Professional Documents
Culture Documents
Auditor
Auditor
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A. Auditing
B. Vouching
C. Verification
D. Checking
The term ‘Audit’ is derived from a Latin word “audire” which means___________?
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A. To inspect
B. To examine
C. To hear
D. To investigate
Assuming that it is not the first appointment of the auditor, who is responsible for the
appointment of the auditor?
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A. The shareholders in a general meeting
B. The managing director
C. The board of directors in a board meeting
D. The audit committee
Audit risk is composed of 3 factors. Which of the following is NOT one of those factors?
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A. Compliance risk
B. Detection risk
C. Control risk
D. Inherent risk
Which of the following are you unlikely to see in the current file of auditors’ working
papers?
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A. Memorandum & articles of association
B. Audit planning memorandum
C. Summary of unadjusted errors
D. Details of the work done on the inventory count
According to ISA 500, the strength of audit evidence is determined by which two
qualities?
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A. Appropriateness & competence
B. Sufficiency & appropriateness
C. Reliability & extensiveness
D. Objectivity & independence
Which of the following is normally the most reliable source of audit evidence?
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A. Internal audit
B. Suppliers’ statements
C. Board minutes
D. Analytical review
According to ISA 315, which of the following is NOT an element of the control
environment?
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A. Participation of management
B. Information processing
C. Commitment to competence
D. Human resource policies and practices
Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example
of____________?
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A. Error of principle
B. Error of commission
C. Error of omission
D. Error of duplication
Which of the following statements is not true?
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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 auditor’s responsibility for detection and prevention of errors and frauds is similar.
D. All statements are correct.
In determining the level of materiality for an audit, what should not be considered?
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A. Prior year’s errors
B. The auditor’s remuneration
C. Adjusted interim financial statements
D. Prior year’s financial statements
Which of the following statements is most closely associated with analytical procedure
applied at substantive stage?
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A. It helps to study relationship among balance sheet accounts
B. It helps to discover material misstatements in the financial statements
C. It helps to identify possible oversights
D. It helps to accumulate evidence supporting the validity of a specific account balance
Which of the following statements is, generally, correct about the reliability of audit
evidence?
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A. To be reliable, evidence should conclusive rather than persuasive
B. Effective internal control system provides reliable audit evidence
C. Evidence obtained from outside sources routed through the client
D. All are correct.
The nature, timing and extent of substantive procedures is related to assessed level of
control risk
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A. Randomly
B. Disproportionately
C. Directly
D. Inversely
What would most appropriately describe the risk of incorrect rejection in terms of
substantive testing?
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A. The auditor concludes balance is materially correct when in actual fact it is not
B. The auditor concludes that the balance is materially misstated when in actual fact it
not
C. The auditor has rejected an item for sample which was material
D. None of the above
What would most effectively describe the risk of incorrect acceptance in terms of
substantive audit testing?
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A. The auditor has ascertained that the balance is materially correct when in actual fact
it is not
B. The auditor concludes the balance is materially misstated when in actual fact is not
C. The auditor has rejected an item from sample which was not supported by documentary
evidence
D. He applies random sampling on data which is inaccurate and inconsistent
The working papers which auditor prepares for financial statements audit
are___________?
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A. Evidence for audit conclusions
B. Owned by the client
C. Owned by the auditor
D. Retained in auditor’s office until a change in auditors
The quantity of audit working papers complied on engagement would most be affected
by__________?
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A. Management’s integrity
B. Auditor’s experience and professional judgment
C. Auditor’s qualification
D. Control risk
Which of the following best describes the primary purpose of audit programme
preparation?
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A. To detect errors or fraud
B. To comply with GAAP appropriate evidence
C. To gather sufficient
D. To assess audit risk
The auditor’s permanent working paper file should not normally, include__________?
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A. Extracts from client’s bank statements
B. Past year’s financial statements
C. Attorney’s letters
D. Debt agreements
For what minimum period should audit working papers be retained by audit firm?
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A. For the time period the entity remains a client of the audit firm.
B. For a period of ten years
C. For a period auditor opines them to be useful in servicing the client
D. For the period the audit firm is in existence.
Which of the following factors would least likely affect the quantity and content of an
auditor’s working papers
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A. The assessed level of control risk
B. The possibility of peer review
C. The nature of auditor’s report
D. The content of management representation letter
Which of the following statement best describes the understanding with respect to
ownership and custody of working papers prepared by an auditor?
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A. The working papers may be obtained by third parties when they appear to be
relevant to issues raised in litigation
B. The safe custody of working papers is the responsibility of client, if kept at his premises
C. The working papers must be retained by an audit firm for a period of 10 years
D. Successor auditors may have access to working papers of the predecessor auditors. The
approval of client is not required.
Auditing is what?
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A. Reporting the financial information
B. Examination of financial statements
C. Preparation financial statements
D. maintaining the ledger records
When issuing unqualified opinion, the auditor who evaluates the audit findings should
be satisfied that the_____________?
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A. Amount of known misstatement is documented in working papers
B. Estimates of the total likely misstatement is less than materiality level
C. Estimate of the total likely misstatement is more than materially level
D. Estimates of the total likely misstatement cannot be made
In determining the level of materiality for an audit, what should not be considered?
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A. Prior year’s errors
B. The auditor’s remuneration
C. Adjusted interim financial statements
D. Prior year’s financial statements
Which of the following statements is most closely associated with analytical procedure
applied at substantive stage?
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A. It helps to study relationship among balance sheet accounts
B. It helps to discover material misstatements in the financial statements
C. It helps to identify possible oversights
D. It helps to accumulate evidence supporting the validity of a specific account balance
What is the primary objective of analytical procedures used in the overall review stage
of an audit?
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A. To help to corroborate the conclusions drawn from individual components of
financial statements
B. To reduce specific detection risk
C. To direct attention to potential risk areas
D. To satisfy doubts when questions arise about a client’s ability to continue
Which of the following statements is, generally, correct about the reliability of
auditevidence?
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A. To be reliable, evidence should conclusive rather than persuasive
B. Effective internal control system provides reliable audit evidence
C. Evidence obtained from outside sources routed through the client
D. All are correct.
What would most appropriately describe the risk of incorrect rejection in terms of
substantive testing?
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A. The auditor concludes balance is materially correct when in actual fact it is not
B. The auditor concludes that the balance is materially misstated when in actual fact it
not
C. The auditor has rejected an item for sample which was material
D. None of the above
What would most effectively describe the risk of incorrect acceptance in terms of
substantive audit testing?
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A. The auditor has ascertained that the balance is materially correct when in actual fact
it is not
B. The auditor concludes the balance is materially misstated when in actual fact is not
C. The auditor has rejected an item from sample which was not supported by documentary
evidence
D. He applies random sampling on data which is inaccurate and inconsistent
If the book value of an asset stands at________per cent of the original cost, a company
need not provide depreciation on it.
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A. two
B. fifteen
C. five
D. ten
The term of the auditor ship of first auditor would be from the date of appointment
till________?
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A. the conclusion of statutory meeting
B. the conclusion of first annual general meeting
C. the conclusion of next annual general meeting
D. the date of removal
In case the directions fail to appoint first auditor (s), the shareholders shall appoint
them at_________by passing a resolution.
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A. a general meeting
B. first annual general meeting
C. statutory meeting
D. annual general meeting
If a casual vacancy in the office of auditor arises by his resignation it should only be
filled by the company in a_________?
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A. Board meeting
B. extraordinary general meeting
C. General meeting
D. annual general meeting
The authority to remove the first auditor before the expiry of term is with__________?
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A. the shareholders in a general meeting
B. the shareholders in the first annual General meeting
C. the board of directors
D. the Central Government
Who out of the following cannot be appointed as a statutory auditor of the company?
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A. Erstwhile director
B. Internal auditor
C. Relative of a director
D. Only (B. and (C.
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Auditor of a___________company does not have right to visit foreign branches of the company?
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A. Unlimited liability
B. Manufacturing
C. Banking
D. Nonprofit making
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When restrictions that significantly affect the scope of the audit are imposed by the client, the
auditor generally should issue which of the following opinion?
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A. Qualified opinion
B. Disclaimer of opinion
C. Adverse opinion
D. Unqualified report with ‘an emphasis of matter’ paragraph;
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___________?
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A. unqualified opinion
B. unqualified opinion with reference to notes to the accounts
C. qualified opinion
D. disclaimer of opinion
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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?
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A. Unqualified opinion
B. Qualified opinion
C. Disclaimer of opinion
D. Adverse opinion
Which of the following documents is not relevant for vouching cash sales?
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To test whether sales have been recorded, the auditor should draw a sample from a file
of__________?
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A. purchase orders
B. sales orders
C. sales invoices
D. bill of loading
The auditor should examine subsequent realization of revenue such as dividends,
interest,commission, etc to:_____________?
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A. one audit firm should audit the IFI and a different firm should audit the financial
statements for the year as a whole.
B. one accountancy firm should review the IFI and a different firm should audit the financial
statements for the year as a whole.
C. the same firm should audit the IFI and the financial statements for the year as a whole.
D. the same firm should review the IFI and the financial statements for the year as a
whole.
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A. Positive assurance
B. Negative assurance
C. High level of assurance
D. No assurance
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A. Introductory paragraph specifying the pages to which the report relates and the accounting
convention adopted
B. Basis of the opinion
C. Involvement of any specialist
D. Statement of responsibilities of directors and auditors
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A. The gap between how the directors of a company perform their duties and how the
shareholders expect them to perform
B. The gap between how the directors of a company perform their duties and how the general
public expects them to perform
C. The gap between the public perception of the role of company auditors and their
statutory role and responsibilities
D. The gap between the auditors’ own perception of their duties and how they are set out in
the Companies Act
Which of the following would you not use as a benchmark for comparison when undertaking
analytical procedures?
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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___________?
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A. Self-interest threat
B. Self-review threat
C. Advocacy threat
D. Familiarity threat
Which of the following are fundamental ethical principles for professional accountants?
1 Competence
2 Compliance
3 Integrity
4 Objectivity
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A. 1, 2 and 3 only
B. 1, 3 and 4 only
C. 2, 3 and 4 only
D. 1, 2 and 4 only
Which one of the following may auditors NOT perform for their client?
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You have been proposed as auditor of a company. What is the first step that you should take?
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A. Obtain the client’s permission to communicate with the existing auditor
B. Obtain the existing auditor’s working papers
C. Obtain a copy of the company’s most recent board minutes
D. Obtain a copy of the existing auditor’s letter of engagement
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A. Unqualified opinion
B. Qualified opinion
C. Adverse opinion
D. Disclaimer of opinion.
All of above
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A. Standards on Auditing
B. Standard on Quality Control
C. Standards on Review Engagement
D. Standards on Assurance Engagement
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A. 32
B. 34
C. 36
D. 38
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A. Profit making entity
B. Non-profit making entity
C. Corporate entity only
D. Any entity
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A. Financial information
B. Non-financial information
C. Both (a) and (b)
D. None of these
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A. Inventory
B. Accounts Payable
C. Accounts Receivable
D. Expenses
Submitted by: Amir
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A. works on cost.
B. selling overhead.
C. distribution overhead.
D. administration overhead