0% 0 Auditing Quiz 1 1 / 50 When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the___________? Estimates of the total likely misstatement is less than materiality level Amount of known misstatement is documented in working papers Estimate of the total likely misstatement is more than materially level Estimates of the total likely misstatement cannot be made 2 / 50 You have been proposed as auditor of a company. What is the first step that you should take? Obtain the existing auditor?s working papers Obtain a copy of the company?s most recent board minutes Obtain the client?s permission to communicate with the existing auditor Obtain a copy of the existing auditor?s letter of engagement 3 / 50 Which of the following statements is not correct about materiality? At the planning state, the auditor considers materiality at the financial statement level only Materiality is a relative concept Auditor?s consideration of materiality is influenced by the auditor?s perception of the needs of an informed decision maker who will rely on the financial statements Materiality judgments involve both quantitative and qualitative judgments 4 / 50 Which of the following factors would least likely affect the quantity and content of an auditor?s working papers The nature of auditor?s report The assessed level of control risk The possibility of peer review The content of management representation letter 5 / 50 The main object of an audit is _____________? Expression of opinion Detection and Prevention of fraud and error Both (A) and (B) Depends on the type of audit. 6 / 50 Which of the following is not corroborative evidence? Confirmations from debtors Information gathered by auditor through observation Minutes of meetings Worksheet supporting consolidated financial statements 7 / 50 International auditing standards are issued by the______________? International Federation of Accountants Auditing Practices Board International Accounting Standards Board International Standards Board 8 / 50 Pick the odd one: Evaluation of internal control Checking the vouchers Preparation of vouchers None of the above 9 / 50 Which of the following is NOT the responsibility of a company?s directors? Reporting to the shareholders on the accuracy of the accounts Supplying information and explanations to the auditor Keeping proper accounting records Establishment of internal controls 10 / 50 How long is the auditor?s term of office? Until the directors remove them Until the financial statements are complete Until the next AGM (Annual General Meeting) Until the audit is complete 11 / 50 When applying analytical procedures, an auditor could develop independent estimate of an account balance to compare it to?___________? client?s unedited account balance adjusted for trends in the industry client?s unedited account balance Prior year audited balance adjusted for trends in the industry Prior year audited balance 12 / 50 The working papers which auditor prepares for financial statements audit are___________? Evidence for audit conclusions Owned by the auditor Retained in auditor?s office until a change in auditors Owned by the client 13 / 50 Which of the following documents is not relevant for vouching cash sales? Salesmen?s summary Monthly statements sent to customers Bank statement Daily cash sales summary 14 / 50 Goods sent on approval basis? have been recorded as ?Credit sales?. This is an example of____________? Error of duplication Error of commission Error of omission Error of principle 15 / 50 Which of the following are you unlikely to see in the current file of auditors? working papers? Audit planning memorandum Details of the work done on the inventory count Summary of unadjusted errors Memorandum & articles of association 16 / 50 Which of the following factors is most important in determining the appropriations of audit evidence? The objectivity and integrity of the auditor The reliability of audit evidence and its relevance in meeting the audit objective The independence of the source of evidence The quantity of audit evidence 17 / 50 Which of the following is not true about opinion on financial statements? He should examine whether recognised accounting principle have been consistently His opinion is no guarantee to future viability of business The auditor should express an opinion on financial statements. He is responsible for detection and prevention of frauds and errors in financial statements 18 / 50 For companies required to produce interim financial statements (IFI): the same firm should review the IFI and the financial statements for the year as a whole. the same firm should audit the IFI and the financial statements for the year as a whole. one accountancy firm should review the IFI and a different firm should audit the financial statements for the year as a whole. one audit firm should audit the IFI and a different firm should audit the financial statements for the year as a whole. 19 / 50 What sort of assurance is provided in a review engagement? High level of assurance No assurance Positive assurance Negative assurance 20 / 50 Audit of banks is an example of_____________? Balance sheet audit Statutory audit All of the above Concurrent audit 21 / 50 Which of the following is not a revenue expense? Expenses incurred for laying of sewers on land purchased Insurance premium paid at the time of registration of the ship Cost of raising a loan Cost of accessories of motor vehicles spent at the time of purchase 22 / 50 The scope of internal audit is decided by the___________? Shareholders Government Management Law 23 / 50 The current file of the auditor?s working papers, generally, should include____________? A copy of financial statements Organisation charts Copies of bond and debentures A flowchart of the internal controls 24 / 50 Which of the following statements is not true about continuous audit? It may be carried out on daily basis It is expensive It is needed when the organization has a good internal control system It is conducted at regular interval 25 / 50 The independent auditor?s primary responsibility is to______________? the shareholders the directors the company?s bank the company?s creditors (payables) 26 / 50 Audit fess is a part of__________. distribution overhead. administration overhead works on cost. selling overhead. 27 / 50 Which of the following would you not use as a benchmark for comparison when undertaking analytical procedures? Other companies in the same industry Previous years Other audit clients Budget 28 / 50 Institute of Chartered Accountants of Pakistan was established in____________? 1949 1961 1956 1972 29 / 50 Internal check is carried on by___________? Staff specially appointed for the purpose Internal auditor Members of the staff Supervisor of the staff 30 / 50 Auditor of a___________company does not have right to visit foreign branches of the company? Non?profit making Banking Manufacturing Unlimited liability 31 / 50 Which of the following is not type of engagement standard? Standards on Auditing Standards on Assurance Engagement Standards on Review Engagement Standard on Quality Control 32 / 50 What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing? The auditor concludes the balance is materially misstated when in actual fact is not The auditor has ascertained that the balance is materially correct when in actual fact it is not He applies random sampling on data which is inaccurate and inconsistent The auditor has rejected an item from sample which was not supported by documentary evidence 33 / 50 In an audit of financial statements, substantive tests are audit procedures that___________? will increase proportionately when the auditor decreases the assessed level of control risk may be eliminated for an account balance under certain conditions may be test of transactions, test of balance and analytical procedures are designed to discover significant subsequent events 34 / 50 The degree of effectiveness of an internal control system depends on: The design of the internal control system and the correctness of the accounting records The design of the internal control system and the implementation of the controls The implementation of the controls and the correctness of the accounting records The design of the internal controls and the implementation of the control system 35 / 50 Which of the following best describes the primary purpose of audit programme preparation? To gather sufficient To comply with GAAP appropriate evidence To assess audit risk To detect errors or fraud 36 / 50 _______the audit risk,_______the materiality and _______the audit effort? Lower, Lower, Higher Lower, Higher, Higher Higher, Lower, Lower Lower, Higher, Lower 37 / 50 Which of the following statements is most closely associated with analytical procedure applied at substantive stage? It helps to identify possible oversights It helps to study relationship among balance sheet accounts It helps to accumulate evidence supporting the validity of a specific account balance It helps to discover material misstatements in the financial statements 38 / 50 Of the following, which is the least persuasive type of audit evidence? Documents obtained by auditor from third parties directly. Carbon copies of sales invoices inspected by the auditor Bank statements obtained from the client Computations made by the auditor 39 / 50 Test Checking refers to___________? Checking of selected number of transactions Examination of adjusting and closing entries Checking of all transactions recorded Testing of accounts and records 40 / 50 According to ISA 315, which of the following is NOT a control activity? Segregation of duties Performance reviews Organizational structure Physical controls 41 / 50 How many Standards on Auditing have been issued? 36 38 32 34 42 / 50 Balance sheet does not include?:_____________? Examination of adjusting and closing entries Vouching of income and expense accounts related to assets and liabilities Verification of assets and liabilities Routine checks 43 / 50 What is the primary objective of analytical procedures used in the overall review stage of an audit? To help to corroborate the conclusions drawn from individual components of financial statements To direct attention to potential risk areas To satisfy doubts when questions arise about a client?s ability to continue To reduce specific detection risk 44 / 50 Which of the following statements is, generally, correct about the reliability of audit evidence? To be reliable, evidence should conclusive rather than persuasive All are correct. Evidence obtained from outside sources routed through the client Effective internal control system provides reliable audit evidence 45 / 50 IFRS 9 explains about? Expenses Accounts Receivable Inventory Accounts Payable 46 / 50 Lapping is also known as___________? Looping Embezzlement Teeming and lading Hacking 47 / 50 Which of the following does NOT belong in the auditors? report? Involvement of any specialist Basis of the opinion Introductory paragraph specifying the pages to which the report relates and the accounting convention adopted Statement of responsibilities of directors and auditors 48 / 50 Which of the following is not an analytical procedure? Comparing aggregate wages paid to number of employees Comparing the actual costs with standard costs All of them are analytical procedure Tracing of purchases recurred in the purchase book to purchase invoices. 49 / 50 Which of the following statements is not true? Internal control system reduces the possibility of occurrence of employee fraud and management fraud All statements are correct. Management fraud is more difficult to detect than employee fraud The auditor?s responsibility for detection and prevention of errors and frauds is similar. 50 / 50 For what minimum period should audit working papers be retained by audit firm? For the period the audit firm is in existence. For a period auditor opines them to be useful in servicing the client For the time period the entity remains a client of the audit firm. For a period of ten years Provide Your Information Your score is The average score is 0% LinkedIn Facebook Twitter 0% Restart quiz Send feedback Share on facebook Facebook Share on twitter Twitter Share on whatsapp WhatsApp Auditing Quiz 2Next
