Auditing and Assurance MCQs Set I

No business or institution can effectively carry on its activities without the help of proper ————-

As per SA-200 “Overall Objectives of the Independent Auditor”, in conducting an audit of financial statements, the overall objectives of the auditor are:

(IESBA Code) related to an audit of financial statements establishes which of the following as the fundamental principle of professional ethics relevant to the auditor when conducting an audit of financial statements:

The auditor’s _________ safeguards the auditor’s ability to form an audit opinion without being affected by any influences.

Whichof the following is the responsibility of the auditor:

An employee of Fruits and Vegetables Limited was of the opinion that auditor of a company is required to express an opinion. On which one of the following the auditor of a company is required to express an opinion:

The auditor of Delicious Sweets Limited was of the opinion that objective of audit of financial statements of a company is to provide reasonable assurance that financial statements of that company are free from misstatements. Which type of misstatements are mentioned by auditor of Delicious Sweets Limited:

Standard on Quality Control (SQC) 1 provides that,

As explained in SA 200, “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing”,
_________is obtained when the auditor has obtained sufficient appropriate audit evidence to reduce audit risk (i.e., the risk that the auditor expresses an inappropriate opinion when the financial statements are materially misstated) to an acceptably low level.

………. sets the scope, timing & direction of the audit and guides the development of the more detailed plan.

Planning is ______ process of an audit that often begins shortly after (or in connection with) the completion of the previous audit and continues until the completion of the current audit engagement:

Statement 1: The establishment of the overall audit strategy and the detailed audit plan are not necessarily discrete or sequential process but are closely inter-related.
Statement 2: The auditor shall establish an overall audit strategy that guides the development of audit plan.

which of the following is not addressed by the overall audit strategy :

The overall audit strategy and the audit plan remain the _______ responsibility

Determining a percentage to be applied to a chosen benchmark (in relation to materiality) involves the exercise of ________

Which of the following is not an example of benchmarks in determining materiality for the Financial Statements as whole:

Which of the following is correct :

Planning an audit involves

When planning the audit,

SA 320 on “Materiality in Planning and Performing an Audit” requires that an auditor

Which of the following is true:

Once the overall audit strategy has been established, _______can be
developed to address the various matters identified in the overall audit strategy, taking into account the need to achieve the audit objectives through the efficient use of the auditor’s resources.

The auditor shall develop an audit plan that shall include a description of:

Statement 1: A response that indicates a difference between information requested to be confirmed and information provided by confirming party is Negative Confirmation.
Statement 2: A failure of the confirming party to respond, or fully respond, to a positive confirmation request, or a confirmation request returned undelivered is exception.

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?

Which of the following is not correct?

………………refers to the audit procedures performed to obtain an understanding of the entity and its environment, including the entity’s internal control to identify and assess the risk of material misstatement.

Audit documentation provides:

Which of the following is correct :

Audit evidence includes

The auditor shall design and perform audit procedures in order to identify litigation and claims involving the entity which may give rise to a risk of material misstatement, including:

If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening balances, the auditor shall express :

Auditor’s judgment as to sufficiency may be affected by the factors such as:

The auditor has no obligation to perform any audit procedures regarding the financial statements after the date of the auditor’s report. However, when, after the date of the auditor’s report but before the date the financial statements are issued, a fact becomes known to the auditor that, had it been known to the auditor at the date of the auditor’s report, may have caused the auditor to amend the auditor’s report, the auditor shall:

Audit risk is a function of the risks of material misstatement and __________

For a given level of audit risk, the acceptable level of detection risk bears ________relationship to the assessed risks of material misstatement at the assertion level.

Risk of material misstatement has components

Controls can be related to an assertion.

Which of the following is incorrect-
For the purpose of Identifying and assessing the risks of material misstatement, the auditor shall :

_____________refers to a difference between the amount, classification, presentation, or disclosure of a reported financial statement item and the amount, classification, presentation, or disclosure that is required for the item to be in accordance with the applicable financial reporting framework.

Latest and Vibrant Limited is an unlisted public limited company. For the above mentioned company, it will be required to appoint an internal auditor according to the provisions of Companies Act, 2013 only when during the preceding financial year, the paid up share capital of the company would be:

Bright and Smart Private Limited will be required, according to the provisions of Companies Act, 2013 to appoint an internal auditor only if the turnover during the preceding financial year would be:

Components of risk of material misstatement at the assertion level are:

When deviations from controls upon which the auditor intends to rely are detected,

Because the assessment of the risk of material misstatement takes account of internal control,

Risk of material misstatement may be defined as the risk

The susceptibility of an assertion about a class of transaction, account balance or disclosure to a misstatement that could be material, either individually or when aggregated with other misstatements, before consideration of any related controls is-

The assessment of risks is a

The assessment of the risks of material misstatement may be expressed in

SA 315 establishes requirements and provides guidance on identifying and assessing the risks of material misstatement –

When credit purchases of ` 5,100 is recorded on credit side and credit sales of ` 5,100 is recorded on debit side, this kind of error is called _.

If as a result of a misstatement resulting from fraud, the auditor encounters exceptional circumstances that bring into question his ability to continue performing the audit, he shall-

Which of the following is an example of inflating cash payments?

The type of errors, existence of which becomes apparent in the process of compilation of accounts is known as:

Which of the following is Incorrect:

The factor which distinguishes an error from fraud and other irregularity is

Reporting on fraud is to be made by an auditor to Central Government when fraud amount is

Reporting on fraud is made by auditor to Central Government in statement in the form

Reporting on fraud is made by auditor under which of the following clause of para 3 of CARO, 2020

Which of the following is a General IT control?