Verma & Kapoor, Chartered Accountants, were appointed as the statutory auditors of Mor Components Ltd. for the financial year 2024–25. The…

Examples of factors influencing Sample Size for Test of Details: (i) Desired Level of Assurance: An increase in the auditor's desired level of assurance that tolerable misstatement is not exceeded by actual misstatement in the population will increase the sample size. Hence, greater the level of assurance that the auditor requires that the results of the sample are in fact indicative of the actual amount of misstatement in the population, the larger the sample size needs to be. (ii) Stratification of Population: When stratification of the population is appropriate, then sample size will decrease as when there is a wide range (variability) in the monetary size of items in the population, it may be useful to stratify the population. When a population can be appropriately stratified, the aggregate of the sample sizes from the strata generally will be less than the sample size that would have been required to attain a given level of sampling risk, had one sample been drawn from the whole population. Thus, while determining the sample size for test of details, the auditor considers factors such as the desired level of assurance and the possibility of stratifying the population, as these directly influence the extent of sampling required.