Auditing Quiz 1

1 / 50

Pick the odd one:

None of the above

Preparation of vouchers

Checking the vouchers

Evaluation of internal control

2 / 50

Of the following, which is the least persuasive type of audit evidence?

Computations made by the auditor

Documents obtained by auditor from third parties directly.

Carbon copies of sales invoices inspected by the auditor

Bank statements obtained from the client

3 / 50

When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the___________?

Estimate of the total likely misstatement is more than materially level

Estimates of the total likely misstatement cannot be made

Estimates of the total likely misstatement is less than materiality level

Amount of known misstatement is documented in working papers

4 / 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 audit firm should audit the IFI and a different firm should audit 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.

5 / 50

How many Standards on Auditing have been issued?

6 / 50

How long is the auditor?s term of office?

Until the next AGM (Annual General Meeting)

Until the audit is complete

Until the financial statements are complete

Until the directors remove them

7 / 50

Which of the following statements is not true?

Management fraud is more difficult to detect than employee fraud

Internal control system reduces the possibility of occurrence of employee fraud and management fraud

The auditor?s responsibility for detection and prevention of errors and frauds is similar.

All statements are correct.

8 / 50

Which of the following best describes the primary purpose of audit programme preparation?

To comply with GAAP appropriate evidence

To detect errors or fraud

To gather sufficient

To assess audit risk

9 / 50

Which of the following factors is most important in determining the appropriations of audit evidence?

The quantity of audit evidence

The independence of the source of evidence

The reliability of audit evidence and its relevance in meeting the audit objective

The objectivity and integrity of the auditor

10 / 50

The scope of internal audit is decided by the___________?

Shareholders

Law

Government

Management

11 / 50

Audit fess is a part of__________.

selling overhead.

administration overhead

works on cost.

distribution overhead.

12 / 50

Which of the following statements is not true about continuous audit?

It may be carried out on daily basis

It is needed when the organization has a good internal control system

It is expensive

It is conducted at regular interval

13 / 50

Which of the following is not corroborative evidence?

Worksheet supporting consolidated financial statements

Minutes of meetings

Information gathered by auditor through observation

Confirmations from debtors

14 / 50

International auditing standards are issued by the______________?

International Standards Board

International Accounting Standards Board

Auditing Practices Board

International Federation of Accountants

15 / 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 discover material misstatements in the financial statements

It helps to accumulate evidence supporting the validity of a specific account balance

It helps to study relationship among balance sheet accounts

16 / 50

Which of the following would you not use as a benchmark for comparison when undertaking analytical procedures?

Budget

Other audit clients

Previous years

Other companies in the same industry

17 / 50

The current file of the auditor?s working papers, generally, should include____________?

Organisation charts

A flowchart of the internal controls

Copies of bond and debentures

A copy of financial statements

18 / 50

The independent auditor?s primary responsibility is to______________?

the shareholders

the directors

the company?s creditors (payables)

the company?s bank

19 / 50

Which of the following is not a revenue expense?

Insurance premium paid at the time of registration of the ship

Expenses incurred for laying of sewers on land purchased

Cost of accessories of motor vehicles spent at the time of purchase

Cost of raising a loan

20 / 50

The main object of an audit is _____________?

Expression of opinion

Both (A) and (B)

Detection and Prevention of fraud and error

Depends on the type of audit.

21 / 50

The working papers which auditor prepares for financial statements audit are___________?

Retained in auditor?s office until a change in auditors

Evidence for audit conclusions

Owned by the auditor

Owned by the client

22 / 50

Internal check is carried on by___________?

Internal auditor

Members of the staff

Staff specially appointed for the purpose

Supervisor of the staff

23 / 50

IFRS 9 explains about?

Accounts Payable

Expenses

Inventory

Accounts Receivable

24 / 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 possibility of peer review

The content of management representation letter

The assessed level of control risk

25 / 50

Which of the following is not type of engagement standard?

Standards on Assurance Engagement

Standard on Quality Control

Standards on Review Engagement

Standards on Auditing

26 / 50

Which of the following statements is, generally, correct about the reliability of audit evidence?

Effective internal control system provides reliable audit evidence

Evidence obtained from outside sources routed through the client

To be reliable, evidence should conclusive rather than persuasive

All are correct.

27 / 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 judgments involve both quantitative and qualitative judgments

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 is a relative concept

28 / 50

According to ISA 315, which of the following is NOT a control activity?

Performance reviews

Segregation of duties

Physical controls

Organizational structure

29 / 50

What is the primary objective of analytical procedures used in the overall review stage of an audit?

To satisfy doubts when questions arise about a client?s ability to continue

To direct attention to potential risk areas

To help to corroborate the conclusions drawn from individual components of financial statements

To reduce specific detection risk

30 / 50

Which of the following documents is not relevant for vouching cash sales?

Salesmen?s summary

Monthly statements sent to customers

Daily cash sales summary

Bank statement

31 / 50

You have been proposed as auditor of a company. What is the first step that you should take?

Obtain the client?s permission to communicate with the existing auditor

Obtain a copy of the existing auditor?s letter of engagement

Obtain a copy of the company?s most recent board minutes

Obtain the existing auditor?s working papers

32 / 50

Which of the following is not true about opinion on financial statements?

He should examine whether recognised accounting principle have been consistently

He is responsible for detection and prevention of frauds and errors in financial statements

His opinion is no guarantee to future viability of business

The auditor should express an opinion on financial statements.

33 / 50

Which of the following is NOT the responsibility of a company?s directors?

Reporting to the shareholders on the accuracy of the accounts

Keeping proper accounting records

Establishment of internal controls

Supplying information and explanations to the auditor

34 / 50

Auditor of a___________company does not have right to visit foreign branches of the company?

Non?profit making

Banking

Unlimited liability

Manufacturing

35 / 50

Which of the following is not an analytical procedure?

Comparing the actual costs with standard costs

All of them are analytical procedure

Tracing of purchases recurred in the purchase book to purchase invoices.

Comparing aggregate wages paid to number of employees

36 / 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

37 / 50

_______the audit risk,_______the materiality and _______the audit effort?

Lower, Higher, Higher

Higher, Lower, Lower

Lower, Higher, Lower

Lower, Lower, Higher

38 / 50

Which of the following are you unlikely to see in the current file of auditors? working papers?

Memorandum & articles of association

Details of the work done on the inventory count

Summary of unadjusted errors

Audit planning memorandum

39 / 50

Which of the following does NOT belong in the auditors? report?

Involvement of any specialist

Basis of the opinion

Statement of responsibilities of directors and auditors

Introductory paragraph specifying the pages to which the report relates and the accounting convention adopted

40 / 50

Balance sheet does not include?:_____________?

Examination of adjusting and closing entries

Verification of assets and liabilities

Routine checks

Vouching of income and expense accounts related to assets and liabilities

41 / 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

The auditor has rejected an item from sample which was not supported by documentary evidence

He applies random sampling on data which is inaccurate and inconsistent

42 / 50

When applying analytical procedures, an auditor could develop independent estimate of an account balance to compare it to?___________?

Prior year audited balance adjusted for trends in the industry

Prior year audited balance

client?s unedited account balance adjusted for trends in the industry

client?s unedited account balance

43 / 50

What sort of assurance is provided in a review engagement?

Negative assurance

No assurance

Positive assurance

High level of assurance

44 / 50

Audit of banks is an example of_____________?

All of the above

Statutory audit

Balance sheet audit

Concurrent audit

45 / 50

Goods sent on approval basis? have been recorded as ?Credit sales?. This is an example of____________?

Error of omission

Error of commission

Error of duplication

Error of principle

46 / 50

For what minimum period should audit working papers be retained by audit firm?

For the time period the entity remains a client of the audit firm.

For a period auditor opines them to be useful in servicing the client

For the period the audit firm is in existence.

For a period of ten years

47 / 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

48 / 50

Lapping is also known as___________?

Embezzlement

Teeming and lading

Hacking

Looping

49 / 50

Institute of Chartered Accountants of Pakistan was established in____________?

1972

1949

1961

1956

50 / 50

The degree of effectiveness of an internal control system depends on:

The design of the internal controls and the implementation of the control system

The implementation of the controls and the correctness of the accounting records

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

Provide Your Information

NameEmailPhone Number

Your score is

The average score is 52%