Bhagya Achievers Test Series

TEST: Chapter 1 (Nature, Objective And Scope Of Audit)

Total marks: 20marks

Time 40mins

Ques1. (4marks)

The objective of the IAASB is to serve the public interest by setting high quality
auditing standards and by facilitating the convergence of international and
national standards, thereby enhancing the quality and uniformity of practice
throughout the world and strengthening public confidence in the global
auditing and assurance profession. State how this objective is achieved.

Ques2. (4marks)
The chief utility of audit lies in reliable financial statements on the basis of
which the state of affairs may be easy to understand. Apart from this
obvious utility, there are other advantages of audit. Some or all of these are
of considerable value even to those enterprises and organisations where
audit is not compulsory. Explain.

Ques3. (3marks)

Both accounting and auditing are closely related with each other. Explain

Ques4. (5marks)

Lord Justice Lindley in the course of the judgment in the famous London &
General Bank case had succinctly summed up the overall view of what an
auditor should be as regards the personal qualities. Explain stating also the
qualities of Auditor.

Ques5. (2marks)

Examine with reasons whether the following statements are correct or

incorrect.

The purpose of an audit is to enhance the degree of confidence of intended

users in the financial statements.
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MCQ’s (1marks)

1. SQC 1 requires firms to establish policies and procedures for the

retention of engagement documentation. The retention period for
audit engagements ordinarily is:
(a) No shorter than eight years from the date of the auditor’s report
or if later the date of the group auditor’s report
(b) No shorter than six years from the date of the auditor’s report, or
if later than date of the group auditor’s report
(c) No shorter than seven years from the date of the auditor’s report
or if later the date of the group auditor’s report
(d) No shorter than ten years from the date of the auditor’s report or
if later the date of the group auditor’s report (1marks)
2. When an auditor deals with shares or securities of the audited company
is an example of:
(a) Self – review threats
(b) Self – interest threats
(c) Advocacy threats
(d) Intimidation threats (1marks)

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