Audit & Assurance
MCQs
1. Which of the following is not included in the current working paper file in case of an auditor appointed for the private limited company?
A. Memorandum and Articles of Association
B. Bank reconciliation statement
C. Annual appointment of auditor
D. Methods of review of internal control
2. The risk of the _________ for not detecting a material misstatement resulting from management fraud is greater than for employee fraud, because management is frequently in a position to manipulate accounting records, present fraudulent financial information.
A. management
B. Chief Finance Officer
C. those charged with governance
D. auditor
3. Standards on Assurance Engagements are to be applied in
A. the audit of historical financial information.
B. the review of historical financial information.
C. assurance engagements, engagements dealing with subject matter other than historical financial information.
D. engagements involving application of agreed upon procedures to information and other related services such as compilation engagements.
4. Which of the following is the disadvantage of an audit programme?
A. Audit programme helps in distribution of work amongst audit assistants as per their capabilities.
B. Audit programme is mechanical in nature, hence audit will be completed within time available.
C. Audit program acts as a evidence against change of negligence.
D. Audit programme helps in covering all the areas where audit is required.
5. The concept of 'True and Fair view' is a fundamental concept of auditing and the Auditor is required to examine and ensure that
I. Assets are neither undervalued nor overvalued
II. No material liabilities are omitted,
III. The charge, if any, on assets are disclosed
IV. Accounting policies have been followed consistently
A. I, II, III
B. I, II, III, IV
C. I, III, IV
D. II, III, IV
6. Permanent working paper file contains __________ while maintaining the audit documentation as per standard on auditing.
A. copies of management letters
B. audit programme
C. analysis of transaction and balances under audit
D. Analysis of significant ratios and trends
7._________________audit is an examination of financial records to assess the correctness of calculation of taxable profit, to ensure compliance with provisions of the Income tax Act,1961 and also to ensure fulfillment of conditions for claiming deduction under the said Act.
A. Cost
B. Tax
C. Social
D. Management
8. The Income tax Act, 1961 provides, for compulsory tax audit for any assesses carrying on a profession where gross receipts exceeds _______ in the previous year.
A. Rs. 5 crores
B. Rs. 1 crores
C. Rs. 1 crores
D. Rs. 50 Lakhs
9. Generally, while performance financial audit, for an auditor _________ audit evidences are more reliable compared to _________ audit evidences.
A. internal, external
B. external, internal
C. Oral, documentary
D. sufficient, appropriate
10. Which of the following is not the method of obtaining the audit evidence?
A. Inquiry
B. Accounting Statistics
C. Recalculation
D. Reperformance
11. __________ is the method of obtaining the audit evidence by looking the process or procedure to be carried out for recording the transactions or events which generally follows in the __________ type of audit evidence.
A. Inspection, documentary
B. Inquiry, documentary
C. Observation, visual
D. Confirmation, documentary
12. The auditor shall _________ the audit procedures that are appropriate in the circumstances for the purpose of obtaining sufficient and appropriate audit evidence.
A. identify
B. inquire into
C. design and perform
D. design
13. From the following, which of the statement is not true?
A. Manipulation of accounts excludes the recording of transactions/events with the purpose of window dressing.
B. Teaming and leading method is one kind of fraud for misappropriation of cash.
C. Inflating payment means showing excess payment than actual.
D. Secrete reserve is created with the intention of reducing the tax liabilities.
14. _________ deals with overall objectives of the Independent Auditor and conduct of an Audit in accordance with Standards on Auditing.
A. SA 240
B. SA 200
C. SA 230
D. SA 500
15. Which of the following is the disadvantage of audit programme?
A. Audit programme helps in distribution of work amongst audit assistants as per their capabilities.
B. Audit programme is mechanical in nature hence audit will be completed within time available.
C. Audit program acts as a evidence against change of negligence.
D. Audit programme helps in covering all the areas where audit is required.
16. Which of the following standard on auditing (SA) belongs to Audit Documentation?
A. SA 500
B. SA 230
C. SA 300
D. SA 200
17. Which of the following statements is/are true or false for audit programme?
I. One Audit programme is not suitable for all entities.
II. Generally audit programme should contain minimum procedures.
III. An audit programme consists of a series of verification procedures to be applied
IV. There is no need to review the audit programme periodically.
A. True, False, True, False
B. True, True, True, False
C. False, False, True, False
D. True, True, True, True
18. Working papers can support the __________ in case the _________ files a suit for negligence in the performance of the audit.
A. client, auditor
B. management, independent auditor
C. company, auditor
D. auditor, client
19. ________ is concerned with designing optimized audit approaches that seek to achieve the necessary audit assurance at the lowest cost within the constraints of the information available.
A. Audit programme
B. Compliance procedures
C. Substantives procedure
D. Audit strategy
20. Which of the following aspect is not covered in audit of financial statements:
A. Examination of Accounting System & Internal Control,
B. Vouching of the transactions
C. Verification of Assets & Liabilities
D. Design, implementation and maintenance of Internal Control System.
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