Faculty of Management Science

Student’s Full Name: ………………………….. Father’s Name ………………. Date: 02.06.2019

Student’s ID: ……………………………………………… Session ………………………………….

ACADEMIC YEAR PROGRAM DURATION PROFESSOR NAME

2019 – 2020 Bachelors (BSF) 1 Hour Mr. Sajid Iqbal

SUBJECT/MODULE: Auditing and Assurance

Marks Obtained Remarks
Question 1: 2 for each.
Question 2:
Question 3:
Question 4:
Question 5:
Total: 30 Marks

BREAKDOWN:
Particulars Marks Obtained Remarks
Class Participation
Mid-Term Examination
Final Examination
Total

ATTESTATION:
Lecturer’s Signature ………………………………….
Invigilators:
(a) Signature..................................................................
(b) Signature …………………………………….……

INSTRUCTIONS AND REMINDERS

1. Please attempt all the questions.
2. All the candidates are required to comply with the university’s examination policies and
regulations.
3. Any academic misconduct during the examination (such as plagiarism, cheating, or collusion
with another candidate) will be expelled from the examination room and the examination will be
markedwith an automatic zero.
4. Make sure you have 04 pages including this page.
5. All answers should be written in the spaces provided in the exam paper.
6. Students should not carry with them any paper, text, or other material bearing any information
relevant to the exam unless it is an open bookexam or certain documents that have been
authorized by the lecturer or invigilator.
7. All mobile phones should be switched off during the examination.
8. The answers for short questions shouldn’t be more than a paragraph.
9. The answers for long questions shouldn’t be less than 1000 words.
10. Case studies and numerical problems should be answered as per instructions or whatsoever
deemed appropriate.

Q1 : Multiple choice question :

Choose the best option.
No marks would be awarded for over writting or using ink removers.

1. The main objective of audit is _________________.

a. Expression of opinion
b. Detection and prevention of error and fraud
c. Both (a) and (b)
d. Depends on the type of audit

2. Which of the following is not true about the opinion on financial statements?
a. The auditor should express and opinion on financial statements
b. His opinion is no guarantee to future viability of business
c. He is responsible for detection and prevention of errors and frauds in financial statements
d. He should examine whether recognized accounting principle have been used consistently

3. Which of the following is not true,

a. Management fraud is more difficult to detect than employee fraud
b. Internal control system (ICS) reduces possibility of occurrence of employee and
management frauds
c. The auditors responsibility for detection and prevention of errors and fraud is similar
d. All statements are correct

4. If auditor detects and error then:

a. He should inform 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)

5. IFAE, is an acronym for,

a. International foundation for audit engagements
b. International framework for audit engagements
c. International foundation for audit education
d. None of the above

6. Which one of the following helps to achieve reasonable assurance about the fairness of financial
statements during audit engagement,
a. Audit report
b. Audit evidence
c. Audit engagement
d. Audit program

7. What do we mean by reasonable assurance in financial auditing?

a. A guarantee there will not be a material misstatement in the accounts
b. A 100% guarantee that all is in order
c. The amount of audit evidence needed to reduce to an acceptably low level the risks of
material misstatement of the financial statements and evaluating the effects of uncorrected
misstatements identified
d. In the context of forming an opinion on the financial statements, a level of confidence that
there should not be a material misstatement in the accounts
8. IFRS is an acronym for,
a. International financial reporting settlements
b. International financial reporting systems
c. International financial reporting standards
d. None of the above

9. The concept of materiality as it applies to a financial statement audit:

a. Relates primarily to the audit fees involved
b. Generally involves less professional judgment for public companies
c. Is determined, based on how financial statements may be influenced in making decisions
d. Relates primarily to the quality of audit procedures performed

10. What is essential meaning of generally accepted auditing standard that requires that the auditor
be independent,
a. The auditor must be without bias with respect to the client under audit
b. The auditor must adopt a critical attitude during the audit
c. The auditors sole obligation is to third parties
d. The auditor may have a direct ownership interest in his client’s business if it is not material

11. When auditor is unable to express an opinion due to incomplete financial statements provided
by management, is known as________________.
a. Unqualified opinion
b. Qualified opinion
c. Adverse opinion
d. Disclaimer

12. What is the primary objective of an external audit and assurance?

a. To prevent financial statements from errors and frauds
b. To detect error and frauds in financial statements
c. Express an opinion about the financial statements
d. Advise management on best practices

13. The most favorable type of audit report opinion for the client to receive is:
a. Qualified
b. Unqualified
c. Full assurance
d. Exceptional

14. The risk that an auditor’s procedures will lead to a conclusion that a material misstatement in
an account balance does not exist, when in fact a misstatement did occur, is known as:
a. Audit risk
b. Inherent risk
c. Detection risk
d. Business risk

15. Which of the following would be classified as “error”?

a. Misinterpretation by management of faces that existed when the financial statements were
prepared
b. Misappropriation of assets for the benefits of managements
c. Preparations of records by employees to cover a fraudulent scheme
d. Intentional omission of the recording of a transaction to benefit a third party