ACCA · Question 13 · Audit Evidence

SECTION A - CASE 3: AQUAPURE UTILITIES

AquaPure Utilities is a highly regulated public utility company managing water and waste services. You are auditing the financial statements for the year ended 31 March 20X6.

During the audit, you note the following:

1. AquaPure has a large internal audit (IA) department that recently completed a review of the procurement controls.
2. The billing system is highly automated, generating millions of micro-invoices based on smart meter readings.
3. The company owns a vast network of underground water pipes, which are difficult to physically verify.
4. You plan to use substantive analytical procedures to audit water revenue.

Question:
When sampling the underground water pipes for impairment testing, the auditor divides the pipes into groups based on their age (e.g., 0-10 years, 11-20 years, 20+ years). What is this sampling technique called, and what is its main benefit?