618B - Advanced Audit and Assurance PDF

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III B.Com PA [2017 - 2020]

SEMESTER : VI
CORE: ADVANCED AUDIT AND ASSURANCE: 618 B
Multiple Choice Questions.
1. Which of the following is not one of the major categories of auditors services ?
A. Audit and reviews of historical financial information
B. Related service framework
C. Assurance engagements on subject matters other than historical financial information
D. Compilation engagement
ANSWER: A
2. Which of the following is not one of five elements exhibited by all assurance engagements?
A. A multi party relationship involving a practioner,a responsible party,those in charge of governance
,and the intended users
B. Suitable criteria
C. The subject matter
D. Evidence
ANSWER: A
3. which of the following is one of the basic elements required to be included in the assurance report
according to international standards on assurance engagements 3000?
A. The results of the internal control
B. Identification of the criteria
C. Summarization of work performed
D. Identification of the subject matter information
ANSWER: C
4. Subject matter and subject matter information of an assurance engagement can take all the following
forms except :
A. Financial performance or conditions
B. Litigation planning
C. Physical characteristics
D. Non-financial performance or conditions
ANSWER: B
5. What is the type of assurance engagement that has as its subject matter non-historical financial
information?
A. Special purpose engagement
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B. Review of financial statements

C. Prospective financial information
D. Agreed upon procedures
ANSWER: C
6. The report on a review of financial statements should contain all of the following basic elements except
A. Addressee
B. Title
C. Scope paragraph , describing the nature of review
D. Statement of positive assurance
ANSWER: D
7. How does the related services frame work differ from the assurance frame work ?
A. Related services engagements don't result in a opinion
B. Related services enhance the degree of confidence intended users can have
C. Related services claim complaints with ISAs
D. Related services claim complaints with ISAEs
ANSWER: A
8. Which of the following is not true about the subject matter of an assurance engagement ?
A. It could be systems and processors or behaviour
B. It could be information such as finacial statements,statistical information and non-financial
performance indicators.
C. It could be IFRS
D. It is the topic about which the assurance is conducted
ANSWER: C
9. A responsible party does each of the following except:

A. Engages the practitioner
B. Determines the subject matter
C. Selects criteria
D. Selects the audit procedures
ANSWER: D
10. The characteristics for assessing whether criteria are suitable are all the following except :
A. International acceptance
B. Neutrality
C. Understandabilty
D. Reliability
ANSWER: A
11. Sufficiency of evidence is:

A. Evidence which is material
B. Evidence which is material
C. The measure of the quantity of evidence
D. The measure of the quality of evidence
ANSWER: C
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12. In a Limited assurance engagement, the practitioner:

A. Expresses the conclusion in a positive form
B. Conveys reasonable assurance
C. Has obtained sufficient appropriate evidence to reduce assurance engagement risk to an acceptably
low level
D. All the above
ANSWER: D
13. Professional judgement is the application of relevant training,knowledge and experience, within the
context provided by ____________,in making informed decisions about the courses of action that are
appropriate in the circumstances of the adult engagement
A. The code of professional ethics
B. IFRS
C. International standards on auditing
D. Auditing,Accounting and ethical standards
ANSWER: D
14. The auditor is required to prepare audit documentation sufficient to enable an experienced
auditor,having no previous connection with the audit ,to understand the ______________in reaching
conlusions on significant matters arising during the audit
A. Confirmation letters.
B. The total evidence gathered
C. The interviews conducted with employees and management.
D. Significant professional judgements made.
ANSWER: D
15. professional scepticism is

A. Adherence to the professional code of ethics.
B. Necessary for a quality control system
C. 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.
D. The application of relevant training,knowledge and experience, within the context provided by
auditing, accounting and ethical standards,in making informed decisions about the courses of action that
are appropriate in the circumstances of the audit engagement
ANSWER: C
16. International regulatory frameworks need for _________

A. standards and regulation.
B. statutory
C. ethics
D. Interest
ANSWER: A
17. Money laundering consists of ---------------

A. placement.
B. layering.
C. integration.
D. all the above
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ANSWER: D
18. _____________is the movement of the cash from its source

A. Placement
B. Layering
C. Integration
D. None of the above
ANSWER: A
19. The purpose of which stage is to make it more difficult to detect and uncover a laundering activity?
A. placement
B. Layering
C. Integration
ANSWER: B
20. )_____________ is the movement of previously laundered money into the economy mainly through the
banking system and thus such monies appear to be normal business earnings
A. Placement
B. Layering
C. Integration
ANSWER: C
21. Which of the following statements is not true?

A. Management fraud is more difficult to detect than employee fraud
B. Internal control system reduces the possibility of occurrence of employee fraud and management
fraud
C. The auditors responsibility for detection and prevention of errors and frauds is similar.
D. All statements are correct.
ANSWER: B
22. Risk can be arises due to __________.

A. Expended foreign operations
B. Limitations in the scope of internal control
C. Inadequate experience
D. Lack of independence of auditor
ANSWER: B
23. Which of the following is not true about opinion on financial statements?
A. The auditor should express an opinion on financial statements.
B. His opinion is no guarantee to future viability of business
C. He is responsible for detection and prevention of frauds and errors in financial statements
D. He should examine whether recognised accounting principle have been consistently
ANSWER: C
24. __________ is the practice of processing stolen money in the legitimate business
A. regulatory environment
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B. money laundering
C. practice management
D. professional applications
ANSWER: B
25. A_____________ document may outline the mission and values of the organisation
A. money laundering
B. regulatory framework
C. code of ethics
D. practice management
ANSWER: C
26. The_________ establish national standard for direct marketing over E-mail.
A. Can-spam act of 2004
B. Can-spam act of 2005
C. Can-spam act of 2006
D. Can-spam act of 2004
ANSWER: D
27. Now a days GCC countries have widely using the E-marketing. In this GCC stands for______
A. German co-operative council
B. German co-operative community
C. General co-operative council
D. Gulf co-operative council
ANSWER: D
28. New scale of communication and information technology under government of india provides a
strategy outline to overcome the cyber crime called __________
A. International cyber security policy
B. Indian cyber security policy
C. State cyber security policy
D. National cyber security policy
ANSWER: D
29. When was money laundering control act passed?

A. 1986
B. 1967
C. 1978
D. 1983
ANSWER: A
30. )___________is a guide of principles designed to help professionals conduct business honestly and
with integrity.
A. Code of ethics
B. Code of conduct
C. Both
ANSWER: A
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31. In Audit Practice Management, Confidentiality has twofold principle Which of the following does
twofold includes?
A. You should refrain from disclosing any information acquired proper authority to do so unless there
exists a legal or professional right or duty to disclose
B. You should refrain from disclosing any information acquired without proper authority to do so unless
there exists a legal or professional right or duty to disclose
C. You should refrain from irregular disclosing any information acquired proper authority to do so
unless there exists a legal or professional right or duty to disclose
D. You should refrain from disclosing any information acquired proper authority to do so unless there
not exists a legal or professional right or duty to disclose
ANSWER: B
32. Which of the following is not related to Code of Ethics in Quality Control (ISQC 1) of Practice
Management?
A. Public Interest
B. Behavior
C. Due Care
D. Ethical Dilemma
ANSWER: C
33. Which of the following is Threats in related to Quality Control (ISQC 1)?
A. Self-interest, Intimidation, Non- advocacy, Review, Familiarity
B. Self-interest, Intimidation, Advocacy, Self-review, Familiarity
C. Self-interest, Intimidation, Advocacy, Review, Familiarity
D. Self-interest, Intimidation, Non-advocacy, Self-review, Familiarity
ANSWER: B
34. In Quality Control (ISQC 1) Management, Conflict of interest is used to assess _______________.
A. Conflict of Interest, dependence, and unethical considerations
B. Conflict of Interest, independence, and unethical considerations
C. Conflict of Interest, dependence, and ethical considerations
D. Conflict of Interest, independence, and ethical considerations
ANSWER: D
35. Different clients will have different ways of evaluating a Tender. Which of the following is need to be
considered (Importance) for above statement?
A. Fee, Professionalism, Proposed audit approach, Professional services
B. Fee, Professionalism, Un-proposed audit approach, Professional services
C. Fee, Professionalism, Proposed audit approach, Personal services
D. Fee, Professionalism, Un-proposed audit approach, Personal services
ANSWER: C
36. Sponsoring charitable events/ organizations that engage in social welfare activity Above activity is
considered to be ______________ in regarded with growth of company reputation.
A. Advertisement
B. Publicity
C. Partly Advertisement and Partly Publicity
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D. Either Advertisement or Publicity

ANSWER: B
37. The general standards stress the importance of

A. evidence accumulation.
B. the personal qualities which the auditor should possess
C. communicating the auditors findings to the reader.
D. all of the above.
ANSWER: D
38. The generally accepted auditing standard that requires Adequate technical training and proficiency is
normally interpreted as requiring the auditor to have
A. . formal education in auditing and accounting.
B. adequate practical experience for the work being performed.
C. continuing professional education.
D. all of the above.
ANSWER: D
39. The preliminary judgment about materiality is the amount by which the auditor believes the statements
could be misstated and still not affect the decisions of reasonable users.
A. minimum
B. maximum
C. mean average
D. median average
ANSWER: C
40. When an auditor calculates the gross margin as a percent of sales and compares it with previous
periods, this type of evidence is called
A. physical examination.
B. computation.
C. observation.
D. inquiry
ANSWER: A
41. A measure of the auditors assessment of the likelihood that there are material misstatements in an
account before considering the effectiveness of the clients internal control is
A. control risk.
B. acceptable audit risk.
C. statistical risk.
D. inherent risk.
ANSWER: A
42. The auditor is likely to accumulate more evidence when the audit is for a company
A. whose stock is publicly held.
B. which has extensive indebtedness.
C. which is to be sold in the near future.
D. All three of the above.
ANSWER: D
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43. In the audit of accounts payable the auditor is normally most concerned with
A. existence.
B. completeness.
C. rights and obligations.
D. valuation and allocation.
ANSWER: B
44. Your audit client has a debt covenant that requires a 2:1 interest cover ratio. With respect to interest
expense, the auditor would be most interested in
A. cut-off.
B. accuracy.
C. occurrence.
D. completeness.
ANSWER: D
45. ) Your client is in a highly competitive industry with the majority of the competition coming from
overseas. Its products have a relatively short life cycle and product development is continuous in order to
keep up with competitors. For the inventory account, the assertion upon which most audit effort should be
concentrated is
A. existence.
B. completeness.
C. rights and obligations.
D. valuation and allocation.
ANSWER: D
46. ) _________ me answer a person who has been granted a license to issue a electronic signature
certificate.
A. Certifying authority
B. Certifying private key authority
C. Certifying system controller
D. Appropriate authority.
ANSWER: A
47. Under Indian penal act 1860 offences relating to documents and property marks.In this offence
includes__________.
A. trade mark
B. property mark
C. both a and b
D. none of these
ANSWER: C
48. Which of the following are cryptographic method?

A. technical standard
B. criteria
C. protocols
D. all the above.
ANSWER: D
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49. The objective of ISO-9000 family of Quality management is

A. Customer satisfaction
B. Employee satisfaction
C. Skill enhancement
D. Environmental issues
ANSWER: A
50. To introduce the new products to world of consumers is the main goal of
A. Entertainment
B. Advertising
C. Boost the sales
D. Online marketing
ANSWER: B
51. Which of the following is responsible for quality objective?

A. Top level management
B. Middle level management
C. Frontline management
D. All of the above
ANSWER: B
52. For making advertisement s more effective, the manufacturers improve _____and launch new products.
A. Existing products
B. Advertisement style
C. Marketing channel
D. Sponsors
ANSWER: A
53. It is advisable to use ________ as a source of advertising

A. Social media
B. Email
C. Radio
D. Television
ANSWER: D
54. Selecting time, choosing media types, deciding on reach of frequency and media vehicle for
advertisements are part of
A. Media strategy
B. Media execution
C. Selecting media
D. Measuring communication
ANSWER: C
55. ) Quality control program is consideres to be

A. a system of activities to provide quality of products
B. a system of activities to provide quality of services
C. a system of activities to provide quality of products and services
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ANSWER: C
56. ) If two sets of limits approach is takento construct a control chart, what are the outer set of limits
called?
A. action limits
B. warning limits
C. variable limits
D. constant limits
ANSWER: A
57. Quality is ___ variability

A. opposite of
B. proportional to
C. reciprocal of
D. synonym of
ANSWER: C
58. In management process, the most misinterpreted word is ___

A. organising
B. delegating
C. controlling
D. planning
ANSWER: A
59. The department that an event management company will have is ___
A. creative
B. production
C. client servicing
D. all the above
ANSWER: D
60. under mechanism of scientific management, scientific task setting include___

A. time study
B. motion study
C. method study
D. all the above
ANSWER: D
61. When an auditor is proposed for removal from office, which one of the following is he NOT permitted
to do?
A. Circulate representations to members
B. Apply to the court to have the proposal removed
C. Speak at the AGM/EGM where the removal is proposed
D. Receive notification of the AGM/EGM where the removal is proposed
ANSWER: B
62. Which one of the following is NOT a duty of the auditor?
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A. Duty to report to the companys bankers

B. Duty to report to the members
C. Duty to sign the audit report
D. Duty to report on any violation of law
ANSWER: A
63. Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of
the auditor?
A. The shareholders in a general meeting
B. The managing director
C. The board of directors in a board meeting
D. The audit committee
ANSWER: A
64. The independent auditor's primary responsibility is to

A. the directors
B. the company's creditors (payables)
C. the company's bank
D. the shareholders
ANSWER: D
65. How long is the auditor's term of office?

A. Until the audit is complete
B. Until the financial statements are complete
C. Until the next AGM
D. Until the directors remove them
ANSWER: C
66. Audit risk is composed of 3 factors. Which of the following is NOT one of those factors?
A. Compliance risk
B. Detection risk
C. Control risk
D. Inherent risk
ANSWER: A
67. For agreed-upon procedures, auditor simply provides a report of factual findings
A. absolute assurance
B. negative assurance
C. moderate assurance
D. no assurance
ANSWER: D
68. In a complication engagement although the users of complied information derive some benefit from the
involvement of a member of the institute _________ is expressed in the report
B. negative assurance
C. moderate assurance
D. no assurance
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ANSWER: D
69. The evidence available to auditor _________ in nature, rather _________ in nature
A. pervasive, conclusive
B. conclusive, pervasive
C. limited, unlimited
D. none of the above
ANSWER: A
70. Which of the following actions would be considered as self-interest threats? Select which two options
are correct.
A. One client provides a high percentage of total audit fees.
B. A member of the assurance team is a director of the client.
C. An auditor acts as an advocate on behalf of an assurance client.
ANSWER: A
71. Standard issued by auditing and assurance standards boards under the authority of the council are
collectively known as __________
A. standards of auditing
B. auditing pronouncement
C. engagement standards
D. all of the above
ANSWER: C
72. Compliance with the standards of auditing is the responsibility of ___________

A. management
B. those charged with governance
C. auditor
D. audit committee
ANSWER: C
73. Fraud means __________ act by any person to conceal truth and obtain illegal advantages
A. false
B. honest
C. intentional
D. un intentional
ANSWER: C
74. The auditor shall obtain _____________ that the financial statement are free from fraud and
misstatement
B. management's assurance
C. reasonable assurance
D. none of the above
ANSWER: C
75. The primary responsibility for prevention and detection of fraud rests with both ___________ and
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____________
A. auditor and management
B. management and those charged with governance
C. auditor and those charged with governance
D. all the above
ANSWER: B
76. Owing to the ____________ limitations of an audit there is __________ risk that some material
misstatement of the financial statement will not detected , eventhough the audit is properly planned and
performed in accordance with SAS
A. inherent, unavoidable
B. inherit, inherit
C. management, unavoidable
D. management, control
ANSWER: A
77. Auditor shall require what the managementâ��s assessment of the _____________ risk and how
frequently management assesses the same
A. control
B. detection
C. inherit
D. fraud
ANSWER: D
78. SA 240 deals with auditorâ��s responsibilities towards ______________ in the financial statement
audits
A. error
B. misstatement
C. fraud
D. risk
ANSWER: C
79. _____________ arise from either fraud or error

A. Financial statement
B. Theft
C. Management Fraud
D. Cash embezzlement
ANSWER: A
80. Which of this is not an example of misappropriate of asset?

A. embezzling receipts
B. stealing physical assetss
C. inappropriately adjusting estimates
D. using entity assets for personal use
ANSWER: D
81. Which one of the following statements is correct?
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A. Audit risk is the risk of a material misstatement in the financial statements.

B. The risk of a material misstatement in the financial statements consists of control risk.
C. Audit risk is the risk that the auditor will not detect a material misstatement that exists in the financial
statements.
D. Audit risk is the risk of a material misstatement in the financial statements and that the auditor did not
detect the material misstatement.
ANSWER: D
82. Which of the following increase control risk? Select which two options are correct.
A. lack of segregation of duties.
B. optimistic forecasts presented to analysts
C. reduction in sample size for substantive tests
D. None of the above.
ANSWER: A
83. ISA 240 The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements
specifically requires the auditor, when identifying and assessing the risk of material misstatement due to
fraud, to presume there is a risk of fraud in
A. Revenue recognition.
B. Weak internal controls
C. Liability understatement
D. Misappropriation of assets.
ANSWER: A
84. Which one of the following does not impact on inherent risk?
A. The auditor has reduced the sample sizes for testing of purchases for the entity.
B. The entity has purchased its raw materials from the United States at discounted prices.
C. During the year, the entity converted its computer system to a new improved online system.
D. Management has introduced a new bonus scheme for sales employees who meet their monthly target.
ANSWER: A
85. In which of the circumstances below would an auditor be able to change the terms of engagement from
an audit to a review engagement? Select which two options are correct.
A. A change in circumstances affects the entity's requirements.
B. There is a misunderstanding concerning the nature of the service originally requested.
C. During the audit, the auditor is unable to obtain sufficient appropriate evidence with respect to
receivables.
D. The client has substantial assets in Iraq. Due to an ongoing conflict, the auditor is unable to test the
existence or value of the assets.
ANSWER: A
86. XYZ Ltd (XYZ) is a listed company with an audit committee comprising three of the eight board
members. XYZ's auditor would communicate matters of governance with
A. Management only.
B. Management, audit committee and the board of directors.
C. Either the audit committee, the board of directors or both.
D. Only the audit committee and never the full board of directors.
ANSWER: C
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87. With respect to financial statement fraud, which one of the following statements is not correct?
A. Enquiries of management are more useful for detecting management fraud than employee fraud.
B. The auditor must consider the risk of material fraud at both the financial statement level and the
assertion level
C. Excessive pressure on management to meet expectations of third parties creates incentives for
management fraud.
D. The auditor needs to consider the likelihood of collusion in determining the appropriate level to
report suspicions of fraud.
ANSWER: A
88. Which one of the following statements is true with respect to the terms of audit engagements?
A. For an audit of financial statements, a new engagement letter must be sent each year
B. The auditor must obtain assurance from management that the financial statements are free from
material misstatement.
C. If the auditor receives a request to change the engagement from an audit to a review because of a
misunderstanding about the nature of an audit by the auditee, this would normally be considered a
reasonable basis for requesting a change.
D. If the auditor receives a request to change the engagement from an audit to a review because of
reduction in the scope of the audit caused by management, this would normally be considered a reasonable
basis for requesting a change.
ANSWER: A
89. The balance date for the auditee is 30 June 20X0. Based on preliminary work carried out at the
planning stage, the auditor decides to move all substantive testing of inventory to 30 June, instead of the
original planned date of 31 May. Which of the following risks would be reduced? Select which two options
are correct.
A. Audit
B. Control
C. Inherent
ANSWER: A
90. Auditors are required by _____ to communicate audit matters of governance interest to those charged
with governance.
A. ISA 260
B. ISA 263.
C. ISA 265.
D. ISA 268
ANSWER: A
91. . ______ me answer the persons with responsibility for overseeing the strategic direction of the entity
and obligations related to accountability of the entity.
A. Those charged with governance.
B. Those charged with management
C. both (a) and (b).
D. none of these.
ANSWER: D
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92. _____is a key element in auditors communication with those charged with governance.
A. Auditors communication with audit committee.
B. Auditors communication with management.
D. none of these
ANSWER: A
93. "Forensic audit uncover several type of fraud". In this fraud does not includes
A. Theft of cash
B. Fruadlent payment
C. Manipulated document
ANSWER: D
94. Before accepting PFI engagement, audit firm should considered _________
A. Information should be included
B. Period covered by information
C. Nature of assumption
D. All the above
ANSWER: D
95. Internal auditing department are lead by CAE. In this CAE stands for_____________.
A. Charted accountant executive
B. Chief accountant executive
C. Chief audit executive
D. Charted audit executive
ANSWER: C
96. Those charged with _____ me such personnal who will supervise the work done by the entity.
A. governance
B. management
C. managing director.
D. none of these
ANSWER: A
97. ._____ refers to those persons within the entity who are having the executive responsibility about code
of conduct of entity.
A. management
B. governance
C. both(a) and (b).
D. none of these
ANSWER: A
98. Management comprises of officers and others who also perform _____ managerial functions.
A. senior
B. junior
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D. managing director.
ANSWER: A
99. Financial information without _____ is essentially worthless for investing purposes.
A. balance sheet.
B. audit report.
C. profit and loss a/c.
D. none of these.
ANSWER: B
100. Auditees determine the compensation to auditors for their work is called _____.
A. salary
B. audit fee.
D. none of these
ANSWER: B
101. The audit report is written in a standard format, as mandated by _____.

A. International Financial Reporting Standards (IFRS).
B. Generally Accepted Auditing Standards (GAAS).
C. Generally Accepted Accounting Principles (GAAP).
D. none of these.
ANSWER: B
102. A forensic audit can be conducted in order to prosecute a party for

A. Tax
B. Fraud
C. Auditing
D. BOTH A And C
ANSWER: B
103. The audit covers a wide range of investigative activities performed by

A. Auditors
B. Accountants
C. Board of directors.
D. Government
ANSWER: B
104. Forensic audits uncover several types of fraud. The most common involves theft, including.
A. Cash
B. Inventory.
C. BOTH A And B.
D. None of this
ANSWER: C
105. The retiring auditor does not have a right to:

A. To make written representations
B. Get his representations circulated
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C. Be heard at the meeting

D. Speak as a member of the company
ANSWER: D
106. The auditor has a right to:

A. Obtain information and explanation
B. Obtain information and explanations from the employees and officers
C. Obtain information and explanation necessary for the purpose of audit
D. Both (2) and (3)
ANSWER: D
107. Whether the management can restrict the scope of work of external auditor:
A. Yes
B. No
C. In some cases
D. If shareholders permit
ANSWER: B
108. An audit which is compulsory by the law __________.

A. Government audit.
B. Internal audit.
C. Cost audit.
D. Statutory audit.
ANSWER: D
109. Which of the following are not objectives of auditing?

A. Ascertain the profit and preparation of P/L Account, Balance sheet.
B. Detection and prevention of frauds and errors.
C. Give a true and fair view of financial amount.
D. To submits the accounts to the Government
ANSWER: D
110. Which of the following is not a kind of audit?

A. Statutory and private audit.
B. Government and continuous audit.
C. final, Interim, Cash, Cost and Management audit.
D. None of these.
ANSWER: D
111. The auditor shall assemble the audit documentation in an audit file within _____________ days of
completition of audit
A. 60 days
B. 90 days
C. 180 days
D. 30 days
ANSWER: A
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112. What is not a basic element of auditorâ��s report __________

A. title
B. signature of the auditor
C. other information
D. introductory para
ANSWER: D
113. ___________ is responsible for the preparation of prospective financial information

A. General publiuc
B. central government
C. accountant of the company
D. auditor
ANSWER: C
114. ._________ indicates that the information presented in a companys financial report is clean.
A. unqualified opinion
B. Qualified opinion
C. Disclaimer opinion
D. Adverse opinion
ANSWER: A
115. In _____opinion the auditing body cannot express an unqualified opinion for several reasons.
A. Unqualified opinion
B. Qualified opinion
C. Disclaimer opinion
D. Adverse opinion
ANSWER: B
116. The ________ has indicated that companies that include prospective financial information in SEC
fillings or annual reports.
A. SEC
B. AICPA
C. SSAE
D. SPW
ANSWER: A
117. Prospective financial information is based on assumptions regarding __________

A. past events
B. future events
C. practical events
D. management events
ANSWER: B
118. The prospective financial information is often referred to by a number of different names such as
forecasts, projections ______
A. breakeven analyses and budgets
B. feasibility studies
19 of 25 1/27/2020 2:44 PM
C. significant assumptions
D. practical presentations
ANSWER: A
119. When auditors issue a __________ it indicates that there has been a gross misstatement and, possibly,
fraud, in the preparation of the companys financial records.
A. Unqualified
B. Qualified
C. Disclaimer
D. Adverse
ANSWER: D
120. Which one of the following procedures would normally be carried out by the engagement quality
control reviewer?
A. Participation in the planning of the audit
B. Review and approval of the audit program
C. Review of significant judgments made by the engagement team
D. Ensure that all evidence collected by the audit team is valid and reliable
ANSWER: C
121. Which of the following would need to be documented with respect to a sample of purchase orders?
Select which three options are correct.
A. The population from which the purchase orders came
B. The unique numbers of the purchase orders examined
C. The supplier of the inventory items identified on the purchase order
ANSWER: A
122. Which of the following are financial statement frauds? Select which three options are correct.
A. Forging of accounting records
B. Unintentional omission from the financial statements of transactions
C. Intentional misapplication of accounting principles related to amounts
ANSWER: A
123. Prior to accepting an appointment as auditor, the audit firm is informed by management that
management does not believe it is responsible for the internal control system. As a result of this
information, the auditor
A. Cannot accept the audit engagement unless required to do so by law or regulation.
B. Will not be able to rely on internal controls and will need to carry out substantive tests of details and
analytical procedures.
C. Will need to increase the extent of tests of controls, as well as consider the nature and timing of these
tests in order to rely on internal controls.
D. Must inform management that unless management acknowledges its responsibility for the internal
control system it will be considered a limitation of scope on the audit.
ANSWER: A
124. Which of the following statements are correct? Select which two options are correct.
20 of 25 1/27/2020 2:44 PM
A. Some ISAs may not be relevant to small entities.

B. ISAs do not apply to companies limited by guarantee.
C. Specific audit procedures to comply with ISAs may vary depending on the size of the entity.
D. In some instances, the Australian auditing standards permit auditors to ignore the requirements of the
ISAs.
ANSWER: A
125. The degree of certainty that the practitioner has attained and wishes to convey is
A. A conveyance.
B. An assertion.
C. A declaration.
D. An assurance.
ANSWER: D
126. Who shall appoint the first auditorâ��s incase of non-government company?
A. Central government
B. ROC
C. Board of Directors
D. Shareholders
ANSWER: C
127. The main object of an audit is ___

A. Expression of opinion
B. Detection and Prevention of fraud and error
C. Both (a) and (b)
D. Depends on the type of audit
ANSWER: D
128. The title of AAS2 issued by Council of ICAI is ___

A. Objective and Scope of the Financial Statements
B. Objective and Scope of the Audit of Financial Statements
C. Objective and Scope of Business of an Entity
D. Objective and Scope of Business of an Entity
ANSWER: B
129. Which of the following is not true about opinion on financial statements?
A. The auditor should express an opinion on financial statements.
B. His opinion is no guarantee to future viability of business
C. He is responsible for detection and prevention of frauds and errors in financial statements
D. He should examine whether recognised accounting principle have been consistently
ANSWER: C
130. A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of _

A. Error of omission
B. Error of commission
C. Compensating error
D. Error of principle
21 of 25 1/27/2020 2:44 PM
ANSWER: B
131. Goods sent on approval basis have been recorded as Credit sales. This is an example of _
A. Error of principle
B. Error of commission
C. Error of omission
D. Error of duplication
ANSWER: A
132. Which of the following statements is not true?

A. Management fraud is more difficult to detect than employee fraud
B. Internal control system reduces the possibility of occurrence of employee fraud and management
fraud
C. The auditors responsibility for detection and prevention of errors and frauds is similar.
D. All statements are correct.
ANSWER: B
133. As per AAS4 if auditor detects an error then

A. He should inform the management.
B. He should communicate it to the management if it is material
C. The auditor should ensure financial statements are adjusted for detected errors.
D. Both (b) and (c)
ANSWER: D
134. Which of the following is not a limitation of audit as per AAS4 ?

A. Objectivity of auditors judgment
B. Selective testing
C. Persuasiveness of evidence
D. Limitations of internal control system
ANSWER: A
135. Components of internal control structure are ______________

A. control activities
B. entity risk assessment procedure
C. accounting system
D. all the above
ANSWER: C
136. Audit risk means the risk that the auditor gives inappropriate audit opinion when
A. financial statement are affected by material facts
B. financial statement do not give true or fair review
C. Financial statement do not present fairly
D. Financial statement are materially misstatement
ANSWER: D
137. Audit planning is a ______phase

A. Discrete
B. Iterative
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C. Continual and discrete

D. Continual and Iterative
ANSWER: C
138. The auditor shall document

A. Result of un expected events
B. Changes in conditions
C. Overall audit strategy
D. all of the above
ANSWER: C
139. Under which type of market pay in and pay out takes place on the same day
A. Auction market
B. Spot market
C. Odd lot market
D. Normal market
ANSWER: B
140. Which of the following actions would be considered as self-interest threats? Select which two options
are correct.
A. One client provides a high percentage of total audit fees
B. A member of the assurance team is a director of the client
C. An auditor has potential employment with an assurance client.
D. An auditor acts as an advocate on behalf of an assurance client.
ANSWER: C
141. Contract notes should be issued within ____ hours of the trade Execution
A. 12 hours
B. 24 hours
C. 48 hours
D. 72 hours
ANSWER: B
142. Which of the following is not related to fraud by operational level employees?
A. Cash misappropriation
B. Teeming and leading
C. payroll fraud
D. Advance billing
ANSWER: D
143. Which of the following statements are correct?

A. Professional scepticism implies an expectation of fraud or error, so is a biased viewpoint.
B. The level of professional scepticism needs to be maintained throughout the whole engagement.
C. Professional scepticism is important in considering managements explanations for unusual trends.
D. The level of professional scepticism can be reduced where the auditor has past experience with the
entity indicating the honesty and integrity of management.
ANSWER: C
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144. Which of the following statements are true?

A. Reviews of historical financial information are limited assurance engagements.
B. A review engagement does not ordinarily require tests of accounting records through inspection,
confirmation and observation.
C. A practitioner who is the auditor of an entity cannot also carry out a review engagement for the same
client in the same year.
D. A common form of expression for a review engagement is The financial statements are prepared in
accordance with the [appropriate accounting] framework.
ANSWER: A
145. An auditor leaves an audit firm and takes the role of the CFO of an audit client two months after
completing the audit. This would involve some of the following threats. Select which is not correct
A. familiarity
B. self-review
C. self-interest
D. intimidation
ANSWER: B
146. For a financial audit of a government department carried out by an Auditor-Generals office, which of
the following would be outputs of the audit? Select which is not correct
A. an audit opinion on the financial statements
B. a report to parliament on significant issues arising out of the audit
C. an opinion on whether taxpayers money is spent efficiently, effectively and economically
D. a letter to the governing body of the auditee that includes observations about the quality of internal
controls
ANSWER: C
147. Entities which have raised funds from public or bank or financial institution of over Rs.50 crores
during period has to apply for peer review
A. Once in 3 years
B. Once in 4 years
C. Once in 5 years
D. Once in 6 years
ANSWER: A
148. Compliance review procedures includes____

A. Independence
B. Professional skills and standards
C. both of the above
ANSWER: C
149. If the report is modified board can order follow on for a period of one year but many reduce that
period but it shall not be less than ________
A. 9 months
B. 3 months
C. 6 months
D. 5 months
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ANSWER: C
150. The requirement of internal control under computer based system may not cover which of the
following aspects_____.
A. Data entry and program control
B. Computer operation control
C. control over planning activities
D. Control over input
ANSWER: C
Staff Name
Dhanasekaran R .
25 of 25 1/27/2020 2:44 PM

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http://172.16.1.50/printqp.php?heading=III B.Com PA [2017 - 2020], ...

Dr.G.R.Damodaran College of Science

III B.Com PA [2017 - 2020]

B. Review of financial statements

9. A responsible party does each of the following except:

11. Sufficiency of evidence is:

12. In a Limited assurance engagement, the practitioner:

15. professional scepticism is

16. International regulatory frameworks need for _________

17. Money laundering consists of ---------------

18. _____________is the movement of the cash from its source

21. Which of the following statements is not true?

22. Risk can be arises due to __________.

29. When was money laundering control act passed?

D. Either Advertisement or Publicity

37. The general standards stress the importance of

48. Which of the following are cryptographic method?

49. The objective of ISO-9000 family of Quality management is

51. Which of the following is responsible for quality objective?

53. It is advisable to use ________ as a source of advertising

55. ) Quality control program is consideres to be

D. None of the above

57. Quality is ___ variability

58. In management process, the most misinterpreted word is ___

60. under mechanism of scientific management, scientific task setting include___

62. Which one of the following is NOT a duty of the auditor?

A. Duty to report to the companys bankers

64. The independent auditor's primary responsibility is to

65. How long is the auditor's term of office?

72. Compliance with the standards of auditing is the responsibility of ___________

79. _____________ arise from either fraud or error

80. Which of this is not an example of misappropriate of asset?

81. Which one of the following statements is correct?

A. Audit risk is the risk of a material misstatement in the financial statements.

101. The audit report is written in a standard format, as mandated by _____.

102. A forensic audit can be conducted in order to prosecute a party for

103. The audit covers a wide range of investigative activities performed by

105. The retiring auditor does not have a right to:

C. Be heard at the meeting

106. The auditor has a right to:

108. An audit which is compulsory by the law __________.

109. Which of the following are not objectives of auditing?

110. Which of the following is not a kind of audit?

112. What is not a basic element of auditorâ��s report __________

113. ___________ is responsible for the preparation of prospective financial information

117. Prospective financial information is based on assumptions regarding __________

A. Some ISAs may not be relevant to small entities.

127. The main object of an audit is ___

128. The title of AAS2 issued by Council of ICAI is ___

130. A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of _

132. Which of the following statements is not true?

133. As per AAS4 if auditor detects an error then

134. Which of the following is not a limitation of audit as per AAS4 ?

135. Components of internal control structure are ______________

137. Audit planning is a ______phase

C. Continual and discrete

138. The auditor shall document

143. Which of the following statements are correct?

144. Which of the following statements are true?

148. Compliance review procedures includes____

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