0% 0 Auditing Quiz 3 1 / 50 Pick the odd one: None of the above Checking the vouchers Evaluation of internal control Preparation of vouchers 2 / 50 The board of directors shall appoint first auditor of a company With in one month of the promotion of the company With in one month of completion of capital subscription state of the company With in one month of incorporation of the company With in one month of the commencement of the business of the company 3 / 50 Which of the following affects audit effectiveness? Both A and C Risk of incorrect acceptance Risk of over reliance Risk of incorrect rejection 4 / 50 The authority to remove the first auditor before the expiry of term is with__________? the shareholders in the first annual General meeting the board of directors the shareholders in a general meeting the Central Government 5 / 50 The quantity of audit working papers complied on engagement would most be affected by__________? Auditor?s qualification Management?s integrity Auditor?s experience and professional judgment Control risk 6 / 50 Who is responsible for the appointment of statutory auditor of a limited company ? Members of the company Directors of the company All of the above The Central Government 7 / 50 The nature, timing and extent of substantive procedures is related to assessed level of control risk Inversely Directly Randomly Disproportionately 8 / 50 Which of the following statements is, generally, correct about the reliability of auditevidence? To be reliable, evidence should conclusive rather than persuasive Effective internal control system provides reliable audit evidence All are correct. Evidence obtained from outside sources routed through the client 9 / 50 ______the audit risks_______the materiality and_________the audit effort. Lower, Lower, Higher Lower, Higher, Higher Higher, Lower, Lower Lower, Higher, Lower 10 / 50 According to ISA 500, the strength of audit evidence is determined by which two qualities? Appropriateness & competence Objectivity & independence Sufficiency & appropriateness Reliability & extensiveness 11 / 50 Test Checking refers to___________? Checking of selected number of transactions Testing of accounts and records Checking of all transactions recorded Examination of adjusting and closing entries 12 / 50 Stock should be valued at_________? Cost or Market price whichever is lower. Cost less depreciation. Cost Market price 13 / 50 Audit risk is composed of 3 factors. Which of the following is NOT one of those factors? Detection risk Control risk Compliance risk Inherent risk 14 / 50 Audit in depth is synonymous for?_____________? Completed audit Complete audit Detailed audit Final audit 15 / 50 A statutory auditor has a right of access at all times to___________? Books, accounts and vouchers of the company Notices and documents of the company Books and accounts of a company Books, accounts and documents of the company 16 / 50 When is evidential matter, generally, considered sufficient? When it constitutes entire population When it is enough to provide a basis for giving reasonable assurance regarding truthfulness When it is objective and relevant When auditor collects and evaluates it independently 17 / 50 What would most appropriately describe the risk of incorrect rejection in terms of substantive testing? The auditor concludes that the balance is materially misstated when in actual fact it not The auditor has rejected an item for sample which was material The auditor concludes balance is materially correct when in actual fact it is not None of the above 18 / 50 Which one of the following is NOT a duty of the auditor? Duty to report to the members Duty to report to the company?s bankers Duty to sign the audit report Duty to report on any violation of law 19 / 50 Which of the following is true about written representations? They should be used only when there is a lack of other substantive audit evidence They are the best source of audit evidence Shareholders receive a copy of all material written representations They should be used only when there is other substantive audit evidence to complement it 20 / 50 In an audit of financial statements, substantive tests are audit procedures that __________? Are designed to discover significant subsequent events 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 21 / 50 When an auditor is proposed for removal from office, which one of the following is he NOT permitted to do? Circulate representations to members Speak at the AGM/EGM where the removal is proposed Apply to the court to have the proposal removed Receive notification of the AGM/EGM where the removal is proposed 22 / 50 The auditor should examine subsequent realization of revenue such as dividends, interest,commission, etc to:?_____________? ensure proper disclosure in the balance sheet Any of these recompute accrued income on the data of balance sheet identify cases of unrecorded revenue 23 / 50 If a casual vacancy in the office of auditor arises by his resignation it should only be filled by the company in a_________? extraordinary general meeting annual general meeting Board meeting General meeting 24 / 50 Which of the following expenses should not be treated as capital expenditure? The fees paid to engineer who constructed the plant. Cost of dismantling a building in case a new building is to be constructed on the land Legal expenses incurred to defend a suit related to title of patent. Expenses paid on installation of a plant. 25 / 50 Which of the following describes sampling risk? The risk that the sample does not reflect the population The risk of reliance on unsuitable audit evidence The risk of the auditor reaching the wrong conclusions from testing The risk of the auditor carrying out a test the wrong way round 26 / 50 If the book value of an asset stands at________per cent of the original cost, a company need not provide depreciation on it. fifteen ten two five 27 / 50 Who out of the following cannot be appointed as a statutory auditor of the company? Internal auditor Relative of a director Erstwhile director None 28 / 50 According to ISA 315, which of the following is NOT an element of the control environment? Information processing Participation of management Human resource policies and practices Commitment to competence 29 / 50 Audit programme is prepared by____________? The auditor The auditor and his audit assistants The client The audit assistants 30 / 50 Balance sheet audit includes verification of____________? Income and expense accounts where appropriate All of the above Liabilities Assets 31 / 50 Which of the following is correct in relation to materiality? A matter is material only if it affects directors? emoluments A matter is material only if it changes the audit report A matter is material if its omission or misstatement would reasonably influence the decisions of an addressee of the auditors? report A matter is material if the auditor and the directors both decide that further work needs to be done in the area under question 32 / 50 Which of the following factors is most important in determining the appropriations of audit evidence? The objectivity and integrity of the auditor The quantity of audit evidence The reliability of audit evidence and its relevance in meeting the audit objective The independence of the source of evidence 33 / 50 An auditor is like a_______________? None of these Blood haunt May both according to situation Watch dog 34 / 50 Which one of the following is part of the auditor?s function? Calculating the year-end accruals figure for inclusion in the accounts Conducting the inventory count Obtaining and evaluating audit evidence on the financial statements Providing representations to management 35 / 50 Errors of Omission are_____________? Compensating errors Errors of principle None of the above Technical errors 36 / 50 The client changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express? Adverse opinion Unqualified opinion Qualified opinion Disclaimer of opinion 37 / 50 The fundamental objective of the audit of a company is to_____________? Protect the interests of the minority shareholders Detect and prevent errors and fraud Assess the effectiveness of the company?s performance Attest to the credibility of the company?s accounts 38 / 50 Auditing is what? Examination of financial statements Preparation financial statements Reporting the financial information maintaining the ledger records 39 / 50 Goods sold on the basis of ?sales or return ? should: Not be checked by auditor Be included in the stock Not be included in the stock None of the above 40 / 50 Which of the following is not an advantage of the preparation of working paper? To provide a basis for subsequent audits To provide a basis for review of audit work To ensure audit work is being carried out as per programme To provide a guide for advising another client on similar issues 41 / 50 The auditor has serious concern about the going concern of the company. It is dependent on company?s obtaining a working capital loan from a bank which has been applied for. The management of the company has made full disclosure of these facts in the notes to the balance sheet. The auditor is satisfied with the level of disclosure. He should issue___________? unqualified opinion with reference to notes to the accounts unqualified opinion disclaimer of opinion qualified opinion 42 / 50 Which of the following is NOT an accepted method of selection in sampling? Random selection Haphazard selection Systematic selection Pervasive selection 43 / 50 Which of the following is normally the most reliable source of audit evidence? Board minutes Analytical review Suppliers? statements Internal audit 44 / 50 An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to his or her independence. The threat would be a___________? Familiarity threat Self-interest threat Advocacy threat Self-review threat 45 / 50 Analytical procedures issued in the planning stage of an audit, generally Helps to determine the nature, timing and extent of other audit procedures Directs attention to potential risk areas All of the above Indicates important aspects of business 46 / 50 Audit in depth is synonymous for____________? Complete audit Final audit Completed audit Detailed audit 47 / 50 When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the_____________? Estimates of the total likely misstatement cannot be made Amount of known misstatement is documented in working papers Estimates of the total likely misstatement is less than materiality level Estimate of the total likely misstatement is more than materially level 48 / 50 Process of verifying the documentary evidences of transactions are known as___________? Vouching Verification Testing Auditing 49 / 50 Concealment of shortage by delaying the recording of cash receipts is known as_____________? Misappropriation Lapping None of these Embezzlement 50 / 50 A sale of Rs. 50.000 to A was entered as a sale to B This is an example of____________? Error of principle Compensating error Error of commission Error of omission 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 PrevAuditing Quiz 2
