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HMRC internal manual

Enquiry Manual

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HM Revenue & Customs
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Examining Accounts: Records Examination - Tests to Apply: Sampling Techniques

Where an accountant has simply prepared accounts from books and records supplied it is likely that there will have been no systematic checking of the underlying documents. A clerk will have allocated items to different accounts and totalled them. There will be discussion over matters which are unclear.

If the accounts have been audited there will have been sample checking of prime documents EM2778. However, in many areas this will have been limited, as dictated by the audit programme. When deciding what checking to undertake yourself, you should try to find out exactly what the auditor has done. Of course the fact that a sample has been seen does not guarantee that documents have been subject to the same scrutiny as you would give them. The roles of enquiry officer and auditor are different.

If there are relatively few records you may decide to look at them all, but in many cases that will not be either possible or desirable. Various samples can be taken.

  • Sampling of items at regular intervals (for example, every fifth), or an alphabetic or geographical spread (for example, all customers with initials A-C or living in Surrey). This will generally test a representative cross-section. However, only a small proportion of the total value is covered.
  • Sampling by amount - all items over, say, £250. This will ensure that although relatively few documents are seen you will cover the overwhelming proportion of the value. What is lost is the typical cross-section of the business.
  • Sampling all invoices within a given period. Obviously this provides the complete picture during the chosen period, but the extent may be limited by the throughput of invoices. The accuracy of the sample will depend upon how representative the period is. The proportion of total amount sampled will be relatively small.

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  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Work out in advance exactly what you are looking for and decide on the approach appropriate to each set of records. Do not choose samples which are too large: there is only a limited amount of time which you can devote to this task. If you find something, are you satisfied that you have sufficient evidence - should you undertake a further sample or can you pick out similar examples fairly easily from the rest of the records? If you have found nothing, do you want to undertake a further sample? If you are confident in the basis of your original choice, then you will be better moving on to the examination of a different account.