ALL MCQS Flashcards
An attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence, is known as
PROFESSIONAL SKEPTICISM
CA Vijay is the statutory auditor of XYZ Ltd. for the FY 2020-21. During the process of assembling the audit file, CA Vijay briefed his team as to what all changes can be made to the audit documentation at that stage. Which of the following changes cannot be made to the audit documentation during the final assembly process?**
*A) Sorting, collating & cross referencing of working papers.
B) Signing off completion checklists relating to the file assembly process.
C) Deleting or discarding superseded documents.
D) Recalculation of Depreciation.**
D) Recalculation of Depreciation.**
SQC 1 requires firms to establish policies and procedures for the timely completion of the assembly of audit files. An appropriate time limit within which to complete the assembly of the final audit file is ordinarily not more than ————- after the date of the auditor’s report.
60 DAYS
As per requirements of SQC 1, firm should obtain written confirmation of compliance with its policies and procedures on independence from all firm personnel required to be independent in terms of the requirements of the Code:
**
A)on quarterly basis
B)on half yearly basis.
C)on engagement basis.
D)on annual basis**
D) on annual basis
A process comprising an ongoing consideration and evaluation of the firm’s system of quality control, including a periodic inspection of a selection of completed engagements, designed to enable the firm to obtain reasonable assurance that its system of quality control is operating effectively, is known as
**monitoring **
A process designed to provide an objective evaluation, before the report is issued, of the significant judgments the engagement team made and the conclusions they reached in formulating the report, is known as
EQCR
Mr. A, auditor and Mr. B, Finance Manager of XYZ Pvt Ltd are friends. Mr. A prepares the audit report according to the wishes and directions of Mr. B. In this situation which essential quality of the auditor has been compromised
**
A) Professional Competence
B) Independence
C ) Professional Skepticism
D) Professional Skepticism**
B) Independence
An enterprise is normally viewed as a going concern, i.e., as continuing in operation
A)Till the next financial year
B)For the foreseeable future
C)Till the completion if audit
D)All of the above
B)For the foreseeable future
Auditor Compares Gross Profit Ratio with that of Previous year and it is discovered that there has been a fall in the ratio. This is an example of
A)Analytical Procedure
B)Test of Controls
C)Walk Through Test
D)Audit Sampling
The relationship between tolerable error and sample size is
A)Inverse
B)Direct
C)lose
D)There is no relationshiP
In random Sample, each item of population has
A)equal chance of selection
B)has varying chance of selection depending upon placing of items.
C)may have a chance of selection based on auditors professional judgement
D)All of these
**
A)equal chance of selection**
Risk of material misstatement has _______components
2
**
Which of the following is not a type of modified opinion**
A)qualified opinion
B)adverse opinion
C)disclaimer of opinion
D)negative opinion.
D)negative opinion.
If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening balances, the auditor shall express a ————–.
(a) QO
(b) DO
(c) Either (a) or (b)
(d) Both (a) & (b)
C)EITHER QO OR DO
Which of the following item should not be treated as an asset, as per provisions of Accounting Standard 26
A)Computer software
B)Internally generated goodwill
C)Fishing License
D)Brand Name
B)Internally generated goodwill
are charges against profits to provide for known liabilities for which amounts cannot be determined with accuracy
A)Contingent Liabilities
B)Provision
C)Securities Premium Reserve.
D)Liabilit
B)Provision**
Useful life of assets is given in Schedule —— of Companies Act 2013.
SCHEDULE II
**Which of the following is not an example of revenue expenditure **
A)Salaries and wages of employees engaged directly or in-directly in production
B)Repairs, maintenance and renewals of fixed assets
C) Legal and professional expenses
D) development expenditure on land
D) development expenditure on land
**
Search for unrecorded liability is performed during audit of current liabilities to address the following balance sheet assertion**
A)Valuation
B)Rights and obligations
C)Existence
D)Completeness
D)Completeness
Wages paid to workers would qualify as:
A)Revenue expenditure
B)Revenue expenditure
C)Revenue or capital expenditure depending upon facts and circumstances.
D)None of the above
C)Revenue or capital expenditure depending upon facts and circumstances.
Direct confirmation procedures are performed during audit of accounts receivable balances to address the following balance sheet assertion:
A)Rights and obligations
B)Existence
C)Valuation
D) Completeness
B)Existence
Which assertion is common among the statement of profit and loss and balance sheet captions
COMPLETENESS
**
If the prior period financial statement are not audited, the auditor shall state the same in ——————–.**
A)Key Audit matter Paragraph
B)Emphasis of matter Paragraph
C)Going concern paragraph
D)Other matter Paragraph
D)Other matter Paragraph
The level of information included in those comparative financial statements is comparable with that of financial statement of ——————–.
A)Prior period
B)Future period
C)Current period
D)All of the above
C)Current period
If prior period Financial statement has been audited by auditor himself, Apply
A)SA 560 Subsequent Events
B)SA 500 Audit Evidence
C)SA 510 Initial Audit Engagement – Opening Balance
D)All of the above
A)SA 560 Subsequent Events
The auditor shall obtain ————- from the management that they have appropriately accounted for related party transaction and made appropriate disclosure of such relationship and transaction in accordance with the requirements of the framework
A)Absolute assurance
B)Reasonable assurance
C)Written representation
D)Audit evidence
C)Written representation
Controls can be _related to an assertion
A)Directly
B)Indirectly
C)Directly or indirectly
D)None of the above
C)Directly or indirectly
The auditor shall request management and, where appropriate, those charged with governance to, provide a written representation in accordance with SA 580, “Written Representations” that all events occurring ———– to the date of the financial statements and for which the applicable financial reporting framework requires adjustment or disclosure have been adjusted or disclosed
A)Prior
B)Subsequent
C)Former
D)None of the above.
B)Subsequent**
Which of the following is not an Application control?
A)Input Data Validation
B)Mandatory Field Check
C)Captcha Code
D)Physical security of system
D)Physical security of system
Who is mainly responsible for implementation of internal financial controls in a company?
A)Auditors
B)Directors
C)Employees
D)Regulators
B)Directors
The Guidance Note on Audit of Internal Financial Controls over Financial Reporting has been issued by?
A)ICAI
B)SEBI
C)MCA
D)RBI
A)ICAI
IT related risks, if not mitigated, may put an impact on :
A)Substantive Audit
B)Controls
C)Reporting
D)All of above
D)All of above**
Which of the following Audit Testing methods give the least effective audit evidence?
A)Inquiry
B)Inspection
C)Observation
D)Reperformance
A)Inquiry
_______________ are needed to support the functioning of _________________
A)General IT Controls ; Application Controls
B)Application Controls ; General IT Controls
C)IT Dependent Controls ; General IT Controls
D)Application Controls ; IT Dependent Controls
A)General IT Controls ; Application Controls
The main advantage of using statistical sampling techniques is that such techniques:
A)Mathematically measure risk
B)Eliminate the need for judgmental sampling
C)Defines the values of tolerable error
D)All of them.
A)Mathematically measure risk
Which of the following is more scientific:
a) Statistical
b) Non- statistical
c) Both (a) and (b)
d) None of the above
a) Statistical
Statistical sampling has the following characteristics :
(a) Random selection
(b) Use of Probability theory
(c) both (a) and (b)
(d) Judgmental approach
(c) both (a) and (b)
Substantive Analytical Procedures are generally more applicable to:
(a) Large volumes of transactions.
(b) Transactions predictable over time.
(c) Both (a) and (b)
(d) None of (a) and (b)
(c) Both (a) and (b)
……………is the comparison of current data with the prior period balance.
A)Ratio Analysis
B)Trend analysis
C)Reasonableness test
D)Structural Modelling
B)Trend analysis
SA 299 deals with the special considerations in carrying out audit by _____.
A)Internal auditor
B)Another auditor
C)Joint auditor
D)Expert auditor
C)Joint auditor
Where joint auditor are appointed they should by ————-, divide the work among themselves.
A)Terms of engagement
B)Mutual discussion
C)Choice
D)All of the above
B)Mutual discussion
While auditing a cinema hall, the auditor needs to verify that-
A)Entrance to the cinema-hall during show is only through printed tickets
B)Tickets are serially numbered and bound into books
C)That for advance booking a separate series of tickets is issued
D)All of the above
D)All of the above
**Engagement Team Discussions are usually done at which stage of Bank audit?
A)ppointment
B)Developing an Audit Plan
C)Framing an Audit Programme
D)Issuing Audit Report
B)Developing an Audit Plan**
