, No. 59
1. This standard is developed on the basis of the Law of the Republic of Uzbekistan "About auditor activities", resolutions of the Cabinet of Ministers of the Republic of Uzbekistan of June 10, 1999 N 296 "About measures for realization of the basic provisions containing in the report of the President of the Republic of Uzbekistan at the XIV session of Oliy Majlis" and is element of normative auditing regulation in the Republic of Uzbekistan.
2. The purpose of the standard is establishment for auditing organization of rules of selection of data from the checked set and assessment of results of information obtained thus.
3. Requirements of this standard are obligatory for all auditing organizations when implementing the audit providing preparation of official audit opinion, except for those its provisions where it is directly specified that they have advisory nature.
4. Requirements of this standard have advisory nature when carrying out the audit which is not providing preparation by its results of official audit opinion and also when rendering the services (consulting services) accompanying audit. In case of variation in case of accomplishment of specific task from mandatory requirements of this standard the auditing organization without fail shall note it in the working documentation and in the written report to management of the business entity who ordered audit and (or) services accompanying it.
Types of selections
5. Selection shall be representative, i.e. representative. This requirement assumes that all elements of the studied set shall have equal probability to be selected in selection. For providing representativeness the auditing organization can use one of the following methods:
5.1. Random sampling. It can be carried out according to the table of random numbers.
5.2. Systematic selection. Assumes that elements are selected through permanent interval, since accidentally chosen number. The interval is under construction or on certain number of elements of set, or on their cost assessment.
5.3. The combined selection. Represents combination of various methods of random and systematic sampling.
6. The auditing organization has the right to resort to not representative, i.e. unpresentable, selection only when professional judgment of the auditor following the results of carrying out selection does not concern all set in general. Not representative selection can be used when the auditor checks separately taken group of transactions or at check of class of transactions on which possible mistakes are established.
7. The auditing organization can check fidelity of reflection in financial accounting of balance and account transactions or to check means of the control system in a continuous way if the number of elements of the checked set so are not enough that application of statistical techniques is not lawful or if application of auditor selection is less effective, than conducting continuous check.
8. This standard is applied as to the selections constructed by the statistical technique selection is constructed, it shall represent reliable opportunity for collection of auditor proofs.
9. Auditor selection is carried out for the purpose of application of audit procedures in the relation of less than 100% of objects of the checked set which are understood as the elements constituting accounts balance, or the transactions constituting turnovers on accounts for collection of the auditor proofs allowing to size up all checked set. For selection creation the auditing organization shall determine procedure for test of the specific Section of accounting records, the checked set of which selection, and selection amount will be made.
10. In case of development of conducting verification of the specific Section of accounting records the auditing organization shall determine the purposes of check and audit procedures allowing to achieve these objectives. Then the auditor shall determine possible mistakes, estimate proofs necessary for it which are required to be collected, and on the basis of it to establish set of the considered data.
11. The auditing organization shall determine the studied set so that it answered the audit purpose. Set shall consist of set of units which can be identified definitely. The auditing organization carries out selection of elements of set by the most effective and economical image allowing it to achieve effective objectives of audit.
12. When carrying out selection the auditing organization can break all studied set into separate groups ("subsets"), elements of each of which have similar characteristics. Criteria of splitting set shall be such that for any element it was possible to specify accurately to what subset it belongs. This procedure called by stratification allows to reduce dispersion (variation) of data that can facilitate work of auditing organization.
Risk of selection
13. When scoping (size) of selection the auditing organization shall establish risk of selection, the admissible and expected mistakes.
14. The risk of selection is that the opinion of the auditor to certain question constituted on the basis of selective data can differ from opinion on the same question constituted based on studying of all set. The risk of selection takes place both when testing means of the control system, and when conducting detailed check of fidelity of reflection in financial accounting of turnovers and balance on accounts. In audit practice differentiate risks of the first and second sort for tests of the control system and check of fidelity of turnovers and balance on accounts.
14.1. When testing control facilities differentiate the following risks of selection:
14.1.1. Risk of the first sort - risk to reject right hypothesis when the result of selection testifies to unsafeness of the control system while actually the system is reliable;
14.1.2. Risk of the second sort - risk to accept incorrect hypothesis when the result of selection testifies to unreliability of system while the control system has no necessary reliability.
14.2. When conducting detailed check of fidelity of reflection in financial accounting of turnovers and balance on accounts differentiate the following risks of selection:
14.2.1. Risk of the first sort - risk to reject right hypothesis when the result of selection demonstrates that the checked set contains material mistake while set is free from such mistake.
14.2.2. Risk of the second sort - risk to accept incorrect hypothesis when the result of selection demonstrates that the checked set does not contain material mistake while set contains material mistake.
15. The risk of variation of right hypothesis requires carrying out extra work from auditing organization or business entity in whose accounting as a result of the carried-out selection the error was found. The risk of acceptance of incorrect hypothesis calls into question results of work of auditing organization.
16. The amount of selection is determined by the size of mistake which the auditor considers admissible. The lower it size, the more necessary amount of selection.
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