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1. Audit of which of the following companies is excluded from ceiling c) By CAG within 60 days of incorporation of Co
limit of audit d) By Members within 90 days of incorporation of Co
a) Government Companies
b) Private Limited Company having paid up share capital Rs 100 Crore 7. Subsequent auditor of non-government company is a appointed
or more a) By Members in EGM by passing ordinary resolution
c) Audit of Public Companies b) By Members in AGM by passing special resolution
d) Dormant Companies c) By Members in AGM by passing ordinary resolution
d) By BoD in Board Meeting
2. A person shall not be appointed as auditor of co if he has been
convicted by court for an offence involving fraud and a period of 8. Subsequent auditor of government company is appointed by CAG
___________ years has not been elapsed since such conviction within_______ days from commencement of FY which is subject to
a) 10 Years audit
b) 7 Years a) 60 days
c) 8 Years b) 180 days
d) 5 Years c) 120 days
d) 150 days
3. Which of the following is not disqualification of company’s auditor
a) Any person who is officer or employee of the company 9. The provision of section 139(1) are applicable to all companies
b) Any person who is indebtedness to company exceeding Rs. 5,00,000 except:
c) Any person who has been convicted by court for an offence a) Government Companies
involving fraud and a period of 10 years has not been elapsed since b) One person companies
the date of such conviction c) Dormant companies
d) Any person who is officer or employee of holding co or subsidiary d) None of these
company of the company.
10. The auditor shall furnish his written consent and a certificate to the
4. Audit of private limited company is exempted from ceiling on number company
of audits if its a) Before his appointment
a) Paid up share capital is less than Rs. 10 crore b) Within 15 days of his appointment
b) Paid up share capital is less than 20 crore c) Not required to furnish
c) Paid up share capital is less than Rs. 50 crore d) None of these
d) Paid up share capital is less than Rs. 100 crore
11. Which of the following Form is filed by Co with RoC as intimation of
5. First auditor of non- government company is appointed appointment of subsequent auditor
a) By BoD within 1 month of incorporation of Co a) ADT-1
b) By BoD within 30 days of incorporation of Co b) ADT-2
c) By Members within 90 days of incorporation of Co c) ADT-3
d) By Members within 60 days of incorporation of Co d) ADT-4
6. First auditor of government company is appointed 12. ADT-1 is filed with RoC within
a) By BoD within 1 month of incorporation of co a) Within 15 days of appointment of auditor
b) By CAG within 1 month of incorporation of co b) Within 30 days of appointment of auditor
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c) Within 1 month of appointment of auditor b) Members within 30 days

d) Within 60 days of appointment of auditor c) BoD within 15 days
d) BoD within 30 days
13. Tenure of subsequent auditor of non-government company is
a) Till conclusion of next AGM 19. Any casual vacancy in the office of auditor of government company is
b) Till conclusion of 5th AGM filled by
c) Till conclusion of 5 years. a) BoD within 30 days
d) Till conclusion of 6th AGM b) CAG within 30 days
c) CAG within 60 days
14. Tenure of subsequent auditor of government company is d) Members within 90 days
a) Till conclusion of next AGM
b) Till conclusion of 5th AGM 20. If vacancy in the office of auditor of other than government company
c) Till conclusion of 5 years is caused by resignation by auditor, then appointment by BoD shall
d) Till conclusion of 6th AGM also be approved by company at general meeting within
_____________ months of the recommendation of BoD
15. If at AGM no auditor is appointed or reappointed, the following a) 1
consequence will be there b) 3
a) CG shall appoint the auditor c) 5
b) CAG shall appoint the auditor d) 6
c) Existing auditor shall continue to be auditor of company
d) Due to casual vacancy, BoD shall appoint the auditor 21. Which of the following in not a case of casual vacancy in the office
of auditor of company
16. Which of the following company in required to constitute an audit a) Death of person appointed as auditor
committee b) Dissolution of partnership firm appointed as auditor
a) Listed Company c) Refusal of appointment by auditor
b) Small Company d) If any disqualification is attracted to auditor after appointment of
c) One Person Company auditor
d) All of these
22. Any auditor appointed to fill a casual vacancy shall hold office of
17. Before making any appointment or reappointment of auditor also auditor of company
including filling of casual vacancy recommendation of a) Till conclusion of 6th AGM
________________ shall be considered if company falls under b) Till conclusion of next AGM
section 177(1). c) Till he submits his audit report
a) Board of Director d) None of these
b) Audit Committee
c) Tribunal 23. Pick the odd one out
d) Company Law Board a) Section 139(6)
b) Section 139 (1)
18. Any casual vacancy in the office of auditor of non-government c) Section 139(8)
company is filled by d) Section 139(10)
a) Members within 15 days
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24. At any AGM, a retiring auditor may be re-appointed if 30. Rotation of auditor is applicable of private limited company if
a) He is not disqualified for re-appointment a) Its paid up share capital is more than Rs 10 Crore
b) He has not given the company a notice in writing of his b) Its paid up share capital is equal to or more than Rs 10 Crore
unwillingness to be re-appointed c) Its paid up share capital is more than Rs 50 Crore
c) A special resolution has not been passed at that AGM appointing d) Its paid up share capital is equal to or more than Rs 50 Crore
some other auditor or providing expressly that he shall not be re-
appointed. 31. Rotation of auditor is always applicable on
d) All of above a) Listed Companies
b) Government Companies
25. Remuneration of auditor of company is fixed c) Private Limited Companies
a) By company in general meeting d) All of these
b) By BoD of Co
c) By CG 32. If rotation of auditor is applicable on company, term of an individual
d) By CAG auditor will be
a) One term of 5 consecutive years
26. Remuneration of auditor of government company is fixed b) Two terms having 5 consecutive years in each term
a) By company in general meeting c) Till conclusion of next AGM
b) By BoD of Co d) None of these
c) By CG
d) By CAG 33. If rotation of auditor is applicable on company, term of partnership
firm as auditor will be
27. At any AGM, a retiring auditor may be re-appointed if a) 10 Years
a) He is not disqualified for re-appointment b) Two terms having 5 consecutive years in each term
b) He has not given the company a notice in writing of his c) Till conclusion of next AGM
unwillingness to be re-appointed d) None of these
c) A special resolution has not been passed at AGM appointing some
other auditor or providing expressly that he shall not be 34. A break in the term for continuous period of ____________ years
reappointed. shall be considered as fulfilling the requirement of rotation
d) All of the above a) 1 Year
b) 5 Years
28. Rotation of auditor is not applicable on c) 10 Years
a) Dormant Company d) 20 Years
b) One Person Company
c) Small Company 35. As on date of appointment no audit firm having a common partner or
d) Both (b) and (c) partners to audit firm, whose tenure has expired in a company, shall
be appointed as auditor of the same company for a period of _____
29. Rotation of auditor is applicable on unlisted public company if years
a) Its paid up share capital is more than Rs 10 Crore a) 1
b) Its paid up share capital is equal to or more than Rs 10 Crore b) 3
c) Its paid up share capital is more than Rs. 50 Crore c) 5
d) Its paid up share capital is equal to or more than Rs 50 Crore. d) 10
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d) Any partner of auditor cannot be appointed as internal auditor of

36. Which of the following services is not prohibited for auditor of the company.
company
a) Internal Audit 42. Which of the following in not mentioned along with signing on audit
b) Tax Audit report
c) Book-keeping a) Membership number of individual/partner
d) Actuarial Service b) Firm’s registration number in case of partnership firm as auditor
c) Date
37. Which of the following is prohibited service for auditor of company d) Time
a) Tax Audit
b) Income Tax Representative 43. In case of removal of auditor under section 140 (1), an application
c) Tax Consultant for obtaining approval of such removal is made to
d) None of these a) CG
b) CAG
38. Pick the odd one out w.r.t. auditor of company c) ROC
a) Representing client before taxation authorities d) NCLT
b) Management Services
c) Internal Audit 44. CG approval is required when auditor is to be removed
d) Actuarial Service a) After expiry of term
b) Before expiry of term
39. Auditor shall not render prohibited services as specified u/s 144 of c) By order of tribunal
the Co Act, to d) All of the above
a) The Company
b) Holding Company of the Company 45. For removal of auditor before expiry of term of auditor, which of
c) Subsidiary Company of the Company the following form is filed with CG for getting approval of such
d) All of the above removal
a) ADT-1
40. Auditor shall not render prohibited services to the company or its b) ADT-2
holding company or its subsidiary company_________________ c) ADT-3
a) Directly d) ADT-4
b) Indirectly
c) Directly or Indirectly 46. Which of the following form is filed by auditor in case of his
d) None of these resignation
a) ADT-1
41. Which one of the following is incorrect b) ADT-2
a) Auditor of company can be appointed as internal auditor of holding c) ADT-3
company of the company. d) ADT-4
b) Auditor of company can be appointed as internal auditor of
associate company of the company. 47. In case of resignation by auditor, ADT-3 shall be filed by auditor
c) Any relative of auditor cannot be appointed as internal auditor of within _________days of resignation
the company a) 7
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b) 10 d) None of these
c) 15
d) 30 54. Which of the following error will affect the trial balance
a) Error of partial omission
48. In case resigning auditor does not file ADT-3 as required, the b) Error of principles
minimum penalty shall be c) Error of complete omission
a) Rs 50,000 d) Compensatory errors
b) Remuneration of auditor
c) Rs 50,000 or remuneration of auditor, which is less 55. Which of the following SAs deals with auditor’s responsibilities in
d) Rs 50,000 or remuneration of auditor, whichever is higher agreeing the terms of audit engagement
a) SA 210
49. Under section 140(4), the retiring auditor is entitled to b) SA 220
a) Make a representation against his removal c) SA 230
b) Request the company to circulate the representation to members d) SA 240
c) Personally communicate the members on one to one basis
d) Both (a) and (b) 56. The primary purpose of establishing quality control policies and
procedures for deciding on client evaluation to
50. _________ may order that the representation received u/s 140(4) a) Ensure adherence to generally accepted auditing standards
shall not be circulated and read out at meeting b) Acceptance or continuance of client’s relationship
a) CAG c) Ensure audit fees is charged according to the type of audit work
b) ROC assigned
c) Tribunal d) All of above
d) CG
57. The auditor shall establish existence of preconditions for an audit of
51. Primarily prevention and detection of fraud are the responsibilities of financial statements
a) TCWG and Management of entity a) Before confirming common understanding between the auditor and
b) Internal Auditor of entity management of the terms of audit engagement.
c) External Auditor of entity b) After confirming common understanding between the auditor and
d) All of above management of the terms of audit engagement.
c) Before appointment of auditor
52. Which of the following in not a fraud through suppressing cash d) After the date of auditor’s report.
receipts:
a) Not accounting for cash sales fully 58. Terms of auditing engagement are discussed through
b) Not accounting for miscellaneous receipts a) Letter of appointment
c) Not accounting for bad debt recovered b) Letter of acceptance
d) Making payment against fictitious vouchers. c) Engagement letter
d) Letter of weakness
53. Teeming and lading is a technique of fraud through
a) Inflating cash payment 59. Engagement letter is provided by
b) Wrongs casting in cash book a) Management to auditor
c) Suppressing cash receipts b) Auditor to Management/TCWG
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c) Internal auditor to External Auditor b) Communication with Owners of the entity

d) CG to Auditor c) Communication with Management of the entity
d) All of these
60. Engagement letter is
a) Always required when auditor is appointed 66. The auditor shall communicate with TCWG a statement w.r.t.
b) Always required when auditor is reappointed auditor’s independence in case of audit of financial statements of
c) Not always required when auditor is reappointed but except for a) Any entity
certain exceptions b) Listed entities
d) (a) and (C) c) Any entity except One Person Company and Small Company
d) None of these
61. Which of the following is not a term of engagement letter
a) Object and Scope of audit 67. Which of the following SAs deals with responsibilities of auditor
b) Responsibilities of management and TCWG of the entity regarding quality control procedures for an audit of financial
c) Fact that audit process may be subject to peer review under statements
Chartered Accountants Act, 1949 a) SA 200
d) Audit Planning b) SA 210
c) SA 220
62. The audit engagement letter generally should include to each of the d) SA 260
following except
a) Limitation of auditing 68. The objective of SA 220 is to implement quality control procedures at
b) Responsibilities of management with respect to audit work the engagement level that provide the auditor with reasonable
c) Expectation of receiving a written representation letter assurance that
d) A description of the auditor’s method of sample selection. a) The audit complies with professional standards and regulatory
requirements
63. In which of the following circumstances a new engagement letter is b) The auditor’s report issued is appropriate in the circumstances
required in recurring audit engagement c) Both (a) and (b)
a) Any change in the senior management of the entity d) None of these
b) Any change in the nature of business of the entity
c) Any change in legal requirement 69. The partner who is responsible for the auditing engagement and its
d) All of the above performance and for the report that is issued on behalf of the firm
is called as:
64. If auditor is requested by management to change the audit a) Active partner
engagement to an engagement that conveys a lower level of b) Performing partner
assurance, then the auditor shall c) Engagement Partner
a) Reject the management’s request d) Working Partner
b) Accept the management’s request
c) Determine that there is a reasonable justification for doing so 70. Which of the following partner can act as engagement partner
d) Shall not entertain any such request a) Any Partner
b) Any CA Partner
65. SA 260 deals with auditor’s responsibilities w.r.t. c) Any CA Partner in full time or part time practice
a) Communication with Those Charged with Governance of the entity d) Any CA Partner in full time practice
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71. Who will take responsibility for overall quality in an audit of financial 76. Auditing firms should establish quality control policies and procedures
statements for personnel management in order to provide reasonable assurance
a) All the partners of firm that
b) All CA partners of firm a) Employees promoted possess the appropriate characteristics to
c) Engagement partner perform competently
d) Engagement team b) Personnel will have the knowledge required to fulfill responsibilities
assigned
72. Which of the following information assist the auditor in accepting and c) The extent of supervision and review in a given instance will be
continuing of client relationship appropriate
a) The integrity of the principal owners, key management and TCWG d) All of the above are reasons
of the entity
b) Whether the firm and the engagement partner can comply with the 77. The least important element in the evaluation of an audit firm’s
relevant ethical requirements system of quality control would relate to
c) Whether the engagement team is competent to perform the audit a) Assignment of audit assistants
engagement and has the necessary capabilities, including time and b) Consultation with experts
resources c) System for determining audit fees
d) All of these d) Confidentiality of client’s information
73. Appointment of engagement quality control reviewer is mandatory in 78. In pursuing its quality control objectives with respect to
case of audit of financial statements of independence, an auditing firm may use policies and procedures such
a) Any entity as
b) Any entity except One Person Company and Small Company a) Emphasizing independence of mental attitude in firm training
c) Listed Entity programs and in supervision and review of work
d) None of these b) Prohibiting employees from owning stock of public companies
c) Suggesting that employees conduct their banking transactions with
74. Which of the following in not element of quality control in an audit of banks that do not maintain accounts with client firms
financial statements d) Assigning employees who may lack independence to research
a) Leadership Responsibilities positions that do not require participation in field audit work
b) Assignment of Engagement Team
c) Acceptance and Continuance of Client Relationship and Audit 79. Policies and procedures w.r.t human resources address which of the
Engagements following issues
d) Signing on Audit Report a) Recruitment
b) Capabilities
75. If any difference of opinion arise within engagement team or between c) Competence
engagement partner and quality control reviewer, the engagement d) All of above
team follow
a) Engagement partner 80. Which of the following SAs deals with auditor’s responsibilities w.r.t.
b) Engagement quality control reviewer audit planning in an audit of financial statements
c) Firm’s policies and procedures a) SA 300
d) Majority of members of engagement team b) SA 315
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c) SA 320 a) Discussion with people within client entity

d) SA 330 b) Publication relating to industry
c) Previous experience
81. The auditor shall d) All of these
a) Establish audit strategy on the basis of overall audit plan.
b) Develop overall audit plan on the basis of audit strategy 87. Benefit(s) of audit planning is
c) Both (a) and (b) a) Helping auditor to devote appropriate attention on important areas
d) None of these of the audit
b) Better preparation of engagement letter
82. The audit plan is ______________ detailed than the overall audit c) Effective communication with retiring auditor
strategy. d) It ensure compliance with applicable law and regulation
a) Less
b) More 88. Planning should be made to cover, among other things:
c) Equal a) acquiring knowledge of the client’s accounting system, policies and
internal control procedures
83. Planning is _______________ process of an audit that often begins b) establishing the expected degree of reliance to be placed on
shortly after (or in connection with) the completion of the previous internal control
audit and continues until the completion of the current audit c) coordinating the work to be performed
engagement. d) all of above
a) Continuous
b) Discreet 89. Which of the following is incorrect
c) Neither continuous nor discreet. a) In establishing the audit strategy the auditor shall identify
characteristics of the engagement that define its scope.
84. The auditor shall develop an audit plan that include a description of: b) The auditor shall develop an audit plan that shall include a
a) The nature, timing and extent of planned risk assessment description of the nature, timing and extent of risk assessment
procedures. procedures and further audit procedures which are proposed to be
b) The nature, timing and extent of planned further audit procedures performed.
at the assertion level. c) The auditor shall establish audit strategy on the basis of overall
c) Other planned audit procedures that are required to be carried out audit plan.
so that the engagement complies with SAs. d) The auditor shall update and change the audit strategy and audit
d) All of the above plan as necessary during course of the audit.
85. An auditor who accepts an audit but does not possess the industry 90. The overall audit strategy and the audit plan remain the
expertise of the business entity should _____________ responsibility.
a) Engage experts a) Auditor’s
b) Obtain knowledge of matters that relate to the nature of entity’s b) Management’s
business c) Those charged with governance
c) Inform management about it d) All of the above
d) Take help of other auditors
91. Prior to commencing field work, an auditor usually discusses the
86. Auditor can obtain knowledge of client’s business from general audit strategy with the client’s management. Which of the
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following details do management and the auditor usually agree upon at b) Quality of item
this time? c) Legal or Regulatory consideration of item
a) The specific matters to be included in the communication with the d) All of these
audit committee
b) The minimum amount of misstatements that may be considered to 97. Materiality in terms of amount or amounts set by the auditor for
be reportable conditions particular classes of transactions, account balances or disclosures is
c) The schedules and analyses that the client’s staff should prepare called as
d) The effects that inadequate controls may have over the a) Materiality for financial statement as a whole
safeguarding of assets b) Performance Materiality
c) Item Materiality
92. Which of the following is not a source of obtaining knowledge of d) None of these
client’s business
a) Annual reports circulated among the shareholders 98. Determining a percentage to be applied to a chosen benchmark (in
b) Communication from previous auditor relation to materiality) involves the exercise of
c) Client’s policy and procedure manual ___________________
d) Discussion with client a) Independence
b) Professional judgement
93. The methodology of audit planning is c) Professional skepticism
a) Not prescribed in any law d) All of the above
b) Prescribed in Companies Act, 2013
c) Prescribed in Chartered Accountants Act, 1949 99. In determining the level of materiality for an audit, what should not
d) Prescribed by the appointing authority. be considered?
a) Prior year’s errors
94. _____________ shall be involved in the planning of audit b) The auditor’s remuneration
a) Engagement partner c) Adjusted interim financial statements
b) Other key members of engagement team d) Prior year’s financial statements.
c) Both (a) and (b)
d) Either (a) or (b) 100. Which of the following is a type of audit procedure
a) Risk Assessment Procedures
95. Which of the following in incorrect w.r.t audit programme b) Further Audit Procedures
a) An audit programme consists of a series of verification procedures c) Both (a) and (b)
to be applied. d) None of these
b) It is desirable in respect of each audit and more particularly for
bigger audits an audit programme should be drawn up. 101. In stratified random sampling
c) An audit programme is a summarized plan a) Sample is taken from whole of the population
d) There should be periodic review of the audit programme to assess b) It requires special attention to judge contents of stratum
whether the same continues c) There is application of different concept and not an extension of
simple random sampling
96. While determining materiality of any item financial statements, the d) All of these
auditor considers
a) Quantity of item
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102. Tolerable error is _______________ in population that auditor is 108. If aggregate of uncorrected misstatements is material, auditor shall
willing to _______________ for a given sample size. express
a) Minimum, Forego a) Unmodified Opinion
b) Maximum, Forego b) Qualified /Adverse Opinion
c) Minimum, Accept c) Disclaimer of opinion
d) Maximum, Accept d) None of these
103. The kind of relationship between tolerable error and sample size is 109. __________________ means audit evidence obtained as direct
a) Inverse written response from a third party in paper/electronic form.
b) Direct a) Internal Confirmation
c) They both are same b) External Confirmation
d) There is no relationship as such c) Written Representation
d) All of above
104. Which of the following SAs deals with auditor’s responsibilities to
evaluate the effect of identified misstatements 110. Which of the following SAs deals with auditor’s responsibilities to
a) SA 330 design and perform external confirmation procedures to obtain
b) SA 500 relevant and reliable audit evidence
c) SA 505 a) SA 580
d) SA 450 b) SA 330
c) SA 500
105. Misstatements may result from: d) SA 505
a) An inaccuracy in gathering or processing data from which financial
statements are prepared 111. A request that the confirming party respond directly to the auditor
b) An omission of an amount or disclosure indicating whether the confirming party agrees or disagrees with the
c) An incorrect accounting estimate information in the request, or providing the requested information, is
d) All of above a) Negative Confirmation Request
b) Exception
106. SA 450 considers the mis-statements resulting from c) Positive Confirmation Request
a) Frauds d) Non-Response
b) Errors
c) Frauds and errors both 112. A request that the confirming party respond directly to the auditor
d) Mistakes only if the confirming party disagrees with the information provided in
the request, is
107. Misstatements that the auditor has accumulated during the audit and a) Negative Confirmation Request
have not been corrected are called as b) Positive Confirmation Request
a) Uncorrected misstatements c) Exception
b) Material misstatements d) Non Response
c) Immaterial misstatements
d) Tolerable errors 113. A response that indicates a difference between information requested
to be confirmed, or contained in the entity’s records, and information
provided by the confirming party, is
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a) Error 119. _______________ should carefully plan and control external

b) Exception confirmation
c) Fraud a) Management
d) All of above b) TCWG
c) Auditor
114. A failure of the confirming party to respond, or fully respond, to a d) All of these in consultation with one another
positive confirmation request, or a confirmation request returned
undelivered is called 120. ________________ means evaluation of financial information through
a) Disagreement analysis of plausible relationships among both financial and non-
b) Confirmation failure financial data.
c) Restriction on auditor’s scope a) Risk assessment
d) Non-Response b) Analytical Procedures
c) Substantive Procedures
115. The auditor should use negative confirmation request if d) Test of Controls
a) Population comprises a large number of small, homogeneous account
balances or transactions 121. Which of the following SAs deals with auditor’s responsibilities to
b) The auditor has assessed the risk of material misstatement as low design and perform analytical procedures as substantive analytical
c) A very low exception rate is expected procedure?
d) All of above a) SA 315
b) SA 330
116. Factors to be considered when designing confirmation request: c) SA 520
a) Prior experience of auditor d) SA 500
b) Assertions being addressed
c) Information to be confirmed 122. What are analytical procedures?
d) All of above a) Substantive tests designed to assess control risk.
b) Substantive tests designed to evaluate the validity of
117. In case any exception is identified by auditor by conducting external management’s representative letter.
confirmation, he shall perform c) Substantive tests designed to study relationship between financial
a) Alternative audit procedures and non-financial.
b) Additional audit procedures d) All of the above.
c) Test of Controls
d) Both (a) and (b) 123. Analytical procedures used in the planning stage of an audit, generally
a) helps to determine the nature, timing and extent of other audit
118. In case of non-response in the process of external confirmation, the procedures
auditor shall perform b) Directs attention to potential risk areas
a) Alternative audit procedures c) Indicate important aspects of business
b) Additional audit procedures d) All of above.
c) Test of Controls
d) Both (a) and (b) 124. The basic assumption underlying the use of analytical procedures is
a) It helps the auditor to study relationship among elements of
financial information
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b) Relationship among data exist and continue in the absence of known a) External confirmation
condition to the contrary b) Ratio Analysis
c) Analytical procedures will not be able to detect unusual c) Trend Analysis
relationships d) Both (b) and (c)
d) None of the above.
130. Timing of analytical procedure is
125. Which of the following is not an analytical procedure? a) At Planning stage only
a) Tracing of purchases recurred in the purchase book to purchase b) Throughout the audit engagement
invoices. c) At planning stage and in addition these are also required during
b) Comparing aggregate wages paid to number of employees. completion phase.
c) Comparing the actual costs with standard costs. d) None of these
d) All of them are analytical procedures.
131. Reliability of data is influenced by
126. Analytical procedures used in the planning stage of an audit, a) Its source
generally: b) Its nature
a) Helps to determine the nature, timing and extent of other audit c) Circumstances under which it is obtained
procedures d) All of these
b) Directs attention to potential risk areas
c) Indicates important aspects of business 132. Which of the following is not a typical analytical procedure?
d) All of the above a) Study of relationships of the financial information with relevant
nonfinancial information
127. The basic assumption underlying the use of analytical procedures is: b) Comparison of the financial information with similar information
a) It helps the auditor to study relationship elements of financial regarding the industry in which the entity operates
information. c) Comparison of recorded amounts of major disbursements with
b) Relationship among data exist and continue in the absence of known appropriate invoices
conditions to the contrary d) Comparison of the financial information with budgeted amounts
c) Analytical procedures will not be able to detect unusual
relationships. 133. Which of the following SA deals with auditor’s responsibilities in
d) None of the above. relation to fraud in an audit of financial statements
a) SA 240
128. What is the primary objective of analytical procedures used in the b) SA 250
overall review stage of an audit? c) SA 315
a) To help to corroborate the conclusions drawn from individual d) SA 330
components of financial statements
b) To reduce specific detection risk 134. Examples of fraudulent financial reporting
c) To direct attention to potential risk areas a) Inflating or suppressing purchases and expenses
d) To satisfy doubts when questions arise about a client’s ability to b) Inflating or suppressing sales and other items of income
continue c) Overvaluation of assets
d) All of above
129. Which of the following is a technique available as substantive
analytical procedure? 135. Which of the following is not an example of suppressing cash receipts
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a) Teeming and Lading 141. Which of the following is most likely to be presumed to present a
b) Payment against fictitious vouchers fraud risk on an audit?
c) Not accounting for cash sales fully a) Capitalization of repairs and maintenance expense into the
d) Not accounting for miscellaneous receipts. property, plant and equipment asset account
b) Improper revenue recognition
136. Which of the following is not self-revealing error c) Improper interest expense accrual
a) Wages paid for installation of machine debited in wages account. d) Introduction of significant new products
b) Omission to post a part of a journal entry to ledger
c) A failure to record in the cash book, cash paid into or withdrawn 142. Degree of detection risk is generally high which respect to
from bank a) Management’s Fraud
d) Goods purchased from Mr. A omitted to be recorded. b) Employee’s Fraud
c) Error
137. Teeming and Lading is a technique for d) All of above.
a) Inflating cash payments
b) Wrong casting in the cash book 143. Due to inherent limitations of audit, there is ______________ that
c) Suppressing cash receipts some mis-statements will __________
d) None of these a) Reasonable assurance, not be detected
b) Unavoidable risk, not be detected
138. Which of following is fraud risk factor c) Avoidable risk, not be detected
a) Incentive/Pressure d) Unavoidable risk , not be prevented
b) Opportunities
c) Attitude/Rationalization 144. Fraud is an intentional act involving use of deception to obtain an
d) All of above unjust advantage and can be committed by
a) TCWG
139. Which of the following is an indicator of fraud due to problematic or b) Employees
unusual relationship between auditor and management c) Third parties
a) Unsupported or unauthorized transaction d) Any of these
b) Unusual delays by the entity in providing requested information
c) Last minute adjustments that significantly affect financial results 145. In order to form an opinion, the auditor shall take into account:
d) All of above. a) Whether sufficient appropriate audit evidence has been obtained
b) Whether uncorrected misstatements are material, individually or in
140. Which of the following is least likely to be included in an auditor’s aggregate
inquiry of management while obtaining information to identify the c) Evaluations
risks of material misstatement due to fraud? d) All of above
a) Are financial reporting operations controlled by and limited to one
location? 146. In order to form the opinion, the auditor shall conclude as to whether
b) Does it have knowledge of fraud or suspect fraud? the auditor has obtained ______________ about whether the
c) Does it have programs to mitigate fraud risks? financial statements as a whole are free from material misstatement,
d) Has it reported to the audit committee the nature of the whether due to fraud or error.
company’s internal control? a) Reasonable assurance
b) Absolute assurance
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c) Limited assurance a) True and fair view

d) None of the above b) Correct view
c) Fair view
147. Which of the following is a not a type of modified opinion d) Completely true
a) Qualified opinion
b) Adverse opinion 153. Auditing begins where__________ends.
c) Disclaimer of opinion a) Selling
d) None of these b) Inventory valuation
c) Accounting
148. The auditor shall express________________ opinion when the d) Purchase
auditor, having obtained sufficient appropriate audit evidence,
concludes that misstatements, individually or in the aggregate, are 154. Which type of organizations use auditing services?
both material and pervasive to the financial statements. a) Non-profit-organizations
a) Adverse b) Business
b) Qualified c) Governments
c) Disclaimer d) All of the above
d) None of the above
155. Auditing should be
149. When auditor concludes that financial statements as a whole are free a) Independent
from material misstatements and he has no reservation for any b) Compulsory
material item of the financial statements, he shall express c) On the request of government
a) Qualified opinion d) None of the above
b) Unmodified opinion
c) Adverse opinion 156. Independence comprises
d) Disclaimer of opinion a) Independence by mind
b) Independence in appearance
150. When auditor concludes that financial statements are not free from c) Both (a) and (b)
material misstatements and effect of material misstatements is not d) None of these
pervasive, he shall express
a) Unmodified opinion 157. If auditor maintains high degree of independence, it will result in
b) Disclaimer of opinion a) Attention of media
c) Qualified opinion b) Reward by CG
d) Adverse opinion c) Enhanced reliability on financial statements
d) Good relationship with the entity.
151. The main objective of financial audit is________
a) Expression of opinion 158. Auditor should have knowledge of
b) Detection and prevention of fraud and error a) Accounting
c) Designing internal control system b) Auditing
d) All of these c) Law applicable on the entity
d) All of these
152. Auditor gives ________ regarding the financial statements
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159. Auditor should have communication skills in following areas: c) Evaluate the business rationale for significant, unusual transactions
a) Oral skills d) Make a legal determination of whether fraud has occurred
b) Written skills
c) Both (a) and (b) 166. It is not uncommon in auditing
d) He does not require any communication skills a) Giving the satisfaction to the owner regarding the profits made
b) Protecting the rights of shareholders
160. Function of audit is to c) Helping to give true and fair profits of the organization
a) Detect errors d) All of the above
b) Detect fraud
c) Safeguard the interest of stakeholders 167. Auditing has all features except
d) All the above a) Done every financial year
b) Based on conclusive evidence
161. Which is NOT the function of an auditor? c) Mandatory for companies
a) To give a true and fair view d) None of the above
b) To take care of all the statutory acts applicable
c) To do arithmetic checking 168. The primary objective of the ordinary examination of financial
d) To prepare accounts statement by an auditor is the expression of an opinion on
a) The competence of management in accounting matters which is
162. The basic requirement which is absent is auditing is implied by whether the opinion is qualified or not
a) Exact accounts b) The conformity of the statements with the book of account
b) Certainty in financial statements c) The conformity of the financial statements with generally
c) Conclusive evidence accepted auditing standards applied on a basis consistent with that
d) All of the above of the prior year
d) The fairness with which the financial statements present cash
163. Which of the following statement is not true flows and results of operations
a) The auditor shall express an opinion on financial statements
b) Auditor’s opinion is not guarantee to future viability of business 169. The principal objective of an audit is the examination of financial
c) Auditor is responsible for prevention and detection of fraud and statements of an enterprise with a view for the auditor to form and
error in financial statements express an independent opinion on the truth and fairness for the
d) Auditor should examine whether recognized accounting principles benefit of which one of the following?
have been followed a) The members
b) Corporate Governance
164. Auditor should be done by c) The Corporate Affairs Commission
a) A professional accountant d) Government authorities
b) A certified management accountant
c) A competent and independent person 170. The factor which distinguishes an error from fraud and other
d) A chartered accountant irregularity is
a) Whether it is a caused by officer of the entity or employee of the
165. Which of the following is least likely to be required in an audit? entity
a) Test appropriateness of journal entries and adjustment b) Intention
b) Review accounting estimates for biases c) Materiality
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d) Whether it is caused by the auditor or the client

177. Professional skepticism requires that the auditor should
171. Which of the following statement is TRUE? be_____________ indicating _______________
a) An external auditor is required for all types of entity a) Ignorant, Possible misstatements
b) External auditors are appointed by an entity’s management b) Alert, Possible misstatements
c) Staff auditors make a report for the baseline employees c) Alert, Management bias
d) Staff auditors work is to identify potential risk areas for a d) Ignorant, Possible misstatements.
company
178. Professional skepticism includes being alert to, for example
172. Pick the odd one a) Audit evidence that contradicts other audit evidence obtained
a) Those Charged with Governance b) Overlooking unusual circumstances
b) Management c) Conditions that may indicate possible fraud
c) Employees d) All of above
d) Auditor
179. Holding financial interest in a client and close business relationship
173. Pick the odd one with him give rise to____________
a) Preparation of financial statements a) Self- review threat
b) Designing, implementation and maintenance of internal control b) Advocacy threat
system c) Familiarity threat
c) Reporting on true and fair view of financial statements d) Self-interest threat
d) Compliance with the applicable law and regulation
180. If the professional becomes a witness where the part to litigation is
174. Pick the odd one his client, it will result in _________
a) Balance Sheet a) Self- review threat
b) Audit Report b) Advocacy threat
c) Profit & Loss Account c) Familiarity threat
d) Cash Flow Statement d) Self-interest threat
175. When the auditor is an employee of the organization being audited 181. If the auditor is having long association with client it will give rise to
(Auditee), the audit is classified as _____________
a) Internal audit a) Self- review threat
b) External audit b) Advocacy threat
c) Both (a) and (b) c) Familiarity threat
d) None of these d) Self-interest threat
176. Professional skepticism requires the auditor assume that management 182. If the professional who is preparing the books of accounts is also
is auditing the financial statements, it shall give rise to
a) Reasonably honest a) Self-review threat
b) Neither honest nor dishonest b) Advocacy threat
c) Not necessarily honest c) Familiarity threat
d) Dishonest unless proved otherwise d) Self-interest threat
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c) Standards on Review Engagement

183. If the auditor is facing threat from the client to be dismissed if he d) Standards on Assurance Engagement
refuses to act as per their wishes, it shall give rise to___________
a) Familiarity threat 190. In which of the following engagement opinion is not expressed
b) Intimidation threat a) Related Services Engagement
c) Advocacy threat b) Auditing Engagement
d) Self-review threat c) Review Engagement
d) Assurance Engagement
184. Standards on Auditing are applicable on
a) Auditing Engagement 191. In which of the following engagement an opinion is expressed on a
b) Review Engagement subject matter other than the historical financial information
c) Assurance Engagement a) Auditing Engagement
d) Related Service Engagement b) Review Engagement
c) Assurance Engagement
185. Standards on Auditing are issued by d) Related Services Engagement
a) Accounting Standard Board
b) Quality Review Board 192. Which of the following is not code of ethics
c) Auditing & Assurance Standard Board a) Objectivity
d) Board of Studies b) Integrity
c) Communication skills
186. In the financial audit, the auditor expresses opinion on d) Professional competence and due care
a) True and Fair view of financial statements
b) True and Correct view of financial statements 193. Pick the odd one
c) Effective operation of internal control system a) Standards on Auditing
d) Business operation of the entity b) Standard on Quality Control
c) Standards on Review Engagement
187. Which of the following is not component of financial statement d) Standards on Assurance Engagement
a) Profit and Loss Account
b) Balance Sheet 194. How many Standards on Auditing have been issued
c) Notes to Accounts a) 32
d) Board’s Report b) 34
c) 36
188. Pick the odd one d) 38
a) Checking the vouchers
b) Preparation of vouchers 195. Standards on Auditing are____________
c) Evaluation of internal control a) Mandatory
d) None of the above b) Optional
c) Discretionary
189. Which of the following is not type of engagement standard d) All of these
a) Standards on Auditing
b) Standard on Quality Control 196. General purpose financial statements are prepared as per
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a) General purpose financial reporting framework c) External confirmation

b) Special purpose financial reporting framework d) All of these
c) Both (a) and (b)
d) None of these 203. Pick the odd one
a) Confirmation
197. Designing, implementation and maintenance of internal control system b) Inquiry
are the responsibilities of c) Re-computation
a) Management of entity d) Ledger posting
b) External Auditor of entity
c) Both (a) and (b) 204. Pick the odd one
d) Internal Auditor of entity a) Bank reconciliation statement
b) Copy of sales invoice
198. Auditing engagement can be performed w.r.t. c) Purchase invoice
a) Profit making entity d) Minutes book
b) Non-profit making entity
c) Corporate entity only 205. Which of following statement is incorrect
d) Any entity a) Recalculation consists checking reasonableness of appropriates of
accounting policies
199. Scope of financial audit is b) Inspection consists of examining records, documents whether
a) Financial information internal or external in paper form or electronic form and physical
b) Non-financial information examination of assets
c) Both (a) and (b) c) An external confirmation represents audit evidence obtained by
d) None of these auditor as direct written response to the auditor from a third
party.
200. ______________ along with other disciplines such as accounting and d) Evaluating responses of inquiry is an integral part of inquiry
law equips you with all the knowledge that is required to enter into process.
auditing as a profession.
a) Auditing 206. Observation consists
b) Taxation a) Review of financial statements
c) Finance b) Looking at a process, procedure being performed by others
d) Taxation and Finance both c) Independent execution of procedure or controls that were
originally performed as part of entity’s internal control.
201. Which of the following is not external audit evidence d) All of these
a) Bank Statements
b) Purchase Invoice 207. Before using the work of an expert the auditor shall evaluate
c) External Confirmation a) Competency of expert.
d) Salary Sheet b) Capability of expert
c) Objectivity of expert
202. Techniques to obtain audit evidence are d) All of above
a) Inspection
b) Recalculation
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208. Information regarding the competence, capabilities and objectivity of b) The safeguarding of assets
management’s expert may come from a variety sources such as: c) The prevention and detection of frauds and errors
a) Discussion with expert d) All of these
b) Personal experience with previous work of that expert
c) Published papers or books written by that expert 214. ________________ has been defined as the “checks on day to day
d) All of these transactions which operates continuously as part of routine system
whereby the work of one person is provided independently or is
209. Pick the most appropriate. Auditing evidence is more reliable when complementary to the work of another, the object being the
a) Received from third party prevention or early detection of errors or fraud”
b) Received from reliable third party a) Internal check
c) Received from audited organization resources b) Internal audit
d) Both a & b c) Surprise check
d) Internal control.
210. Which is NOT a technique of obtaining evidence
a) Correction 215. ________________ is a complete and exhausted description of the
b) Computation system as found in operation by the auditors.
c) Confirmation a) Check List
d) Both a & b b) Flow Chart
c) Narrative Records
211. Audit is usually conducted in three steps: d) Internal Control Questionnaire
A pre-examination or opening meeting with the auditee marks the beginning
of the process 216. ________________is a series of instruction and questions which the
Involves a suitability audit of the documented procedures against the auditor should follow and answer.
selected reference standard a) Narrative Records
The auditor examines in depth the implementation of the quality system b) Check List
a) True c) Internal Control Questionnaire
b) False d) Flow Chart
c) Partially false
d) None of the above 217. _______________is a graphic presentation of each part of the
entity’s internal controls system.
212. For better assessing the audit risk, auditor inquires different groups a) Narrative Records
in the organizations EXCEPT: b) Check List
a) Board of governance and top level management c) Internal Control Questionnaire
b) Legal counsel d) Flow Chart
c) Middle level management
d) Stakeholders 218. ______________ gives a bird’s eye view of the system and flow of
transactions.
213. Internal financial controls are policies and procedures adopted by a) Narrative Records
company for b) Check List
a) Ensuring the orderly and efficient conduct of its business, c) Internal Control Questionnaire
including adherence to company’s policies d) Flow Chart
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c) SA 265
219. _______________ is mainly intended to ascertain whether the d) SA 580
system of internal control is operating effective.
a) Surprise check 225. Significant deficiency in internal control means
b) Analytical procedures a) Deficiency or combination of deficiencies in internal control that,
c) Test of details in the auditor’s professional judgement is of sufficient importance
d) None of these of auditor
b) Deficiency or combination of deficiencies in internal control that,
220. Objectives of internal controls can only be reasonably achieved but in the auditor’s professional judgement is of sufficient importance
not absolutely due to of management.
a) Inherent limitation of audit c) Deficiency or combination of deficiencies in internal control that,
b) Inherent limitation of internal controls in the auditor’s professional judgement is of sufficient importance
c) Inherent risk of entity’s owners.
d) Detection risk d) Deficiency or combination of deficiencies in internal control that,
in the auditor’s professional judgement is of sufficient importance
221. Which of the following in inherent limitation of internal controls of TCWG
a) Role of human judgement
b) Ineffective operation of control 226. Which of the following section of Companies Act, 2013 deals with
c) Collusion among employees requirement of internal audit in companies
d) All of these a) Section 139
b) Section 138
222. Internal control system provides reasonable assurance about the c) Section 143
achievements of entity’s objectives, except d) Section 148
a) Reliability of financial reporting
b) Safeguarding of assets 227. Which of the following person can be appointed as internal auditor of
c) Both (a) and (b) Co
d) None of these a) Chartered Accountant
b) Cost Accountant
223. _______________ is sent by auditor to management and TCWG to c) Any Employee of Co
communicate weakness in internal control system d) Any of above (a) (b) (c)
a) Letter of weakness
b) Engagement letter 228. Section 138 of the Companies Act, 2013 shall apply to
c) Internal control questionnaire a) Listed Company
d) Written representation b) Prescribed class of companies
c) Both (a) and (b)
224. Which of the following SA deals with auditor’s responsibility to d) All the companies
communicate appropriately to TCWG and management deficiencies in
internal control that the auditor has identified in an audit of financial 229. Company shall comply with requirement of section 138 of the
statements Companies Act, 2013 w.r.t. internal audit within ___________months
a) SA 260 from applicability of the section.
b) SA 330 a) 6
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b) 8 c) Examination of a few selected transactions from the beginning to

c) 3 the end through the entire flow of transaction
d) 2 d) None of these
230. Which of the following is a routine audit procedure 236. In continuous audit, audit work is commenced by auditor:
a) Vouching of transactions a) Immediately after acceptance of audit engagement
b) Analytical procedures b) After closing of FY
c) Risk assessment procedures c) At any point of time as per auditor’s judgement
d) Verification of assets and liabilities d) None of these.
231. Which of the following statement is correct 237. Which of following is advantage of continuous audit:
a) Surprise check is a part of routine checking a) Earlier discovery of misstatements
b) Surprise check preferably done at least once during the audit b) Client’s accounts are always kept up to date
c) Surprise check cannot exercise good moral check on client’s staff c) Routine checking is completed in advance
d) It is necessary in all cases for the result of surprise check to be d) All of above
included in the audit report.
238. Which of following is disadvantage of continuous audit
232. Surprise check may be with respect to a) The attendance of the audit staff acts a moral check on the
a) Verification of cash client’s staff.
b) Verification of investment b) Less pressure at year end
c) Verification of inventory c) The client’s staff may alter entries in the books after checking
d) All of above thereof.
d) All of above.
233. The frequency of surprise check is
a) As prescribed under law 239. The first standard of field work recognizes that early appointment of
b) As mentioned under SA the independent auditor has many advantages to the auditor and the
c) To be determined by auditor client. Which of the following advantages is least likely to occur as a
d) At least 5% of total time devoted to audit result of early appointment of the auditor?
a) The auditor will be able to complete the audit work in less time
234. The results of surprise checks b) The auditor will be able to perform the examination more
a) Are always to be included in audit report as these are always efficiently
important c) The auditor will be able to better plan for the observation of the
b) May or may not be included in audit report depending upon the physical inventories
quantitative nature of findings d) The auditor will be able to plan the audit work so that it may be
c) Should be included in audit report if they are material and done expeditiously
affecting the financial statements
d) All of these 240. In final audit, audit work is commenced by auditor:
a) Immediately after acceptance of audit engagement
235. Examination in depth refers to b) After closing of FY
a) Examining 100% items of a population c) At any point of time as per auditor’s judgement
b) Examining all the assets and liabilities d) None of these.
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241. The advantages of final audit are: 247. Audit programme is a failure if
a) The possibility of figures being altered after work has been done is a) Instructions are not followed property
avoided b) Audit plan is not made correctly
b) Allocation of work to staff become easier c) The instructions are ambiguous
c) There is no loss of link in the work as the entire audit work is d) All of the above
completed in a single continuous basis.
d) All of above 248. Pick the odd one
a) A hard and fast audit programme may kill the initiative of efficient
242. Instructions to client before start of actual audit are: and enterprising assistants
a) Vouchers should be serially numbered. b) An audit programme can make the audit exercise rigid and
b) The accounts should be total up and the trial balance and final mechanical.
accounts to be kept ready. c) The principal can control the progress of the various audits in hand
c) Schedule of deferred expenditures to be prepared. by examination of audit programme.
d) All of these d) There is a risk that if any matter escaped attention of auditor at
the time of audit programming may remain unaudited during the
243. Some of the important content recorded in the audit notebook are: entire audit.
a) Name of business and its structure
b) Errors and fraud discovered 249. _____________ refers to the record of audit procedures performed,
c) Date of commencement and completion of audit relevant audit evidence obtained, and conclusions the auditor reached.
d) All of above a) Audit Techniques
b) Audit Evidence
244. An audit programme is: c) Audit Documentation
a) List of examination and verification steps to be applied d) None of the above
b) Examination in depth
c) List of audit queries 250. ______________ may be defined as one or more folders or other
d) All of these storage media, in physical or electronic form, containing the records
that comprise the audit documentation for a specific engagement.
245. Responsibility fixing is a feature of a) Audit File
a) Audit plan b) Audit Evidence
b) Audit c) Completion Memorandum
c) Audit programme d) Both (a) and (b) above.
d) All of the above
251. No business or institution can effectively carry on its activities
246. Pick the odd one without the help of proper________
a) Audit programme helps in distribution of work amongst the people a) Audit
doing audit b) Records and accounts
b) Audit programme is mechanical c) Neither (a) nor (b)
c) Audit program acts as a evidence against change of negligence d) Both (a) and (b)
d) Audit programme helps in covering all the areas where audit is
required
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252. _______________ increases the revenue earning capacity of the 258. SA Series 700-799 cover the aspects of ________
business a) Introductory matters
a) Capital expenditure b) General Principles and Responsibilities
b) Revenue expenditure c) Audit Evidence
c) Both (a) and (b) d) Audit Conclusion and Reporting
d) Both (a) and (b) and deferred revenue expenditures
259. SA Series 200-299 cover the aspects of
253. The purpose of providing depreciation is a) Introductory matters
a) Adherence to matching concept b) General Principles and Responsibilities
b) Keeping the capital invested in fixed asset intact c) Audit Evidence
c) Compliance with statutory requirement and presenting true and d) Audit Conclusion and Reporting
fair view
d) All of these 260. SA Series 600-699 cover the aspects of
a) Using the work of others
254. As per SA-200 “Overall Objectives of the Independent Auditor,” in b) Audit Evidence
conducting an audit of financial statements, the overall objectives of c) Risk Assessment and Auditor’s Response
the auditor are: d) Audit Conclusion and Reporting
a) To obtain reasonable assurance
b) To report on the financial statements 261. The______________ have been issued with a view to securing
c) Both (a) and (b) above compliance by members on matters which, in the opinion of the
d) None of the above Council, are critical for proper discharging of their functions.
a) Statements
255. The auditor cannot obtain an absolute assurance due to_________ b) Guidance Notes
a) Lack of accounting knowledge c) Standards on Audit
b) Lack of auditing knowledge d) All of these
c) Both (a) and (b)
d) Inherent limitations of auditing 262. _____________ are designed to provide guidance to members on the
matters which may arise in the course of their professional work and
256. The auditor’s __________ safeguard the auditor’s ability to form an on which they may desire assistance in resolving issues that may pose
audit opinion without being affected by any influences. difficulty.
a) Objectivity a) Statements
b) Independence b) Guidance notes
c) Confidentiality c) Standards on Audit
d) Integrity d) All of these
257. SA Series 500-599 cover the aspects of_______ 263. Guidance notes are
a) Introductory matters a) Mandatory
b) General Principles and Responsibilities b) Recommendatory
c) Audit Evidence c) None of these
d) Audit Conclusion and Reporting
264. Internal audit may cover the aspects_________
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a) Financial
b) Non-Financial 271. Compliance with Laws and Regulations which are applicable of the
c) Both (a) and (b) entity, is the responsibility of _____
d) None of these a) TCWG and Management of entity
b) External Auditor of entity
265. Internal auditor is appointed by c) Internal Auditor of entity
a) Management d) All of above
b) The shareholders
c) CG 272. Which of the following is not basic principle of auditing
d) External auditor a) Integrity, Objectivity and Independency
b) Confidentiality
266. The area of work is determined by management c) Written Representation
a) Insurance audit d) Audit Planning
b) Sole proprietorship audit
c) Internal audit 273. Which of the following is basic principle of auditing
d) Bank audit a) Audit Documentation
267. _________ audit assists the management in finding out new ideas for b) Audit Evidence
marketing and other business areas. c) Skills and competence
a) Secretarial audit d) All of above
b) Insurance audit
c) Internal audit 274. Which of the following is exception of confidentiality by auditor
d) Tax audit a) If permitted by client to disclose any information
b) If there is any legal professional duty of auditor to disclose any
268. An audit which is compulsory by law is called as information
a) Government Audit c) Both (a) and (b)
b) Internal Audit d) None of these
c) Cost Audit
d) Statutory Audit 275. Auditor must have sound knowledge of
a) Accountancy
269. For which of the following entities statutory audit of financial b) Auditing
statement is not conducted c) Client’s Nature of Business
a) Banking Companies d) All of above
b) Insurance Companies
c) Partnership Firm 276. As per SA 200, which level of assurance the auditor shall obtain that
d) One Person Company financial statements are free from material misstatements
a) Reasonable Assurance
270. Accounting and Internal Control system are the responsibilities of: b) Absolute Assurance
a) TCWG & Management of entity c) Moderate Assurance
b) External Auditor of entity d) None of these
c) Internal Auditor of the entity
d) All of above
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277. Reasonable assurance is _______________ level of assurance but it 283. Under which of the following circumstances accounting policy can be
is not ______________ assurance. changed
a) High, Absolute a) If it is required by law
b) Absolute, Guaranteed b) For compliance with accounting standards
c) Moderate, Absolute c) On the opinion of management for better presentation of financial
d) None of these statement
d) All of above
278. The inherent limitations of an audit arise from
a) Involvement of judgement 284. Fundamental accounting assumptions are
b) Test Checking a) Going Concern
c) Time Limitation b) Consistency
d) All of above c) Accrual
d) All of above
279. Which of the following statement is incorrect
a) Sampling is a major inherent limitation of audit. 285. Which of the following section of Companies Act, 2013 deals with
b) Auditor is not an insurer eligibility, qualification and disqualification of auditor
c) Auditor’s primary responsibility is to detect errors and frauds in a) Section 140
financial statements b) Section 141
d) Auditor needs to be independent c) Section 142
d) Section 143
280. Which of the following is responsibility of auditor
a) To ensure that financial statement comply with applicable financial 286. Which of the following section of the Companies Act, 2013, defines
reporting framework meaning of Chartered accountant
b) To express an opinion on true and fair view of the financial a) 2(17)
statements. b) 2(77)
c) To ensure compliance with laws and regulations applicable on the c) 2(87)
entity d) 2(7)
d) To design, implement and maintain system of internal control.
287. Which of the following is eligible for appointment as auditor of
281. Advantage of independent examination are company
a) Credibility of financial statement is enhanced. a) Any Chartered Accountant
b) It is helpful in settling tax liability b) A Company whose all the directors are chartered accountants
c) It acts as moral check on the employees from committing fraud. c) Chartered Accountant holding valid certificate of practice
d) All of above d) All of these
282. Accounting policy refers to 288. A partnership firm can be appointed as auditor of Company if
a) Specific accounting principle a) All the partners of partnership firm are chartered accountants
b) Method of applying accounting principle b) If at least one partner of partnership firm is chartered accountant
c) Both (a) and (b) c) If majority of partners of the firm is of chartered accountants
d) None of these d) If at least 2/3rd partners of the firm are chartered accountants
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289. In case of partnership firm as auditor of company, audit report shall b) Any employee of officer of company shall not be appointed as
be signed by: auditor of company
a) Any partner of the partnership firm c) Any partner of employee of company shall not be appointed as
b) Any CA employee of the firm auditor of company
c) All CA partner of the firm d) Any employee of employee of company can be appointed as auditor
d) Any CA partner of the firm of company
290. Which of the following statement is incorrect 295. An individual is disqualified for appointment as auditor of Co
a) Limited liability partnership firm can be appointed as auditor of a) If he is holding security of co having total face value exceeding Rs.
company 1 Lakh
b) A Body corporate can be appointed as auditor of company b) If he is holding security of co having total face value exceeding Rs.
c) A person who is chartered accountant within the meaning of the 1,000/-
Chartered Accountants Act, 1949 and holding valid certificate of c) If he is holding any security of company, irrespective of face value
practice can be appointed as auditor of company. of security
d) None of these. d) None of these
291. Which of the following is disqualified for appointment as auditor of 296. An individual is disqualified for appointment as auditor of co if
company a) His father is holding security of co having total face value of Rs 1
a) Any officer or employee of Co Lakh
b) Any officer or employee of holding co of the Co b) His father is holding security of co having total face value
c) Any officer or employee of subsidiary co of the Co exceeding Rs. 1 Lakh
d) All of these c) His sister’s husband is holding security of co having total face value
exceeding Rs. 1 Lakh
292. Which of the following is not covered within the meaning of relative d) His step daughter is holding security of co having total face value
u/s 2(77) of the Co Act, 2013 exceeding Rs. 1 Lakh
a) Step Father
b) Step Mother 297. If a relative acquires security exceeding Rs 1 Lakh, then auditor
c) Step Sister shall take corrective action within ________ days of such acquisition
d) Step Daughter so as to maintain the limit of Rs 1 Lakh.
a) 60
293. Which of the following is covered within the meaning of relative u/s b) 30
2(77) of the Co Act, 2013 c) 60
a) Brother’s wife d) 120
b) Step brother
c) Sister’s husband 298. An individual is disqualified for appointment as auditor of co if he is
d) Step daughter indebtedness to co
a) Rs. 5,00,000
294. Which of the following is incorrect b) Exceeding Rs. 5,00,000
a) Any partner of officer of company shall not be appointed as c) Exceeding Rs. 1,00,000
auditor of company d) Any amount
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299. Which of the following transaction is not covered within the meaning 304. If the branch office is situated in a country outside India, the
of business relationship for the purpose of disqualification of auditor accounts of the branch office shall be audited by
a) Commercial transactions which are in the nature of professional a) The Company’s Auditor
services permitted to be rendered by an auditor under the Co Act, b) By An Accountant
2013 and Chartered Accountants Act, 1949 and rules or regulations c) By any other person duly qualified to act as an auditor of the
made under those Acts accounts of the branch office in accordance with the laws of that
b) Commercial transaction which are in the ordinary course of country
business of the company at arm’s length price - like sale of product d) Any of the above
or services to the auditor, as customer, in the ordinary course of
business. 305. Which of the following is incorrect
c) Both (a) and (b) a) Branch office in relation to company means any establishment
d) None of these described as branch by the company.
b) The provisions of regarding reporting of fraud by the auditor shall
300. A person shall not be appointed as auditor of co, if not be applicable to the branch auditor.
a) His relative is director of the company c) The duties and power of the company’s auditor with reference to
b) His relative is in the employment of company as key managerial the audit of the branch and branch auditor, if any, shall be as
personnel contained u/s 143(1) to 143(4).
c) Both (a) and (b) d) The branch auditor shall prepare a report on the accounts of the
d) His relative is manager of subsidiary company of the company branch examined by him and sent it to the auditor of the company
who shall deal with it in his report in such manner as he considers
301. Under section 140(5), the power of order to change of auditor has necessary.
been given to
a) Tribunal 306. Auditor’s right to access to books of account and vouchers of
b) CAG company extends to all the books
c) ROC a) Kept at registered office
d) BOD b) Kept at any other place
c) Kept at registered office or at any other place
302. Any auditor removed under section 140(5) shall not be appointed as d) He is not entitled to such a right
auditor of any company for a period of __________ years from the
date of order of Tribunal 307. The auditor should comply with Auditing Standards. It is
a) 10 ____________ of the auditor
b) 8 a) Right
c) 5 b) Duty
d) 3 c) Moral responsibility
d) None of these
303. Special notice is requires when auditor is to be removed
a) After expiry of term 308. Under section 143(3), auditor has duty to report on internal financial
b) Before expiry of term controls of the company. However, this requirement shall not apply to
c) By order of Tribunal a) A listed company
d) All of the above b) A foreign company
c) One Person Company
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d) A Public Company 315. A Private Limited Company is exempted from applicability of CARO
(2016) if which of following conditions is satisfied
309. Reporting on fraud is made by auditor to CG a) Paid up Share Capital and Reserve & Surplus is not more than Rs. 1
a) Within 2 days of his knowledge of fraud Crore
b) Within 15 days of his knowledge of fraud b) Borrowing from Bank/FI is not more than Rs. 1 Crore at any point
c) Within 45 days of his knowledge of fraud of time during FY
d) Within 60 days of his knowledge of fraud c) Revenue as per Schedule III is not more than Rs. 10 Crore during
FY
310. Reporting on fraud is made by auditor to CG when fraud amount is d) All of these
a) Exceeding Rs. 10 Lakhs
b) Exceeding Rs. 50 Lakhs 316. CARO (2016) is applicable from FY
c) Exceeding Rs. 1 Crore a) FY 2014-15
d) Rs. 1Crore or above b) FY 2015-16
c) FY 2016-17
311. Reporting on fraud is made by auditor to CG in statement in the form d) FY 2017-18
a) ADT-1
b) ADT-2 317. Which of the following statement is incorrect
c) ADT-3 a) CARO is applicable on reporting of consolidated financial
d) ADT-4 statements
b) One Person Companies and Small Companies are exempted from
312. For the purpose of reporting on fraud to CG, CG means applicability of CARO
a) ROC c) If CARO is applicable of the company, it will also be applicable on
b) CBI audit of branch offices of the company
c) Director General d) Insurance Companies are exempted from applicability of CARO.
d) Secretary of Ministry of Corporate Affairs.
318. Which of the following is not reporting requirement w.r.t fixed assets
313. Which of the following in not right of auditor: under CARO (2016)
a) To attend general meetings a) Purchase and sale of fixed assets made during the FY
b) To receive all notices and other communications relating to any b) Maintenance of proper records
general meeting c) Physical verification by management at reasonable intervals
c) To make a representation against his removal d) Title deeds of immovable properties
d) To be heard at such meeting on any part of the business which
concerns him as the auditor 319. Which of the following is reporting requirement w.r.t inventories
under CARO (2016)
314. CARO (2016) is applicable on which of the following companies a) Purchase and sale of inventories made during the FY
a) One Person Company b) Maintenance of proper records
b) Small Company c) Physical verification by management at reasonable intervals
c) Public Company d) All of these
d) Banking Company
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320. Outstanding statutory dues as at last day of financial year concerned 325. Any default in the repayment of loans or borrowings to
for a period of more than __________ months from the day they _______________________________ are reported by auditor
became payable, shall be indicated by the auditor. under CARO (2016)
a) 1 a) Bank, Financial Institution
b) 2 b) Government
c) 5 c) Debenture holders
d) 6 d) All of above
321. In respect of loans, investments, guarantees and security whether 326. Application of money raised by way of public offer is reported under
provisions of section 185 and 186 of the Companies Act, 2013 have which clause of CARO (2016)
been complied with. If not, provide details thereof. This matter is to a) Clause (vii)
be reported under which clause of para 3 of the CARO (2016) b) Clause (viii)
a) Clause (i) c) Clause (ix)
b) Clause (ii) d) Clause (x)
c) Clause (iii)
d) Clause (iv) 327. Application of money raised by way of preferential allotment or
private placement is reported under which clause of CARO (2016)
322. With respect of cost records, what is the reporting requirement a) Clause (xi)
under CARO (2016) b) Clause (xii)
a) Whether such accounts and record are properly audited c) Clause (xiii)
b) Whether such accounts and records have been made and d) Clause (xiv)
maintained
c) Both (a) and (b) 328. Compliance with provision of section 192 of the Companies Act, 2013
d) None of these w.r.t non cash transactions entered by company with directors or
persons connected with him, is reported under which of the following
323. Reporting on fraud is made by auditor under which of the following clause of para 3 of CARO (2016)
clause of para 3 of CARO (2016) a) Clause (xv)
a) Clause (x) b) Clause (xvi)
b) Clause (xii) c) Clause (xi)
c) Clause (xiii) d) Clause (xii)
d) Clause (xiv)
329. For the purpose of applicability of CARO(2016), status of company is
324. Which of the following frauds are reported by auditor under CARO considered
(2016) a) As on 1st day of FY
a) Any fraud on the company by vendor of the company b) Though out the FY
b) Any fraud by the company or any fraud on the company by its c) As on Balance Sheet date of FY
officers or employees d) As on Balance Sheet date of immediate preceding FY
c) All types of frauds
d) None of these 330. How many matters are specified under CARO(2016) for reporting by
Co’s auditor
a) 12
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b) 13 336. Cost auditor of company shall be appointed by BoD within

c) 15 __________days from commencement of FY
d) 16 a) 30
b) 60
331. The auditor shall address audit report on the financial statement of c) 120
company d) 180
a) To BoD of Company
b) To the Members of Company 337. Intimation of appointment of cost auditor is filed by Co to CG in the
c) To CG form
d) To RoC a) ADT-1
b) CRA-1
332. The date on auditor’s report shall be c) CRA-2
a) As on balance sheet date d) CRA-3
b) Any date after balance sheet date
c) After balance sheet date but not earlier than the date of approval 338. Any casual vacancy in the office of cost auditor of company is filed
of financial statement of the entity by
d) Date of AGM a) BoD within 1 month
b) BoD within 30 days
333. Under section 148, the maintenance of cost accounting records are c) CG within 30 days
not required for d) CAG within 60 days
a) A micro enterprise or small enterprise
b) The company whose revenue from exports in Forex exceeds 75% of 339. Cost Auditor performs cost audit in accordance with
total revenue a) Standards on Auditing
c) Which is operating from SEZ b) Basic principles of cost audit
d) All of these c) Cost Audit Standards
d) Standards on Related Services
334. Cost audit will not be applicable to those companies
a) Whose revenue from exports in Forex exceeds 75% of total 340. Cost audit report shall be submitted in Form
revenue a) CRA-1
b) Which is operating from SEZ b) CRA-2
c) Which is engaged in generation of electricity for captive c) CRA-3
consumption through captive generation plant. d) CRA-4
d) All of these
341. Cost audit report shall be submitted by Cost auditor to BoD within
335. Cost auditor of company is appointed by __________ days from closure of FY
a) CG a) 90
b) BoD b) 120
c) Members c) 150
d) CAG d) 180
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342. Company shall within __________days from receipt of cost audit b) Know history of violations of securities laws.
report furnish the CG with such report along with full information and c) Lack of complete and timely reconciliations of assets.
explanation on every reservation or qualification contained therein, in d) Dispute between shareholders in a closely held entity.
Form____________.
a) 30, CRA-4 348. The risk of management fraud increases in the presence of :
b) 60, CRA-5 a) Frequent changes in supplies
c) 120, CRA-6 b) Improved internal control system
d) 180, CRA-7 c) Substantial increases in sales
d) Management incentive system based on sale done in a quarter.
343. When credit purchases of Rs. 5100 is recorded on credit side and
credit sales of Rs. 5100 is recorded on debit side, this kind of error 349. Which of the following is an example of fraudulent financial reporting
is called____________________. a) Defalcation of cash by cashier
a) Error of omission. b) Misappropriation of inventory by store keeper
b) Compensating error. c) Overvaluation of assets
c) Error of principle. d) All of these
d) Error of commission.
350. Which of the following frauds is more difficult to detect
344. If, as a result of s misstatement resulting from fraud, the auditor a) Fraud by employees
encounters exceptional circumstances that bring into question his b) Fraud by management & TCWG
ability to continue performing the auditor shall- c) Both (a) and (b)
a) Withdraw from the engagement immediately. d) None of these
b) Report to audit team regarding withdrawal.
c) Determine the professional and legal responsibilities applicable in 351. Which of the following is not as example of accounting estimate
the circumstances. a) Warranty obligation
d) Ask the management for his withdrawal. b) Outcome of long term contracts
c) Selection of accounting policies
345. Which of the following is an example of inflating cash payments? d) Financial obligations/cost arising from litigation settlements and
a) Making payments against purchase vouchers. judgements.
b) Teeming and lading.
c) Not accounting for cash sales fully. 352. Matters that the auditor may consider in evaluating the
d) Making payments against inflated vouchers. reasonableness of the assumptions used by management include:
a) Whether individual assumptions appear reasonable
346. The type of errors, existence of which becomes apparent in the b) Whether the assumptions are interdependent and internally
process of compilation of accounts is known as- consistent
a) Self-revealing errors. c) In the case of fair value accounting estimates, whether the
b) Intentional errors. assumptions appropriately reflect observable market place
c) Concealed errors. assumptions
d) Unconcealed errors. d) All of above
347. Misappropriation of assets may occur because there is- 353. In case of accounting estimates, the auditor shall perform the
a) Adequate record keeping with respect to assets. following if he faces any significant risk:
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a) Examine alternative assumption d) All of these

b) Develop a range 359. Which of the following is not a record or document that may provide
c) Consider whether management has been biased information about related party relationships and transactions:
d) All of above a) Entity income tax return
b) Internal auditor’s report
354. If there is any material difference between the auditor’s range c) Memorandum of Association
concluded by the auditor and the estimate made by management in d) Life insurance policies acquired by the entity.
the financial statements, which client refuses to adjust, the auditor
shall express: 360. To identify and assess risk of material misstatements due to fraud or
a) An unmodified opinion error that could result the entity’s related party relationships and
b) A qualified opinion transaction the auditor shall:
c) Either a qualified opinion or adverse opinion a) Inquiry with management and others within the entity
d) Either a qualified opinion or disclaimer of opinion b) Perform other risk assessment procedures
c) Both (a) and (b)
355. Which of the following SA deals with auditor’s responsibilities d) None of these
regarding related party relationships and transactions when
performing an audit of financial statements 361. If auditor identifies significant related party transactions, not
a) SA 540 conducted on the terms and conditions like normal rate and market
b) SA 550 conditions then, he should evaluate-
c) SA 560 a) Business rationale behind these transactions
d) SA 570 b) Consistency of terms with management’s explanation
c) Accounting and disclosure of such transactions in financial
356. A transaction conducted on such terms and conditions as between a statements
willing buyer and a willing seller who are unrelated and are acting d) All of these
independently of each other and pursuing their own best interest is
called as: 362. Statement(1)
a) Arm’s length transaction As per SA-550, auditor should examine whether related party transactions
b) Related party transaction have been appropriately accounted for and disclosed in the financial
c) Significant transaction statements as per financial reporting framework; though he need not
d) None of these check authorization of such transactions by management.
Statement (2)
357. Related party transaction may be conducted Auditor should consider whether management has appropriately accounted
a) In the normal course of business and disclosed the related party transactions in their financial
b) Not under normal market terms and conditions statements as per applicable financial framework as it might affect
c) With no exchange consideration his audit opinion.
d) All of these a) Only Statement (1) is true
b) Only Statement (2) is true
358. A related party transaction may have the following features: c) Both the statements are true
a) A person or entity under common control d) None of the Statements is true
b) Owners who are close family members
c) Common key management 363. Statement(1)
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Regarding related party relationships and transactions with them, auditor c) SA-570
shall not obtain any written representation; rather obtain extra d) None of these
evidences independently as he cannot rely on written representations
when it comes to related party transactions. 368. Subsequent events as per SA 560 are-
Statement (2) a) Events occurring between the date of financial statements and the
As per SA-550, he should maintain documentation regarding name and date of auditor’s report
nature of related party relationships. b) Facts that become known to the auditor after the date of auditor’s
a) Only Statement (1) is true report
b) Only Statement (2) is true c) Both a and b
c) Both the statements are true d) None of these
d) None of the Statements is true
369. The auditor shall obtain sufficient and appropriate evidence that all
364. As per Accounting Standard 18, the facts to be disclosed in the events after the balance sheet date but before or up to the date of
financial statements by the auditor shall include- __________ that require adjustment or disclosure in _______ have
a) Related party name and nature of relationship been identified.
b) If there is a transaction between related parties, the nature of a) Board’s approval; Board report
transaction, the price at which it has been made and amount of b) Board’s approval; financial statements
transaction outstanding at the balance sheet date. c) Auditor’s report; Board report
c) Both a and b d) Auditor’s report; financial statements
d) None of these
370. Regarding subsequent events, auditor shall comply with the
365. For identifying existence of related parties, apart from obtaining requirements given in SA-560. State which of the following is not
written representation from management and TCWG, the auditor correct in this regard?
should also consider- a) The auditor shall inquire the management and those charged with
a) Keyman insurance policies governance regarding the subsequent events.
b) Income tax returns b) Auditor should read the entity’s subsequent interim financial
c) Internal auditor’s reports statements, if any
d) None of these c) The auditor may inquire entity’s lawyer regarding the pending cases
and outcomes therefrom.
366. SA- ___________ pertains to management’s responsibilities to d) Auditor need not consider whether subsequent event may have an
examine whether related party transactions have been appropriately impact on going concern assumption.
accounted for and disclosed in the financial statements.
a) SA-240 371. Statement (1)
b) SA-550 Generally, auditor has no obligation to perform any audit procedures
c) SA-560 regarding the financial statements after the date of auditor’s report.
d) None of these Statement (2)
In case auditor comes to know about a fact after the date of auditor’s
367. SA- ____________relates to auditor’s responsibilities regarding report, he should not consider the same.
subsequent events a) Only Statement (1) is true
a) SA-550 b) Only Statement (2) is true
b) SA-560 c) Both the statements are true
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d) None of the Statements is true c) Auditor needs to check whether it has been dealt with in the
financial statements as per applicable financial reporting
372. In case facts become known to the auditor after the date of audit framework.
report but before the date financial statements are issued, then d) All of these
auditor shall-
a) Discuss with management and TCWG the matter whether there is 375. When after the financial statements have been issued, a fact
need to amend financial statements and treatment in financial becomes known to the auditor that, had it been known to the auditor
statements. at the date of auditor’s report, may have caused the auditor to
b) Should not ask the management and TCWG to amend the financial amend the auditor’s report, the auditor shall
statements in any case because it may give rise to many a) Discuss the matter with management and TCWG
complications. b) Determine whether the financial statements need amendment
c) He should ask the management and TCWG to inform about the c) Inquire how management intends to address the matter in the
situation to everyone in receipt of previously issued financial financial statements
statements and amend the financial statements. d) All of the above
d) He need not provide a new report even if facts are such that had it
been known to the auditor at the date of audit report, it might 376. Statement (1)
have affected his audit report. 1. Under the going concern assumption, an entity is viewed as continuing
in business forever.
373. Statement (1) 2. Statement (2)
If auditor comes to know about the facts which are of such nature that 3. General purpose financial statements are prepared on a going concern
had those been known to the auditor at the date of audit report, it basis if management neither intends to liquidate the entity nor to
might have affected his audit report, and he asks the management cease the operations
and TCWG to amend the financial statements but management does a) Only Statement (1) is true
not amend the financial statements, then, he should provide a new b) Only Statement (2) is true
report. c) Both the statements are true
Statement (2) d) None of the Statements is true
If he comes to know about the facts after the date financial statements
are issued, then, he does not have any obligation because financial 377. In case financial statements have not been prepared on a going
statements have already been issued to third parties. At the most he concern basis,-
can provide a public notice. a) The fact need not be appropriately disclosed
a) Only Statement (1) is true b) The auditor shall comply with SA-570
b) Only Statement (2) is true c) Both a and b
c) Both the statements are true d) None of these
d) None of the Statements is true
378. Statement (1)
374. A limited company is having a pending case filed against it on 31 th As per SA-570, the auditor need not consider whether there is material
March, 2018. A decision has been received from the court on 14 th uncertainty about the entity’s ability to continue as a going concern
April, 2018. i.e. after the balance sheet date. because it is management’s responsibility to consider the same.
a) It is a subsequent event Statement (2)
b) It should be considered by the management while preparing the
financial statements.
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The absence of any reference to going concern uncertainty in the auditor’s a) Qualified opinion
report may be viewed as a guarantee as to the entity’s ability to b) Adverse opinion
continue as a going concern. c) (a) or (b)
a) Only Statement (1) is true d) Disclaimer of opinion
b) Only Statement (2) is true
c) Both the statements are true 384. The auditor’s report shall include a separate section under the
d) None of the Statements is true heading “material uncertainty relating to going concern” in case-
a) Adequate disclosure of a material uncertainty has been made in the
379. As per SA-570, the auditor shall financial statements
a) Consider the events or conditions that may cast significant doubt b) Adequate disclosure of material uncertainty is not made in the
on the entity’s ability to continue as a going concern. financial statements
b) Plan and perform his audit considering professional skepticism. c) Management may be unwilling to make or extend his assessment
c) Remain alert throughout the audit d) All of these
d) All of these
385. If auditor identifies events or conditions that may cast significant
380. The following type of indicators may give rise to a doubt on going doubt on going concern, he shall communicate the same to-
concern assumption adopted by management: a) Management
a) Financial indicators b) TCWG
b) Operating indicators c) Option (a) and option (b) both
c) Other indicators d) Either (a) or option (b)
d) All of these
386. The matters relating to going concern may-
381. If the management has prepared financial statements based on going a) Be a key audit matter as per SA 701
concern assumption but auditor concludes that use of going concern b) Should not be a key audit matter as per SA-701 because these are
basis is inappropriate, then auditor shall- dealt only in SA-570
a) Express a qualified opinion c) Key audit matters must not include going concern matters
b) Express an adverse opinion d) None of these
c) Disclaim his opinion
d) Either option (a) or option (b) 387. While performing audit procedures to obtain audit evidence for
management’s use of going concern assumption, the auditor shall
382. If auditor concludes that use of going concern basis of accounting is consider same time period as covered by management in its
appropriate but a material uncertainty exists which is adequately assessment, but such period shall not be less than
disclosed in the financial statements, then auditor shall- a) 3 Months
a) Express a qualified opinion b) 6 Months
b) Express an adverse opinion c) 10 Months
c) Either option (a) and option (b) d) 12 Months
d) None of these
388. Which of the following is financial event or condition which may cast
383. If going concern basis of accounting is appropriate, however, there is significant doubt on the entity’s ability to continue as going concern
a material uncertainty which is not disclosed in the financial a) Loss of franchise
statements, then auditor shall express- b) Shortage of supplies
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c) Negative operating cash flows d) All of the above

d) Non-compliance with statutory requirement
394. SA __________ deals with using the work of another auditor
389. Which of the following is operating event or condition which may cast a) 600
significant doubt on the entity’s ability to continue as going concern b) 610
a) Loss of major market segment c) 620
b) Loss of key customer d) 500
c) Inability to pay creditors on due date
d) (a) and (b) 395. SA 600 is applicable to
a) Component’s auditor
390. The auditor found that entity has recurring losses and has negative b) Joint auditors
net worth, these are indicators of- c) Predecessor auditors
a) Operating nature d) Option (a) and (c) both
b) Financial nature
c) Other indicators 396. Component includes
d) All of these a) Branch
b) Subsidiary
391. If auditor concludes that management’s use of going concern basis of c) Division
accounting is appropriate but material uncertainty exists which has d) All of the above
been properly disclosed by management in financial statement, the
auditor shall 397. ______ should advice __________ regarding use to made of his
a) Introduce EOM para in his report in accordance with SA 706 report, timetable for completion of his work and significant
b) Introduce separate section in his report under the heading accounting, auditing and reporting requirement----
‘Material Uncertainty Related to Going Concern’ a) Principal auditor, expert
c) Introduce OM para in his report in accordance with SA 706 b) Auditor, expert
d) Qualify his opinion in accordance with SA 705 c) Joint Auditor, other joint auditor
d) Principal auditor, another auditor
392. In case of management’s unwillingness to make or extend its going
concern assumption, the auditor shall 398. Principal auditor may require supplementary test to be performed by-
a) Consider the implications for the auditor’s report ---
b) Withdraw from engagement a) Another auditor
c) Introduce EOM para in his report in accordance with SA 706 b) Himself
d) Introduce OM para in his report in accordance with SA 706 c) Either option (a) or option (b)
d) None of these as he cannot require conducting supplement test
393. When any event or condition is identified by auditor which may cast because audit has already been done by another auditor
significant doubt on the entity’s ability to continue as going concern,
the auditor’s additional procedure shall include the following 399. If there is modification in another auditor’s report, then principal
a) Communicating the facts to the regulatory auditory of the entity auditor ---
b) Communicate the matter to the Central Government a) Need not consider another auditor’s report
c) Request written representation from management or TCWG b) Should consider another auditor’s report but will not consider that
regarding their future action and feasibility of these plan while preparing his own audit report
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c) Consider whether modification in his own audit report is required b) SA 220

d) Ask the management to discuss with another auditor why he c) SA 230
modified his audit report d) SA 240
400. Which of the following is incorrect 406. The primary purpose of establishing quality control policies and
a) There should be sufficient liaison between principal auditor and the procedures for deciding on client evaluation to
other auditor. a) Ensure adherence to generally accepted auditing standards
b) The other auditor, knowing the context in which his work is to be b) Acceptance or continuance of client’s relationship
used by the principal auditor, should co-ordinate with the principal c) Ensure audit fees is charged according to the type of audit work
auditor assigned
c) Other auditor also includes internal auditor d) All of above
d) The principal would not be responsible in respect of the work
entrusted to the other auditor
407. The auditor shall establish existence of preconditions for an audit of
financial statements
401. Primarily prevention and detection of fraud are the responsibilities of
a) Before confirming common understanding between the auditor and
a) TCWG and Management of entity
management of the terms of audit engagement.
b) Internal Auditor of entity
b) After confirming common understanding between the auditor and
c) External Auditor of entity
management of the terms of audit engagement.
d) All of above
c) Before appointment of auditor
d) After the date of auditor’s report.
402. Which of the following in not a fraud through suppressing cash
receipts:
408. Terms of auditing engagement are discussed through
a) Not accounting for cash sales fully
a) Letter of appointment
b) Not accounting for miscellaneous receipts
b) Letter of acceptance
c) Not accounting for bad debt recovered
c) Engagement letter
d) Making payment against fictitious vouchers.
d) Letter of weakness
403. Teeming and lading is a technique of fraud through
a) Inflating cash payment
409. Engagement letter is provided by
b) Wrongs casting in cash book
a) Management to auditor
c) Suppressing cash receipts
b) Auditor to Management/TCWG
d) None of these
c) Internal auditor to External Auditor
d) CG to Auditor
404. Which of the following error will affect the trial balance
a) Error of partial omission
410. Engagement letter is
b) Error of principles
a) Always required when auditor is appointed
c) Error of complete omission
b) Always required when auditor is reappointed
d) Compensatory errors
c) Not always required when auditor is reappointed but except for
certain exceptions
405. Which of the following SAs deals with auditor’s responsibilities in
d) (a) and (C)
agreeing the terms of audit engagement
a) SA 210
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411. Which of the following is not a term of engagement letter

a) Object and Scope of audit 417. Which of the following SAs deals with responsibilities of auditor
b) Responsibilities of management and TCWG of the entity regarding quality control procedures for an audit of financial
c) Fact that audit process may be subject to peer review under statements
Chartered Accountants Act, 1949 a) SA 200
d) Audit Planning b) SA 210
c) SA 220
412. The audit engagement letter generally should include to each of the d) SA 260
following except
a) Limitation of auditing 418. The objective of SA 220 is to implement quality control procedures at
b) Responsibilities of management with respect to audit work the engagement level that provide the auditor with reasonable
c) Expectation of receiving a written representation letter assurance that
d) A description of the auditor’s method of sample selection. a) The audit complies with professional standards and regulatory
requirements
413. In which of the following circumstances a new engagement letter is b) The auditor’s report issued is appropriate in the circumstances
required in recurring audit engagement c) Both (a) and (b)
a) Any change in the senior management of the entity d) None of these
b) Any change in the nature of business of the entity
c) Any change in legal requirement 419. The partner who is responsible for the auditing engagement and its
d) All of the above performance and for the report that is issued on behalf of the firm
is called as:
414. If auditor is requested by management to change the audit a) Active partner
engagement to an engagement that conveys a lower level of b) Performing partner
assurance, then the auditor shall c) Engagement Partner
a) Reject the management’s request d) Working Partner
b) Accept the management’s request
c) Determine that there is a reasonable justification for doing so 420. Which of the following partner can act as engagement partner
d) Shall not entertain any such request a) Any Partner
b) Any CA Partner
415. SA 260 deals with auditor’s responsibilities w.r.t. c) Any CA Partner in full time or part time practice
a) Communication with Those Charged with Governance of the entity d) Any CA Partner in full time practice
b) Communication with Owners of the entity
c) Communication with Management of the entity 421. Who will take responsibility for overall quality in an audit of financial
d) All of these statements
a) All the partners of firm
416. The auditor shall communicate with TCWG a statement w.r.t. b) All CA partners of firm
auditor’s independence in case of audit of financial statements of c) Engagement partner
a) Any entity d) Engagement team
b) Listed entities
c) Any entity except One Person Company and Small Company
d) None of these
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422. Which of the following information assist the auditor in accepting and c) The extent of supervision and review in a given instance will be
continuing of client relationship appropriate
a) The integrity of the principal owners, key management and TCWG d) All of the above are reasons
of the entity
b) Whether the firm and the engagement partner can comply with the 427. The least important element in the evaluation of an audit firm’s
relevant ethical requirements system of quality control would relate to
c) Whether the engagement team is competent to perform the audit a) Assignment of audit assistants
engagement and has the necessary capabilities, including time and b) Consultation with experts
resources c) System for determining audit fees
d) All of these d) Confidentiality of client’s information
423. Appointment of engagement quality control reviewer is mandatory in 428. In pursuing its quality control objectives with respect to
case of audit of financial statements of independence, an auditing firm may use policies and procedures such
a) Any entity as
b) Any entity except One Person Company and Small Company a) Emphasizing independence of mental attitude in firm training
c) Listed Entity programs and in supervision and review of work
d) None of these b) Prohibiting employees from owning stock of public companies
c) Suggesting that employees conduct their banking transactions with
424. Which of the following in not element of quality control in an audit of banks that do not maintain accounts with client firms
financial statements d) Assigning employees who may lack independence to research
a) Leadership Responsibilities positions that do not require participation in field audit work
b) Assignment of Engagement Team
c) Acceptance and Continuance of Client Relationship and Audit 429. Policies and procedures w.r.t human resources address which of the
Engagements following issues
d) Signing on Audit Report a) Recruitment
b) Capabilities
425. If any difference of opinion arise within engagement team or between c) Competence
engagement partner and quality control reviewer, the engagement d) All of above
team follow
a) Engagement partner 430. Which of the following SAs deals with auditor’s responsibilities w.r.t.
b) Engagement quality control reviewer audit planning in an audit of financial statements
c) Firm’s policies and procedures a) SA 300
d) Majority of members of engagement team b) SA 315
c) SA 320
426. Auditing firms should establish quality control policies and procedures d) SA 330
for personnel management in order to provide reasonable assurance
that 431. The auditor shall
a) Employees promoted possess the appropriate characteristics to a) Establish audit strategy on the basis of overall audit plan.
perform competently b) Develop overall audit plan on the basis of audit strategy
b) Personnel will have the knowledge required to fulfill responsibilities c) Both (a) and (b)
assigned d) None of these
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432. The audit plan is ______________ detailed than the overall audit c) Effective communication with retiring auditor
strategy. d) It ensure compliance with applicable law and regulation
a) Less
b) More 438. Planning should be made to cover, among other things:
c) Equal a) acquiring knowledge of the client’s accounting system, policies and
internal control procedures
433. Planning is _______________ process of an audit that often begins b) establishing the expected degree of reliance to be placed on
shortly after (or in connection with) the completion of the previous internal control
audit and continues until the completion of the current audit c) coordinating the work to be performed
engagement. d) all of above
a) Continuous
b) Discreet 439. Which of the following is incorrect
c) Neither continuous nor discreet. a) In establishing the audit strategy the auditor shall identify
characteristics of the engagement that define its scope.
434. The auditor shall develop an audit plan that include a description of: b) The auditor shall develop an audit plan that shall include a
a) The nature, timing and extent of planned risk assessment description of the nature, timing and extent of risk assessment
procedures. procedures and further audit procedures which are proposed to be
b) The nature, timing and extent of planned further audit procedures performed.
at the assertion level. c) The auditor shall establish audit strategy on the basis of overall
c) Other planned audit procedures that are required to be carried out audit plan.
so that the engagement complies with SAs. d) The auditor shall update and change the audit strategy and audit
d) All of the above plan as necessary during course of the audit.
435. An auditor who accepts an audit but does not possess the industry 440. The overall audit strategy and the audit plan remain the
expertise of the business entity should _____________ responsibility.
a) Engage experts a) Auditor’s
b) Obtain knowledge of matters that relate to the nature of entity’s b) Management’s
business c) Those charged with governance
c) Inform management about it d) All of the above
d) Take help of other auditors
441. Prior to commencing field work, an auditor usually discusses the
436. Auditor can obtain knowledge of client’s business from general audit strategy with the client’s management. Which of the
a) Discussion with people within client entity following details do management and the auditor usually agree upon at
b) Publication relating to industry this time?
c) Previous experience a) The specific matters to be included in the communication with the
d) All of these audit committee
b) The minimum amount of misstatements that may be considered to
437. Benefit(s) of audit planning is be reportable conditions
a) Helping auditor to devote appropriate attention on important areas c) The schedules and analyses that the client’s staff should prepare
of the audit d) The effects that inadequate controls may have over the
b) Better preparation of engagement letter safeguarding of assets
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442. Which of the following is not a source of obtaining knowledge of d) None of these
client’s business
a) Annual reports circulated among the shareholders 448. Determining a percentage to be applied to a chosen benchmark (in
b) Communication from previous auditor relation to materiality) involves the exercise of
c) Client’s policy and procedure manual ___________________
d) Discussion with client a) Independence
b) Professional judgement
443. The methodology of audit planning is c) Professional skepticism
a) Not prescribed in any law d) All of the above
b) Prescribed in Companies Act, 2013
c) Prescribed in Chartered Accountants Act, 1949 449. In determining the level of materiality for an audit, what should not
d) Prescribed by the appointing authority. be considered?
a) Prior year’s errors
444. _____________ shall be involved in the planning of audit b) The auditor’s remuneration
a) Engagement partner c) Adjusted interim financial statements
b) Other key members of engagement team d) Prior year’s financial statements.
c) Both (a) and (b)
d) Either (a) or (b) 450. Which of the following is a type of audit procedure
a) Risk Assessment Procedures
445. Which of the following in incorrect w.r.t audit programme b) Further Audit Procedures
a) An audit programme consists of a series of verification procedures c) Both (a) and (b)
to be applied. d) None of these
b) It is desirable in respect of each audit and more particularly for
bigger audits an audit programme should be drawn up. 451. As per SQC-1 “An appropriate time limit within which to complete
c) An audit programme is a summarized plan the assemble of the final audit file is ordinarily not more than _____
d) There should be periodic review of the audit programme to assess days after the date of auditor’s report.
whether the same continues a) 30
b) 60
446. While determining materiality of any item financial statements, the c) 90
auditor considers d) 45
a) Quantity of item
b) Quality of item 452. As per SQC-1, auditor should retain audit documentation for at least
c) Legal or Regulatory consideration of item _________ years
d) All of these a) 5
b) 6
447. Materiality in terms of amount or amounts set by the auditor for c) 7
particular classes of transactions, account balances or disclosures is d) 8
called as
a) Materiality for financial statement as a whole 453. Which of the following factors may affect the form, content and
b) Performance Materiality extent of audit documentation:
c) Item Materiality
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a) Size and complexity of the entity 460. Loan agreement are the integral parts of
b) Identified risk of material misstatements a) Permanent audit file
c) Significance of audit evidence obtained b) Current audit file
d) All of above c) Temporary audit file
d) None of the above
454. Audit documentation can be made by auditor:
a) Paper mode 461. Working on trial balance is the part of
b) Electronic mode a) Permanent audit
c) Both (a) and (b) b) Current audit file
c) Temporary audit file
455. Who is the owner of audit working papers? d) None of the above
a) Auditee
b) Auditor 462. Pick the odd one
c) (a) and (b) a) Written representations and confirmation from clients.
d) ICAI b) Audit planning and audit programme
c) Correspondence relating to annual reappointment
456. Additional numbers of purposes served by audit documentation are: d) Memorandum and Article of Association of the Company.
a) Enabling the engagement team to plan and perform the audit
b) Enabling the engagement team to be accountable for its work 463. From the initial client interview to the preparation of audit report an
c) To enable the engagement partner for direction, supervision and auditor must keep a record of all the work you do in
review the work performed by engagement team members. a) Audit file
d) All of above b) Audit report
c) Audit papers
457. If in exceptional circumstances the auditor departs from Standards d) None of the above
on Auditing, he shall___________
a) Document the reason for departure 464. Which of the following is not true of working papers?
b) Perform alternative procedures a) They record the audit evidence to provide support for the auditor’s
c) Both (a) and (b) opinion
d) Auditor is not allowed to depart from SAs. b) They assist in review of the audit work
c) They are a direct aid in the planning of the audit
458. Which of the following is not content of permanent audit file: d) They provide proof of the correctness of the financial statements.
a) Record of study and evaluation of internal control
b) Audit planning and audit documentation 465. The audit working papers should contain information on planning the
c) Memorandum and Article of Association audit work, the nature, timing and extent of audit procedures
d) Notes relating to significant accounting policies performed, _______________________ and the conclusion drawn
leading to an opinion.
459. Which of the following is content of current audit file: a) The results of the audit procedures
a) Correspondence relating to acceptance of annual reappointment b) The auditor’s opinion of management
b) Copies of communication with experts or other auditors c) All gratuities received by auditor
c) Audit evidence obtained d) Names of the employees who cooperated with the auditor.
d) All of above
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466. The extent of what is included in working paper is d) May delete audit documentation before its retention period if it is
a) Thoroughly specified in SAs required by any law.
b) Determined by each staff auditor
c) Thoroughly specified under law 472. Audit note book
d) A matter of professional judgement. a) Contains all details of work carried out
b) Cannot be defense for auditor
467. Which of the following factors would least likely affect the quantity c) It is a record but not useful in formulating audit programme
and content of an auditor’s working papers d) All of these
a) The nature of auditor’s report
b) The assessed level of control risk 473. Which of following SAs deals with auditor’s responsibilities w.r.t audit
c) The possibility of peer review sampling:
d) The content of management representation letter. a) SA 200
b) SA 580
468. A current audit file would always contain which of following? c) SA 530
a) Loan agreements, pension plans, agreements with parent company d) SA 500
and subsidiaries
b) Company documents such as corporate charter or articles of 474. When auditor decides to select less than 100% of the population for
association and corporate bylaws. testing, the auditor is said using
c) A record of the nature, timing and extent of audit procedures a) Audit sampling
performed and the results of such procedures. b) Representative sampling
d) Prior year analysis of fixed assets, long term debt, and terms of c) Poor judgement
stock and bond issues. d) None of the above
469. Which of the following SAs deals with auditor’s responsibilities w.r.t. 475. The entire set of data from which a sample is selected and about
audit documentation: which the auditor wishes to draw conclusions is called
a) SA 580 as________________
b) SA 230 a) Population
c) SA 505 b) Monitor
d) SA 700 c) Data center
d) Source data
470. Audit documentation may be useful for
a) Engagement team 476. The individual items constituting a population is called
b) Quality control reviewer as_______________
c) External inspector a) Transaction
d) All of these b) Sampling unit
c) Sample
471. After assembly of audit file, the auditor_______________ d) Data
a) May delete audit documentation if it is of no use
b) May delete audit documentation if it is occupying much of its space 477. ______________ is the risk that auditor’s conclusion based on a
c) Shall not delete audit documentation before its retention time sample may be different from conclusion if the entire population were
period subjected to the same audit procedure.
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a) Audit Risk c) Examination in depth should be done

b) Inherent Risk d) All of above
c) Control Risk
d) Sampling Risk 484. Approaches to sampling are
a) Non- Statistical Sampling
478. Size of sample is affected by b) Statistical Sampling
a) Tolerable error c) Both (a) and (b)
b) Expected error d) None of these
c) Sampling risk
d) All of these 485. In non-statistical sampling, the sample size and its composition are
determined on the basis of
479. Type 1 sampling risk affects________________ a) Personal experience of auditor
a) Audit efficiency b) Knowledge of auditor
b) Audit effectiveness c) Judgement of auditor
c) Both (a) and (b) d) All of above
d) None of above
486. ____________________ is a method of audit testing which is more
480. Type 2 sampling risk affects________________ scientific than testing based entirely on the auditor’s own judgement
a) Audit efficiency because it involves use of mathematical laws of probability in
b) Audit effectiveness determining the appropriate sample size.
c) Both (a) and (b) a) Statistical Sampling
d) None of above b) Non statistical Sampling
c) Haphazard Sampling
481. _____________________ is the risk that the auditor reaches an d) Cluster Sampling
erroneous conclusion for any reason not related to sampling risk.
a) Inherent Risk 487. Judgmental sampling is
b) Control Risk a) Based on probability theory
c) Sampling Risk b) Not having any personal bias
d) Non-Sampling Risk c) Widely accepted way of sampling
d) None of these
482. Which of the following item is not suitable for test checking?
a) Purchase transactions 488. The main advantage of using statistical sampling techniques is that
b) Sale transactions such techniques:
c) Balance Sheet items a) Mathematically measure risk
d) All of above b) Eliminate the need for judgmental sampling
c) Defines the values of tolerable error
483. Precautions to be considered by auditor while performing audit d) All of them
engagement on the basis of test checking are
a) Auditor should identify the items which are not suitable for test 489. Which of the following factor is (are) considered in determining the
checking sample size for test of controls?
b) There should be no personal bias a) Projected error
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b) Tolerable error 495. In which of the following sampling, sampling units are selected from
c) Expected error population at fixed intervals
d) Both (b) and (c) a) Random Sampling
b) Systematic Sampling
490. Tolerable error, is the maximum monetary error that the auditor is c) Block Sampling
prepared to accept in the population and still concludes that audit d) Cluster Sampling
objectives has been achieved, is directly related to
a) Sample size 496. In which of the following sampling, sampling units are selected from
b) Audit risk population in a defined block of consecutive items
c) Materiality a) Random Sampling
d) Expected error b) Systematic Sampling
c) Block Sampling
491. Which of the following is source of Non Sampling risk d) Haphazard sampling
a) Human Mistakes
b) Applying audit procedures not appropriate to the objectives of 497. In which of the following sampling, population is divided into number
audit of groups
c) Misinterpreting the sample results a) Random Sampling
d) All of the above b) Interval Sampling
c) Block Sampling
492. Which of the following is more scientific d) Cluster Sampling
a) Statistical
b) Non-Statistical 498. Which of the following is a type of random sampling
c) Both (a) and (b) a) Simple Random
d) None of the above b) Stratified Random
c) Both (a) and (b)
493. In which of the following sampling, population is divided into number d) Haphazard Random
of groups
a) Block Sampling 499. In random sample, each item of population
b) Haphazard Sampling a) Has equal chance of selection
c) Cluster Sampling b) Has varying chances of selection depending upon the placing of
d) None of these items
c) May have a chance of selection depends upon the auditor’s
494. In which of the following sampling, sampling units are selected from professional judgement
population on the basis of random number tables d) None of these
a) Systematic Sampling
b) Random Sampling 500. Simple random sample can be selected by
c) Cluster Sampling a) Random number bias
d) Both (b) and (c) b) Help of computers
c) Just by picking up a number without any order
d) All of these
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501. Division of work among joint auditors should be d) Before finalizing their audit report, the joint auditors shall discuss
a) In writing and communicate with each other their respective conclusions.
b) Properly documented
c) Communicated to client 506. SA 402 deals with responsibilities of
d) All of above a) User Auditor
b) Service Auditor
502. If joint auditors are in disagreement with respect to the opinion to c) User Auditor and Service Auditor
be covered by audit report, they shall d) Service organization and user auditor both
a) Express their opinion in a separate audit report
b) Notify to the client 507. In case client outsources some aspects of their business to other
c) Express their opinion in a common audit report through a note organization, SA _________ is to be considered and applied by the
d) Notify ROC regarding disagreement in audit opinion. auditor
a) 320
503. In case separate audit reports are issued by joint auditors, the b) 500
reference of audit reports separately issued by others is made under c) 402
the heading d) 450
a) Emphasis of matter
b) Basis for modified opinion 508. As per SA 402, service auditor is an auditor who provides
c) Other matter _______________ about ______________ of a service
d) Auditor’s responsibilities organization.
a) Audit report, financial statements
504. All the joint auditors are jointly and severally responsible for b) Audit report, controls
a) Examining that financial statements of the entity comply with c) Assurance report, financial statements
requirements of relevant statutes d) Assurance report, controls
b) Presentation and disclosure of the financial statements as required
by the applicable FRF 509. As per SA 402, ___________ report shall provide better assurance
c) Ensuring that the audit report complies with requirements of than ___________ report to the user auditor.
relevant statutes, the applicable SA and other pronouncement a) Type 2, Type 1
issued by the ICAI b) Type 1, Type 2
d) All of above c) Type A, Type B
d) Type B, Type A
505. Which of the following statements is incorrect
a) The joint auditors shall obtain common engagement letter and 510. As per SA 402, user auditor is an auditor who audits and reports
common management representation letter a) On the internal controls of user entity
b) Joint auditors are not entitled to rely on the work of other joint b) On the financial statements of user entity
auditors c) On the controls of service organization
c) After identification and allocation of work among joint auditors, d) On the financial statements of a user entity and those of service
the work allocation document shall be signed by all the joint organization both
auditors and the same shall be communicated to TCWG of the
entity. 511. The user auditor shall obtain un understanding about
a) The nature of service provided by SO
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b) The materiality of transactions processed by SO 517. When Type1 or Type 2 Report of service auditor excludes information
c) The degree of interaction between service organization and user of internal controls of sub service organization, such method is called
entity a) Inclusive method
d) All of these b) Carve out method
c) Combined method
512. If user auditor is not able to obtain to obtain information from d) Exclusive method
service organization or about the transactions being processed by
service organization, he shall 518. Which of the following SA deals with auditor’s responsibility to
a) Modify his audit report consider law and regulation in an audit of financial statements
b) Express an unqualified opinion a) SA 230
c) Express an unqualified opinion but mentions the same in EOM b) SA 240
section c) SA 250
d) Express his audit opinion and mention the same in OM section. d) SA 260
513. The report on description and design of controls at service 519. With respect to examining the compliance with law and regulations
organization is termed as that do not have direct effect on the determination of amounts and
a) Type 1 Report disclosures in the financial statement
b) Type 2 Report a) Auditor’s responsibility is to obtain sufficient and appropriate
c) Type A Report audit evidence
d) Type B Report b) Auditor’s responsibility is limited to undertake specified audit
procedures
514. The report on description , design and operating effectiveness of c) Auditor’s responsibility is to report on these non-compliances, no
controls at service organization is termed as matter how immaterial these can be
a) Type 1 Report d) Auditor’s responsibility is not there to report with respect to non-
b) Type 2 Report compliance with these laws
c) Type A Report
d) Type B Report 520. With respect to examining the compliance with law and regulations
that have direct effect on the determination of amounts and
515. Which of the following is a method of reporting in Type 1 or Type 2 disclosures in the financial statement
Report by service auditor a) Auditor’s responsibility is to obtain sufficient and appropriate
a) Inclusive method audit evidence
b) Carve out method b) Auditor’s responsibility is limited to undertake specified audit
c) Both (a) and (b) procedures
d) None of these c) Auditor’s responsibility is to report on these non-compliances, no
matter how immaterial these can be
516. When Type1 or Type 2 Report of service auditor includes information d) Auditor’s responsibility is not there to report with respect to non-
of internal controls of sub service organization, such method is called compliance with these laws
a) Inclusive method
b) Carve out method 521. Primary responsibility to ensure compliance with applicable law and
c) Combined method regulation is of
d) Exclusive method a) External auditor
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b) Internal auditor d) All of above

c) TCWG and management
d) Legal expert 527. Local self –government means the administration of a locality, a
village, town or any other area smaller than
522. Which of the following is indicator of non-compliance with law and a) State
regulation b) Country
a) Unusual cash payment c) City
b) Unauthorized transactions or improperly recorded transactions d) Region
c) Payments made in tax haven countries
d) All of above 528. Municipal Government in India covers following
a) Municipal Corporation
523. If auditor becomes aware of information concerning an instance of b) Municipal Council
non-compliance or suspected non-compliance with law and regulations, c) Cantonment Committee
the auditor shall d) All of these
a) Obtain an understanding of nature of the act and circumstances in
which it has occurred 529. Local bodies receive following grants from state administration
b) Discuss the matter with management and TCWG a) General Purpose Grants
c) Evaluate the possible effect on the financial statements’ b) Specific Purpose Grants
d) All of above c) Statutory Grants
d) All of these
524. If non-compliance with law and regulation is material and affecting
the financial statements, the auditor shall express 530. Which of the following is not objective of audit of local bodies
a) Unmodified opinion a) Reporting on the fairness of the content and presentation of
b) Qualified/Adverse opinion financial statements
c) Disclaimer of opinion b) Reporting on office infrastructure and maintenance of local bodies
d) Qualified/Adverse opinion with EOM section in audit report c) Reporting on the adherence to legal and/or administrative
requirements
525. If auditor is unable to determine whether non-compliance has d) Detection and prevention of error, fraud and misuse of resources
occurred because of limitation imposed by circumstances rather than
by management or TCWG, the auditor shall 531. _________________________ is generally in charge of the audit of
a) Evaluate the effect on the auditor’s opinion in accordance with SA municipal accounts.
705 a) CAG
b) Withdraw from engagement b) CG
c) Communicate the matter to ROC c) Local Fund Audit Wing of the State Government
d) Communicate the matter to ROC and CG. d) ROC
526. If auditor identifies non-compliance with law and regulation, the 532. In India, the function of government audit is discharged by the
auditor shall report such non-compliance independent statutory authority of ______________ through the
a) To TCWG agency of ____________________________.
b) In Audit Report a) CG, ROC
c) To Regulatory Authority and Enforcement Authorities b) CAG, Indian audit and Account Department
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c) Both (a) and (b) 539. Which of the following is not power of CAG
d) None of these a) To inspect any office of accounts under the control of the union or
a State Government
533. CAG of India is appointed by b) To require that any account, book, paper and other documents
a) Prime Minister of India which deal with or are otherwise relevant to the transaction under
b) Parliament audit, be sent to specified places
c) President of India c) To attend Parliament Session
d) CBI d) To put such questions or make such observations as he may
consider necessary to the person in charge.
534. CAG can resign any time through a resignation letter addressed to
a) Prime Minister of India 540. CAG has a right to order conduct of supplementary audit within
b) Parliament ____________ days from the date of receipt of audit report
c) CBI a) 30
d) President of India b) 60
c) 90
535. The CAG shall be paid salary equivalent to d) 120
a) Judge of High Court
b) Judge of Supreme Court 541. Which of the following section of the Companies Act, 2013 provides
c) Prime Minister right to the CAG to conduct test audit of accounts of Government
d) President of India Companies
a) 143(5)
536. _________________ is competent to make laws to determine salary b) 143(6)
and other conditions of service c) 143(7)
a) The Parliament d) 143(12)
b) President of India
c) Prime Minister of India 542. Which of the following is not a standard for audit of public
d) CBI expenditure
a) Audit of Rules and Orders
537. The CAG shall hold office b) Audit of Sanction
a) For 6 Years c) Audit of Propriety
b) Up to the age of 65 Years d) None of these
c) (a) or (b) whichever is earlier
d) (a) or (b) whichever is later 543. According to _____________, the auditor try to bring out cases of
improper, avoidable, or infructuous expenditure even though the
538. The CAG shall audit expenditure has been incurred in conformity with the existing rules
a) Receipts of Union or State and regulation.
b) Account of Store and Stock a) Propriety Audit
c) Grants and Loans given from Consolidated Fund of b) Audit of Sanction
d) All of these c) Audit of Performance
d) Audit against Provision of Funds
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544. Public money should not be utilized for the benefit of a particular (b) Valuation
person or a section of the community or for the person who is (c) Completeness
sanctioning the expenditure. These are the principles covered in (d) Measurement
a) Performance Audit
b) Audit against rules and orders 550. Direct confirmation procedures are performed during audit of
c) Propriety Audit accounts receivable balances to address the following balance sheet
d) Performance Audit assertion:
(a) Rights and obligations
545. In the case of Government audits, performance audit covers the (b) Existence
following (c) Valuation
a) Efficiency Audit (d) Completeness
b) Economy Audit
c) Effectiveness Audit 551. If auditor is unable to obtain sufficient appropriate audit evidence
d) All of these with respect to any material item(s) of the financial statements and
possible effect if material but not pervasive, he shall express
546. While auditing a cinema hall, the auditor needs to verify that a) Unmodified opinion
a) Entrance to the cinema hall during show is only through printed b) Adverse opinion
tickets c) Disclaimer of opinion
b) Tickets are serially numbered and bound into books d) Qualified opinion
c) That for advance booking a separate series of tickets is issued
d) All of above 552. If auditor is unable to obtain sufficient appropriate audit evidence
with respect to any material item(s) of the financial statements and
547. Reports of CAG relating to the accounts of the Union/State shall be possible effect if pervasive, he shall express
submitted to the ___________ who shall cause to be laid a) Unmodified opinion
a) President/Governor b) Adverse opinion
b) Prime Minister/Chief Minister c) Disclaimer of opinion
c) Union Finance Minister/State Finance Minister d) Qualified opinion
d) All of the above
553. Which of the following SAs deals with auditor’s responsibilities for
548. ______________________aims at ascertaining that the expenditure forming an opinion and reporting on financial statements
incurred has been on the purpose for which the grant and a) SA 700
appropriation had been provided and that the amount of such b) SA 701
expenditure does not exceed the appropriation made c) SA 705
a) Audit against provision of funds d) SA 706
b) Propriety audit
c) Audit of sanction 554. Which of the following is title of auditor’s report
d) Audit against rules and orders a) Auditor’s Report
b) Independent Auditor’s Report
549. Which assertion is common among income statement and balance sheet c) Audit Report on the Financial Statements
captions: d) Reporting on the Financial statements
(a) Existence
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555. As per SA 700, which of the following is addressee of auditor’s 560. The date in auditor’s report represent the date
report a) Balance Sheet Date
a) Those Charged With Governance of the Entity b) Date when financial statements are approved by management of
b) Members of the Entity the entity
c) It depends upon circumstances of the engagement c) Date when audit report is signed by auditor
d) Central Government d) Date when audit report is submitted to management of the entity.
556. If auditor concludes an unmodified opinion, which heading will auditor 561. The place in auditor’s report represent
use for opinion section a) Address of auditor
a) Opinion b) Name of city, where audit report has been signed
b) Unmodified Opinion c) Name of city, where office of entity is situated
c) Unqualified Opinion d) None of these
d) Reporting on True and Fair View
562. If partnership firm is appointed as auditor, audit report shall be
557. Under which of the following section auditor shall mention in his signed by
report that he has conducted audit engagement in accordance with a) Any partner of the firm
SAs issued by ICAI and has complied with code of ethics and b) Any practicing chartered accountant partner of the firm
relevant ethical requirements c) All the partners of the firm
a) Opinion d) Any partner or any CA employee of the firm.
b) SA and Code of Ethics
c) Compliance with Standards 563. Which of the following is not mentioned along with signing in auditor’s
d) Basis for Opinion report
a) Membership number of individual/partner
558. Which of the following is not content of basis of opinion section b) Firm’s Registration Number
a) Name of the entity c) Date & Place
b) Statement that audit was conducted in accordance with SAs d) Time
c) Statement that auditor believes that audit evidence the auditor
has obtained is sufficient and appropriate to provide a basis for 564. The opinion section of the auditor’s report shall:
the auditor’s opinion. a) Identify the entity whose financial statements have been audited;
d) Reference to the section of auditor’s report that describes the b) State that the financial statements have been audited;
auditor’s responsibilities under the SAs. c) Identify the title of each statement comprising the financial
statements
559. Under which of the following heading, auditor shall report those d) All of the above
matters in his report which are required to be reported by him as his
duties as per the law and regulation basis upon which audit has been 565. Which of the following SAs deals with auditor’s responsibility to
conducted communicate key audit matters in the auditor’s report
a) Opinion a) SA 701
b) Basis for Opinion b) SA 705
c) Reporting on the Audit of Financial Statements c) SA 706
d) Reporting on Other Legal and Regulatory Requirements d) SA 700
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566. _________________ are those matters that in the auditor’s c) The purpose of communicating key audit matters to enhance the
professional judgement, were of most significance in the audit of the communicative value of the auditor’s report by providing greater
financial statements of the current period. transparency about the audit that has been performed.
a) Significant Matters d) Key audit matter is a substitute for expressing a modified opinion.
b) Key Audit Matters
c) Noteworthy Audit Matters 571. The auditor shall describe each key audit matter in the auditor’s
d) Remarkable Audit Matters report unless
a) Law or regulation precludes public disclosure about the matter
567. Key Audit Matters are selected from matters b) In extremely rare circumstances, the auditor determines that the
a) Communicated to members of engagement team matter should not be communicated in the auditor’s report because
b) Communicated to management of the entity the adverse consequences of doing so would reasonably be
c) Communicated to TCWG of the entity expected outweigh the public interest benefits of such
d) Communicated to CG. communication
c) (a) or (b)
568. In making determination of key audit matters, the auditor shall d) None of these
consider the following
a) Areas of higher assessed risk of material misstatements or 572. Which of the following SAs deals with auditor’s additional
significant risk identified in accordance with SA 315 responsibilities w.r.t modified opinion
b) Significant auditor judgements relating to area in the financial a) SA 700
statements that involved significant management judgement, b) SA 701
including accounting estimates that have been identified as having c) SA 705
estimation uncertainty. d) SA 706
c) The effect on audit of significant events or transaction that
occurred during the period. 573. When auditor modifies the opinion the opinion the auditor shall give
d) All of the above reason of modified opinion in a section under the heading
a) Basis for Opinion
569. The auditor shall describe each key audit matter, using an b) ‘Basis for Qualified Opinion’ or ‘Basis for Adverse Opinion’ or ‘Basis
appropriate subheading, in a separate section of the audit report for Disclaimer of Opinion’ as appropriate
under the heading_____________________ c) Reason for Modified Opinion
a) Audit Matters d) None of these
b) Key Audit Matters
c) Any appropriate heading as per the auditor’s judgement 574. The auditor’s report shall not include a Key Audit Matter section in
d) None of the above. accordance with SA 701, in case of
a) Disclaimer of Opinion
570. Which of following statement is incorrect’ b) Adverse Opinion
a) Communicating key audit matters in the auditor’s report is not a c) Qualified Opinion
separate opinion on individual matters. d) All of the above
b) SA 701 also applies when the auditor is required by law or
regulation to communicate key audit matters in the auditor’s 575. Which of the following SA deals with auditor’s responsibility to
report. communicate emphasis of matter and other matter paragraph in
independent auditor’s report
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a) SA 700 580. Emphasis of matter paragraph shall in auditor’s report

b) SA 701 a) Immediately following opinion section
c) SA 705 b) Immediately following Basis for opinion section
d) SA 706 c) Immediately following management’s responsibility section
d) Immediately following auditor’s responsibility section
576. ________________ is a paragraph included in the auditor’s report
that refers to a matter appropriately presented or disclosed in the 581. Which of the following sequence in audit report is correct
financial statements that, in the auditor’s judgement, is of such a) Title, Opinion section , Basis For Opinion section, Addressee, Key
importance that is fundamental to user’s understanding of the Audit Matter section
financial statements. b) Title, Addressee, Basis For Opinion section, Opinion section, Key
a) Emphasis of Matters Paragraph Audit Matter section
b) Other Matters Paragraph c) Title, Addressee, Key Audit Matter section, Opinion section, Basis
c) Key Audit Matter For Opinion section
d) None of the above d) Title, Addressee, Opinion section, Basis for opinion section, Key
Audit Matter section.
577. ________________ is a paragraph included in the auditor’s report
that refers to a matter other than those presented or disclosed in 582. Which of the following SA deals with deals with special consideration
the financial statements that, in the auditor’s judgement, is of such by auditor in obtaining sufficient appropriate audit evidence with
importance that is fundamental to user’s understanding of audit, the respect to existence and condition of inventory, completeness of
auditor’s responsibilities or the auditor’s report. litigation and claim and presentation and disclosure of segment
a) Emphasis of Matters Paragraph information:
b) Other Matters Paragraph a) SA 500
c) Key Audit Matter b) SA 501
d) None of the above c) SA 505
d) SA 510
578. To disclose the fact that financial statements of the prior period
have been audited by predecessor auditor, the auditor shall introduce 583. The responsibility for determining the quantity and value of inventory
_____________________ paragraph in his report. rests with
a) Emphasis of Matter a) Management
b) Other Matter b) Auditor
c) Key Audit Matter c) Auditor and Management both
d) None of the above d) None of these
579. To disclose an early application by entity (where permitted) of a new 584. The auditor shall obtain sufficient appropriate audit evidence
accounting standards that has a pervasive effect on the financial regarding the existence and condition of inventory by attending
statements in advance of its effective date, auditor shall physical inventory count, unless impracticable, to
introduce_________________ paragraph in his report. a) Evaluate the management’s instruction and procedures for
a) Emphasis of Matter recording and controlling the results of the entity’s physical
b) Other Matter inventory counting
c) Key Audit Matter b) Observe the performance of management’s count procedures
d) Basis for Modified Opinion c) Inspect the inventory
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d) All of above 590. Which of the following SA deals with the auditor’s responsibilities
relating to Opening balances when conducting an initial audit
585. If auditor is unable to attend physical inventory counting due to engagement:
unforeseen circumstances the auditor shall a) SA 500
a) Obtain a written representation from management of entity b) SA 510
b) Conduct external confirmation form third party c) SA 710
c) Make or observe some physical count on an alternative date, and d) SA 540
perform audit procedures on intervening transactions
d) All of these. 591. An initial audit engagement in engagement in which :
a) The financial statements for the prior period were not audited
586. If attendance at physical inventory counting is impracticable, the b) The financial statements for the prior period were audited by a
auditor shall predecessor auditor
a) Perform Alternative audit procedures c) Either (a) or (b)
b) Perform Additional audit procedures d) None of (a) or (b)
c) Obtain written representation from management of entity
d) None of the above 592. Predecessor auditor is:
a) Joint auditor
587. The auditor shall design and perform audit procedures in order to b) Auditor of component’
identify litigation and claims involving the entity which may give rise c) Internal auditor
to a risk of material misstatement including: d) The auditor from a different audit firm, who audited the financial
a) Inquiry of management and others within the entity statements of an entity in the prior period and who has been
b) Performing analytical procedures as are appropriate replaced by the current auditor.
c) Reviewing minutes of meetings of members
d) All of above 593. To obtain information relevant to opening balances including
disclosures, the auditor shall
588. If management does not permit auditor to communicate with legal a) Read the most recent financial statement, if any and auditor’s
counsel or legal counsel refuses to respond to auditor, the auditor report thereon
shall b) Conduct written communication with predecessor auditor
a) Express unmodified opinion c) Inquire with management
b) Modify opinion d) All of the above
c) Provide key audit matter section in his report
d) All of these 594. Which of the following is true
a) If auditor concludes that opening balances contain misstatements
589. With respect to segment information, the auditor shall obtain that materially affects the current period’s financial statements,
evidences regarding ________ of segment information as the auditor shall express disclaimer of opinion.
per___________. b) If the auditor is unable to obtain sufficient appropriate audit
a) Preparation, Standard on auditing evidence regarding the opening balances, the auditor shall express
b) Disclosure, Standard on auditing a qualified opinion or disclaimer of opinion, as appropriate, in
c) Preparation, Financial reporting framework accordance with SA 705.
d) Presentation and Disclosure, Financial reporting framework. c) If auditor concludes that the current period’s accounting policies
are not consistently applied in relation to opening balances, or a
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change in accounting policies is not properly accounted for , or not 599. Which of the following is false
adequately disclosed in accordance with applicable reporting a) The auditor shall obtain an understanding of requirements of
framework, the auditor shall express a qualified opinion or an standards of auditing to identify and assess risk of material
adverse opinion as appropriate, in accordance with SA 705. misstatements for accounting estimates
d) Both (b) and (c) b) The auditor shall obtain sufficient appropriate audit evidence
about whether the accounting estimate and their disclosure in
595. Which of the following SA deals with auditor’s responsibilities financial statements is appropriate.
regarding accounting estimates including fair value accounting c) For accounting estimates that give rise to significant risk, auditor
estimates and related disclosure in an audit of financial statements shall examine adequacy of disclosure of their estimation
a) SA 501 uncertainty in the financial statements.
b) SA 540 d) The auditor shall obtain written representation from management
c) SA 510 whether management believes significant assumptions used by it in
d) SA 550 making accounting estimates are reasonable.
596. Accounting estimate is ____________ of a monetary amount in 600. A lack of neutrality by management in the preparation and
_______________ a precise means of measurement. presentation of information is called:
a) Exact amount, in the absence of a) Management’s point estimate
b) Approximation, in the absence of b) Management’s range
c) Exact amount, in the presence of c) Estimation uncertainty
d) Approximation, in the presence of d) Management bias
597. Which of the following in not an example of accounting estimate that 601. Principal auditor should __________ his audit opinion if he cannot use
may have high estimation uncertainty: another auditor’s work and is not able to perform sufficient additional
a) Accounting estimates that are highly dependent upon judgement. procedures-
b) Accounting estimates that are not calculated using recognized a) Qualify
measurement techniques. b) Disclaim
c) Accounting estimate for outstanding expenses c) Adverse
d) Accounting estimates where results of auditor’s views of similar d) Qualify or disclaim
accounting estimates made in prior period financial statements
indicate a substantial difference between original accounting 602. Statement (1)
estimate and actual outcome. Principal auditor may use the work of another auditor in accordance
with SA 600 and there is no need to mention about division of
598. The susceptibility of an accounting estimate and related disclosure to responsibility in his audit report.
an inherent lack of precision in its measurement is called as: Statement (2)
a) Risk of material misstatements SA 600 is applicable to all the components whether material or
b) Estimate uncertainty immaterial as components by their very nature need to be considered
c) Significant risk by the principal auditors
d) Inherent risk. a) Only statement 1 is true
b) Only statement 2 is true
c) Both the statements are true
d) None of the statement is true
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603. Which of the following SA deals with auditor’s responsibilities for a) The amount of judgement involved in planning and performing
using the work of internal auditor relevant audit procedures and evaluating the audit evidence
a) SA 600 gathered
b) SA 610 b) The risk of material misstatement assessed
c) SA 620 c) Threats to the objectivity and level of competence to internal
d) SA 402 auditors
d) All of the above
604. SA 610 deals with the external auditor’s responsibilities if using the
work of internal auditors. This includes 608. Which of the following in incorrect
a) Using the work of internal audit function in obtaining audit a) The external auditor may use internal auditor to provide direct
evidence assistance w.r.t. area that involve significant judgements in audit
b) Using internal auditors to provide direct assistance under the b) The external auditor shall not use internal auditor to provide
direction, supervision and review of external auditor. direct assistance w.r.t. area where risk of material misstatements
c) (a) and (b) is highly assessed by auditor
d) None of these c) Both (a) and (b)
d) None of these
605. The external auditor shall determine whether work of internal audit
function can be used for purpose of audit by evaluating of following 609. Statement (1)
a) The extent to which internal audit function’s organization status Auditor’s expert is an individual and organization possessing expertise
and relevant policies and procedures support the objectivity of in a field including accounting and auditing whose work is used by
internal auditors auditor in obtaining evidences.
b) The level of competence of the internal audit function Statement (2)
c) Whether the internal audit function applies a systematic and Auditor’s expert as per SA 620 needs to be an external expert so as
disciplined approach including quality control to maintain his independence.
d) All of the above a) Only statement 1 is true
b) Only statement 2 is true
606. The external auditor shall perform audit procedures on the body of c) Both the statements are true
work of internal auditor that the external auditor plan to use to d) None of the statement is true
determine its adequacy for the purpose of audit, including evaluating
whether 610. SA 620 deals with auditors responsibilities regarding using the work
a) The work of internal auditor had been properly planned, performed, of –
supervised, reviewed and documented a) Managements expert
b) Sufficient appropriate evidence had been obtained to draw b) Auditors expert
reasonable conclusions c) Option (a) or (b)
c) Both (a) and (b) d) Both option (a) and option (b)
d) Internal auditor has necessary competency
611. Statement 1
607. If using internal auditor to provide direct assistance is not prohibited If auditor uses the work of auditor expert, his responsibility to
by law or regulation and external auditor plans to use internal express opinion is reduced to the extent he has used expert’s work.
auditors to provide direct assistance on the audit, the external Statement 2
auditor shall consider
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As per SA, the sole objective of auditor is to determine whether to 617. Auditor should be aware of ________ that may _________ expert’s
use the work of auditor’s expert or not. independence----
a) Only statement 1 is true a) Relationships, hamper
b) Only statement 2 is true b) Education, increase
c) Both the statements are true c) Education, decrease
d) None of the statement is true d) Knowledge, enhance
612. Auditor’s expert may be 618. The auditor should agree with auditor’s expert _____ before relying
a) Auditor’s internal expert on him.
b) Auditor’s external expert a) In writing
c) (a) or (b) b) Orally
d) Management’s expert c) Either option (a) or option (b)
d) Option (a) and subsequently option (b)
613. Auditor’s internal expert may be
a) Any partner of auditor’s firm 619. If the auditor evaluates whether the auditors expert work is
b) Any staff of auditor’s firm adequate, he shall consider----
c) (a) or (b) a) Reasonableness of experts findings and consistency with other
d) Management’s expert evidences
b) Reasonableness of assumptions used by expert
614. Which of the following is correct c) Reasonableness and accuracy of source data
a) An auditor’s internal expert is subject to quality control policies d) All of these
and procedures of firm in accordance with SQC-1
b) An auditor’s internal expert is subject to quality control policies 620. Auditor shall not refer to the work of auditor’s expert in the report
and procedures of firm in accordance with SQC-1 containing-
c) Both (a) and (b) a) Unmodified opinion
d) None of these b) Modified opinion
c) Both option (a) and option (b)
615. Which of the following is source of information for evaluating d) Either option (a) or option (b)
competency, capability and objectivity of auditor’s expert
a) Personal experience with previous work of that expert 621. SA _______ relates to comparative information.
b) Discussion with that expert a) 520
c) Expert’s qualification, membership of professional body b) 705
d) All of the above c) 710
d) 720
616. Which of the following is not a content of written agreement which is
entered with expert before appointing him 622. ____________ financial statements include comparative information
a) The nature, scope and objectives of expert’s work which are included for comparison with current financial statements
b) The Scope and objectives of audit but if audited are referred to in the auditor’s opinion----
c) The nature, timing and extent of communication between auditor a) Comparative
and expert b) Prior period
d) Form of any report to be provided by that expert c) Corresponding
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d) All of these 628. Statement (1)

If client has disclosed comparative information as per corresponding
623. __________ framework means comparative information is included as figures framework, the auditor shall not refer to corresponding
an integral part of current period financial statements--- figures in any case.
a) Corresponding figures Statement (2)
b) Comparative financial statements In the case of comparative financial statements, the audit opinion
c) Both option (a) and option (b) shall refer to each period for which financial statements are
d) Either option (a) or option (b) presented and on which opinion is expressed.
a) Only statement 1 is true
624. As per SA 710, the auditor shall also consider— b) Only statement 2 is true
a) SA 510 c) Both the statements are true
b) SA 560 d) None of the statement is true
c) SA 720
d) Both (a) and (b) 629. SA 720 deals with the auditor’s responsibility in relation
to__________ in ________
625. In SA-710, if there is a doubt of material misstatement in a) Comparative information, financial statements
comparative information, then auditor shall not- b) Other information, annual report
a) Apply professional skepticism c) Financial information, financial statements
b) Perform additional audit procedures d) Other information, last year’s financial statements
c) Obtain sufficient appropriate evidences regarding existence of
material misstatements 630. As per SA 720, the documents containing audited financial
d) None of these statements refers to----
a) Agenda of general meeting
626. If the prior year’s financial statements were audited by another b) Annual reports
auditor, then current year auditor shall as per SA 710, state in c) Audit reports
other matters paragraph--- d) All of these
a) That last year financial statements are audited by predecessor
auditor 631. As per SA 720, other information can be ___________ information
b) Type of opinion expressed by him which is included in a document containing audited financial
c) Date of that report statements and auditor’s report thereon---
d) All of these a) Financial
b) Non-financial
627. If last year financial statements are unaudited, then as per SA 710 c) Financial and Non-financial
the auditor shall state in ______ section of audit report that d) None of these
corresponding financial statements are unaudited---
a) Auditor’s responsibility 632. Statement (1)
b) Opinion As per SA 720, inconsistency means other information that is
c) Emphasis of matter unrelated to matters appearing in the audited financial statements
d) Other matters that is incorrectly stated or presented.
Statement (2)
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As per SA 720, misstatement of fact refers to other information d) None of these

that contradicts information contained in the audited financial
statements. 638. Statement 1
a) Only statement 1 is true Written representation do not include financial statements and
b) Only statement 2 is true supporting records etc.
c) Both the statements are true Statement 2
d) None of the statement is true Written representation should be addressed to the management and
TCWG
633. If auditor concludes that revision of other information is necessary a) Only Statement 1 is true
but management refuses to make the revision, then auditor shall b) Only Statement 2 is true
include this matter in--- c) Both the statements are true
a) Opinion paragraph d) None of the Statements is true
b) Other matter paragraph
c) Emphasis of matter paragraph 639. If auditor concludes that there is a sufficient doubt about the
d) None of these integrity of management such that written representation are not
reliable or management does not provide the necessary written
634. If auditor after reading the other information as per SA 720 representation, he shall
becomes aware of an apparent material misstatement of fact, the a) Express unmodified opinion
auditor shall--- b) Disclaim an opinion
a) Discuss the matter with management c) Express adverse opinion
b) Request the management to consult with a qualified third party d) Withdraw from engagement.
c) Shall consider the advice received from entity’s legal counsel
d) All of these 640. Pick the odd one out
a) Written representation is a written statement by management or
635. SA 580 relates to TCWG of the entity to the auditor
a) External Confirmation b) Written representation shall be dated before the date of auditor’s
b) Audit Materiality report
c) Written Representation c) Written representations do not include financial statements or
d) Going Concern supporting books and records
d) Written representation is a substitution of audit procedures
636. Written representation are obtained from
a) TCWG 641. Audit materiality is to be considered from
b) Management a) Qualitative angle
c) Third Parties b) Quantitative angle
d) TCWG or Management c) Both (a) and (b)
d) None of these
637. Written representation is a written statement by management
provided to auditor 642. Which of the following SA prescribes auditor’s responsibilities for
a) To confirm certain matters materiality in planning and performing an audit
b) To support other audit evidence a) SA 320
c) (a) or (b) b) SA 300
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c) SA 330 d) All of these.

d) SA 500
649. SA 299 deals with the auditor’s responsibilities regarding joint audits
643. As per SA 320, materiality is to be applied at following stages
a) In planning the audit a) Audit planning and risk assessment
b) In performing an audit b) Performance of work and coordination stage
c) In planning and performing an audit c) Conclusion and reporting stage
d) In planning, performing and concluding an audit d) All of these
644. Materiality of item depends upon 650. When joint auditors are appointed, they should
a) Size of item a) Divide audit work among themselves on the basis of instruction of
b) Nature of item client
c) Statutory provision b) Divide the audit work among themselves by mutual discussion
d) All of these c) Divide audit work among themselves as per law
d) None of these
645. Factors that may affect identification of an appropriate benchmark
include 651. Where no reply is received during the performance of direct
a) Elements of financial statements confirmation procedures as part of audit of accounts receivable
b) Nature of entity balances, the auditor should perform:
c) Entity’s ownership structure (a) No additional testing
d) All of these (b) Additional testing including agreeing the balance to cash
received; agreeing the detail of the respective balance to
646. Performance materiality means the amount or amounts set by the the customer’s remittance advice
auditor at _______________ the amount of materiality level for the (c) Additional testing including preparing a detailed analysis of
financial statements as a whole. the balance, ensuring it consists of identifiable
a) Less than transactions and confirming that these revenue
b) More than transactions actually occurred
c) Equal to (d) Both (b) and (c)
d) Any of above
652. Obtaining trade receivables ageing report and analysis and
647. _________________ deals with principle for effective conduct of identification of doubtful debts is performed during audit of accounts
joint audit. receivable balances to address the following balance sheet assertion:
a) SA 220 (a) Valuation
b) SA 600 (b) Rights and obligations
c) SA 299 (c) Existence
d) SA 610 (d) Completeness
648. SA 299 does not deal with the relationship between 653. Observing inventory being counted and personally performing test
a) Principal auditor and component’s auditor counts to verify counts is performed during audit of inventory
b) Auditor and expert balances to address the following balance sheet assertion:
c) Auditor and internal auditor (a) Rights and obligations
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(b) Valuation (d) Equally between financial year 2016-17 and financial year
(c) Completeness 2017-18
(d) Existence
659. All inventory units held by the audit entity and that should have been
recorded, has been recognized in the financial statements. The
4. }
654. Wages paid to workers would always qualify as:

(a) Revenue expenditure assertion involved is:
(b) Capital expenditure (a) Existence
(c) Revenue or capital expenditure depending upon facts and (b) Completeness
circumstances (c) Rights and obligations
(d) None of the above (d) Valuation
655. During the course of audit of intangible assets, expenditure incurred 660. Which of the following is not an example of revenue expenditure-
during following phase is generally not capitalized: (a) Salaries and wages of employees engaged directly or in-
(a) Development phase directly in production
(b) Research phase (b) Repairs, maintenance and renewals of fixed assets
(c) None of the above (c) Legal and professional expenses
(d) Both (a) and (b) (d) Development expenditure on land
656. Search for unrecorded liability is performed during audit of current For IPCC Students
liabilities to address the following balance sheet assertion:
(a) Valuation 661. Bonus shares_____- fully paid up----
(b) Rights and obligations a) Must be
(c) Existence b) May be
(d) Completeness c) May or may not be
d) Should generally be
657. Cut-off testing is performed during audit of sales to address the
following income statement assertion: 662. ________ shall carry voting right----
(a) Occurrence a) Debentures
(b) Measurement b) No debenture
(c) Completeness c) Convertible debenture
(d) All of the above d) Redeemable debentures
658. ABC’s investee company-XYZ declares final dividend for financial year 663. __________ issuing the debentures shall create______________
2016-2017 in the meeting of board of directors held on April 10, a) Every company, debentures redemption reserve
2017. In which financial year should ABC account for the dividend b) Listed company, debenture redemption reserve
income: c) Public company, debentures redemption reserve
(a) Proportionately i.e. considering 10 days of financial year d) Private company, debentures redemption reserve
2017-18 and 355 days of financial year 2016-17
(b) Financial year 2016-17 664. The company shall create debentures redemption reserve equivalent to
(c) Financial year 2017-18 ______ of the value of debentures.
a) 25%
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b) 40% b) Declared, Members

c) 50% c) Recommended, Board
d) 60% d) Recommended, Members
665. The duties and functions of debenture trustee----- 671. The members__________ the rate or amounts recommended by the
a) To protect the interest of debenture holders Board----
b) To redress the grievances of debenture holders a) May reduce
c) Both option (a) and option (b) b) May reduce but cannot increase
d) None of these c) May increase
d) May reduce or may increase
666. Before allotment of debentures prospectus should have been duly
filed with------ 672. Statement 1
a) Central government Dividend can be paid out of moneys provided by Central Government
b) SEBI or State Government in pursuance of a guarantee given by it.
c) Registrar Statement 2
d) All of these Depreciation may or may not be provided so as to compute the profits
for the purpose of declaration of dividend----
667. If debentures are issued at premium, the amount of premium should a) Only Statement 1 is true
be credited to premium on debentures account and the balance to the b) Only Statement 2 is true
credit of this account should be subsequently transferred to_______ c) Both the statements are true
a) Capital Reserve Account d) None of the statement is true
b) General Reserve Account
c) P & L Appropriation Account 673. Dividend shall be declared or paid by the company from---
d) Any of these a) Free Reserves
b) Capital Reserves
668. The interest paid on debentures_____ disclosed as a separate item c) Revaluation reserves
in_________. d) All of these
a) Must be, balance sheet
b) Should be, notes to accounts 674. Dividend shall be payable----
c) Must be, P & L account a) Only in cash
d) Need not be in the P & L account b) In cash or in kind
c) Either in cash or in electronic mode
669. Debentures may be issued as a collateral security to----- d) Option (c) or by issue of cheque
a) The creditors
b) Bankers 675. The dividend shall be deposited in a separate bank account
c) Other parties within______ days of declaration of dividend.
d) Any of these a) 5
b) 7
670. In the case of dividend, first of all dividend is ______ by c) 30
__________ --- d) 60
a) Declared, Board
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676. Any money transfer to unpaid dividend account of accompany which d) 5,10
remains unpaid for _______ shall be transferred with a company to a
fund called Investor Education and Protection Fund. 682. If any person is found guilty of fraud, the maximum finr that can be
a) 30 days imposed u/s 447 is ____________ the amount involved in the fraud.
b) 1 year a) Two times
c) 5 years b) Three times
d) 7 years c) Four times
d) Five times
677. The criminal liability for misstatements in prospectus is given
u/s_______________ of the Companies Act, 2013 683. The auditor should gather which of the following information about
a) 34 CIS environment of the entity before developing audit plan
b) 35 a) How CIS function is organized
c) 36 b) The computer hardware and software used by the entity
d) 37 c) Nature of processing
d) All of these
678. If a prospectus include any statement which is misleading, every
person who authorized the issue of such prospectus shall be liable u/s 684. Which of the following is not specific risk relating to internal control
a) 147 in CIS environment
b) 447 a) Unauthorized changes to system or program
c) 35 b) Unauthorized changes to data in master file
d) None of these c) Risk of non -recording of any transaction
d) Potential loss of data
679. Under section 35 of the companies Act, the person liable for
misstatement means 685. The use of computer may result in the design of system that
a) The Company provides_____________evidence than those using manual procedures.
b) Director of the Company a) Less visible
c) Promoter of the Company b) More visible
d) All of these c) More persuasive
d) Conclusive
680. Section 447 prescribes punishment for fraud, it is applicable on
a) Directors 686. System characteristics that may result from nature of CIS
b) Auditors processing include
c) Members a) Absence of input documents
d) Any Person b) Lack of visible transaction trail
c) Lack of visible output
681. Under section 447 if fraud involves public interest, the minimum d) All of these
imprisonment is ___________ years and maximum imprisonment is
_________years. 687. Different design and procedural aspects of CIS are
a) 3,14 a) Consistency of performance
b) 3,10 b) Programmed control procedures
c) 5,14 c) Both (a) and (b)
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d) None of these d) All of these
688. Which of the following is not general CIS control 694. _______________ refers to a situation where it is possible to
a) Control over inputs relate, the original input with the final output on one to one basis.
b) Organization and Management Controls a) Audit Trail
c) Computer Operation Control b) Input Output Ratio
d) System Software Control c) Programmed control procedure
d) None of these’
689. Application System Development and Maintenance Controls are
designed to control over 695. In CIS environment these is absence of audit trail due to factors
a) Inputs such as
b) Testing, implementation and documentation of new or revised a) Direct data entry into the system
system b) Direct posting of transactions to master file
c) Outputs c) Elimination of reports as information is supplied on-line
d) Processing d) All of these
690. Computer Operation Controls are designed to control the operation of 696. In the ________________ ,the auditor concentrate on input and
the system and to provide reasonable assurance that ignores the procedures of how computer process the data or
a) Only authorized programs are used transaction.
b) Processing errors are detected and corrected a) White box approach
c) System are used for authorized purpose by authorized personnel b) Computer Assisted Audit Techniques
d) All of these c) Black box approach
d) None of these
691. _______________________are designed to establish an
organizational framework over CIS activities. 697. The auditor can usually audit around the computer when
a) Computer operation control a) The system id simple
b) Data entry and program control b) The system is complex
c) Organization and Management Controls c) System uses generalized software that is well tested and widely
d) System software control. used by many institution
d) (a) or (c)
692. Which of following is CIS application control
a) System Software Control 698. Situation where auditing through computer must be used
b) Control Over Processing a) The computer processes a large volume of input and produces a
c) Data Entry and Program Control large volume of output
d) None of these. b) The logic of system is complex
c) The significant parts of internal control system are embodied in
693. Control Over Output provide assurance that the computer system itself
a) Results of processing are accurate d) All of these
b) Access to output is restricted to authorized personnel
c) Output is provided to appropriate authorized personnel on a timely
basis
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699. ____________________ are those techniques which undertake 705. As per section 128 of the Companies Act, 2013, ‘Book and paper’ and
assistance of computer for being applied to an audit in a ‘Book or paper’ include
computerized environment. a) Books of account
a) Computer Assisted Audit Techniques b) Deeds and vouchers
b) Audit Trail c) Writings, documents, minutes and registers
c) Compliance Test d) All of these
d) None of these
706. The books of account etc, must give a true and fair view of the state
700. The use of CAATs may be useful because of following reason of the affairs of the company, including its branch office as per
a) Appearance of audit trail section:
b) Absence of input documents a) 128
c) Visible output b) 129
d) None of these c) 133
d) 143(2)
701. Benefits of CAATs
a) Time saving 707. The company shall intimate to the Registrar on an annual basis at the
b) Audit effectiveness time of filling of financial statement:
c) Lower sampling risk a) The name and internet protocol of the service provider
d) All of these b) The location of the service provider(wherever applicable)
c) Where the books of account and other books and papers are
702. Following are CAATs maintained on cloud, such address as provided by the service
a) Test Data provider
b) Programmes under the control of auditor d) All of these
c) Both (a) and (b)
d) None of these 708. The books of account etc. of the company shall be kept at the
_________ of the company.
703. In auditing through computer, the computer is used as ___________ a) Corporate office
of audit b) Branch office
a) Tool c) Registered office
b) Target d) Head office
c) Help
d) Any of these 709. All or any of the books of account and other relevant papers may be
kept at such other place in India as the Board of directors may
704. Computer Assisted Audit Techniques are used by ___________ to decide. In such a case, the company shall within ___________ days
check validity of __________used by_________. of the decision of the Board, file with the _________ a notice in
a) Client, Programmes, Client writing----
b) Client, Programmes, Auditor a) 10, Registrar
c) Auditor, Programme, Client b) 10, NCLT
d) Auditor, Input, Client’ c) 7, Registrar
d) 7, NCLT
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710. Every company shall preserve in good order the books of account c) III
together with the relevant vouchers. The time period of preservation d) IV
shall be not less than______ financial years immediately preceding
the relevant financial year ---- 716. Sec. 129(1) shall apply to----
a) 7 a) Insurance company and banking company
b) 8 b) Company engaged in the generation or supply of electricity
c) 9 c) Both a and b
d) 10 d) None a and b
711. The person responsible for compliance of section 128----- 717. Under section 130, an application for reopening of accounts is made
a) Managing director by----
b) Whole-time director in charge of finance a) CG or the Income-tax authorities
c) Chief Financial officer b) The securities and Exchange Board or any other statutory
d) All of these regulatory body or authority
c) Any person concerned
712. The books of account etc. maintained within India shall be open for d) Any of these
inspection by___________ under section 128.
a) Any director 718. Under section 130, an order for reopening of accounts is made by---
b) Any member -
c) Auditor a) Account of competent jurisdiction
d) All of these b) The tribunal
c) A court of competent jurisdiction or the tribunal
713. As per section ______________, the financial statements shall d) A court of competent jurisdiction and the tribunal both
comply with the accounting stamdards.
a) 128 719. No order shall be made in respect of re-opening of books of account
b) 129 relating to a period earlier than _______ financial years immediately
c) 133 preceding the current financial year.
d) 143(2) a) 3
b) 5
714. If the financial statements do not comply with the accounting c) 7
standards, the company shall disclose in its financial statements, d) 8
a) The deviation from the accounting standards
b) The reasons for such deviation, and 720. Under section 131, directors may prepare revised financial statement
c) The financial effects, if any, arising out of such deviation or a revised report in respect of any of the _________ preceding
d) All of these FYs after obtaining approval of the _________.
a) 3, Tribunal
715. The financial statements shall be in the form or forms as may be b) 3, CG
provided for different class or classes of companies in c) 8, tribunal
Schedule_____________ d) 8, CG
a) I
b) II
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721. Under section 131, tribunal shall give notice to ___________ and d) Option (a) and (b)
shall take into consideration to the representations, if any.
a) CG 727. The director’s responsibility statement shall disclose as to whether
b) The income tax authorities the directors had taken proper and
c) Either a or b sufficient care—
d) CG and the Income Tax authorities a) For the maintenance of adequate accounting records in accordance
with the provisions of this Act
722. As per the requirements of section 131, detailed reasons for revision b) For safeguarding the assets of the company
of financial statement or report shall also be disclosed in c) For preventing and detecting fraud and other irregularities
a) The Board’s report d) All of these
b) The audit report
c) The annual report 728. In the case of _______________, the director’s responsibility
d) All of these statement shall disclose as to whether thedirectors, had laid down
internal financial controls to be followed by the company and whether
723. Stages in prescribing accounting standards are performed in such
chronological order as follows: internal financial controls are adequate and were operating effectively
a) ICAI-CG-NFRA a) a listed company
b) NFRA-ICAI-CG b) Prescribed classes of companies
c) CG-ICAI-NFRA c) Both (a) and (b)
d) ICAI-NFRA-CG d) All companies
724. The financial statement, including consolidated financial statement, if 729. The Board’s Report shall contain the following information and details
any, shall be submitted to the ____ after they have been approved a) Conservation of energy
or signed. b) Technology absorption
a) Managing director c) Foreign exchange and outgo
b) Auditor d) All of these
c) Members
d) ROC 730. Authorized capital means ___________amount of capital, set out in
____________, which can be issued by the company
725. The auditor’s report shall be attached to_________ a) Minimum, MoA
a) Annual report b) Minimum, AoA
b) Board report c) Maximum, MoA
c) Cost audit report, if any d) Maximum, AoA
d) Every financial statement
731. ____________ is required in the ____________ to issue the shares
726. Board report shall contain explanations or comments by the Board on at premium.
every qualification, reservation or adverse remark or disclaimer a) No provision, articles
made--- b) Provision, articles
a) By the auditor in his report c) Provision, MOA
b) By the company secretary in practice in his secretarial audit report d) None of these
c) Option (a) or (b)
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732. Where “Securities Premium Account” is used for any purpose other 738. _________ is required to be passed in the ____________ for
than the purposes permitted under the Act, then, the provisions of alteration of share capital.
the Act as are applicable to __________- shall apply. a) OR, GM
a) Forfeiture of shares b) SR, GM
b) Buy back of share capital c) OR, AGM
c) Alteration of share capital d) SR, AGM
d) Reduction of share capital
739. Reduction of share capital requires passing of ____________ and
733. Issue of shares at a discount is prohibited in the case of confirmation of __________ also.
a) Public companies a) OR, TRIBUNAL
b) Private companies b) SR, TRIBUNAL
c) All companies, whether public or private c) OR, COURT
d) Listed companies d) SR, COURT
734. Issue of ___________ shares does not fall within the purview of 740. Reduction of share capital shall not be affected if the company has
Sec.53 of the Companies Act, 2013. defaulted in----
a) Sweat equity a) Repayment of any deposits accepted by it
b) Bonus b) Payment of interest payable on such deposits
c) Option on c) Either (a) or (b)
d) All of these d) Both (a) and (b)
735. Issue of sweat equity shares must be authorized by________ 741. Forfeiture must be
a) Board Resolution a) Bonafide
b) Articles b) Authorized by SR
c) Passing SR c) Approved by Court
d) Passing OR d) All of these
736. A company may buy-back its own shares or other specified securities 742. An option on shares arises when a person has __________ under an
out of--- agreement with the company.
a) Free reserves a) Privilege
b) Securities premium account b) Obligation
c) Proceeds of fresh issue of shares or other specified securities c) A duty
d) Any of these d) A right
737. The ratio of debt (secured as well as unsecured debt) owed by the 743. Issue of bonus share is authorized by-----
company must not be more than ______ the aggregate of paid up a) Passing an OR in the General Meeting
capital and free reserves after such buy-back. b) Passing SR in the General Meeting
a) Twice c) Passing OR in the Annual General Meeting
b) Thrice d) Passing SR in the Annual General Meeting
c) Four times of
d) Five times of
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744. Bonus share may be issued out of------ b) .50%

a) Free reserves c) .75%
b) Securities premium account d) 1.00%
c) Capital redemption reserve account
d) Any of these 750. In case of classification of advance as sub-standard assets, provision
is required by the bank for secured portion
Only For Intermediate Students a) 10%
b) 15%
c) 20%
745. Asset in respect of which loss has been identified by the bank or
d) 25%
internal auditor/external auditor or the RBI inspection, but the
amount has not been written off, wholly or partly, is classifies as
751. In case of classification of advance as sub-standard assets, provision
a) Substandard Asset
is required by the bank for unsecured portion
b) Doubtful Asset
a) 10%
c) Written off Asset
b) 15%
d) Loss Asset
c) 20%
d) 25%
746. Which of the following is not classified as NPA
a) Impaired
752. In case of classification of advance as doubtful assets, provision is
b) Sub-standard
required by the bank for unsecured portion
c) Doubtful
a) 100%
d) Loss
b) 75%
c) 60%
747. Erosion in the value of security can be reckoned as significant when
d) 50%
the realizable value of the security is less than ________% of the
value assessed by the bank or accepted by RBI at the time of last
753. In case of classification of advance as doubtful assets (up to one
inspection, as the case may be
year), provision is required by the bank for secured portion
a) 20
a) 10%
b) 50
b) 25%
c) 60
c) 40%
d) 75
d) 100%
754. In case of classification of advance as doubtful assets (more than one
748. In case of classification of advance as standard assets, provision is
year but up to 3 year), provision is required by the bank for secured
required by the bank
portion
a) .40%
a) 10%
b) .50%
b) 25%
c) .75%
c) 40%
d) .80%
d) 100%
749. In case of classification of commercial real estate advance, as
755. In case of classification of advance as doubtful assets (more than 3
standard assets provision is required by the bank
years), provision is required by the bank for secured portion
a) .40%
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a) 10% a) Registered Mortgage

b) 25% b) Equitable Mortgage
c) 40% c) Both (a) and (b)
d) 100% d) None of these
756. In case of classification of advance as loss assets, provision is 762. __________________ is effected by a mere delivery of title deeds
required by the bank or other documents of title with intent to create security thereof
a) 100% a) Registered Mortgage
b) 75% b) Equitable Mortgage
c) 60% c) Both (a) and (b)
d) 50% d) None of these
757. _______________ refers to the security offered by the borrower 763. _______________ involves bailment or delivery of goods by the
for bank finance or the one against which credit has been extended borrower to the lending bank, with the intention of creating a charge
by the bank. thereon as security for the advance
a) Primary Security a) Mortgage
b) Collateral Security b) Pledge
c) Healthy Security c) Hypothecation
d) None of these d) Assignment
758. _________________ is an additional security. Security can be in any 764. ________________ is the creation of an equitable charge, which is
form i.e. tangible or intangible asset, movable or immovable asset created in favour of the lending bank by execution of agreement in
a) Primary Security respect of movable securities belonging to the borrower
b) Collateral Security a) Mortgage
c) Healthy Security b) Pledge
d) None of these c) Hypothecation
d) Assignment
759. Most common types of securities accepted by banks are the following
a) Personal Security of Guarantor 765. ______________ is a transfer of an existing or future debt, right
b) Immovable Property or property belonging to a person in favour of another person.
c) Life Insurance Policies a) Mortgage
d) All of these b) Pledge
c) Hypothecation
760. Which of the following is not a type of mortgage d) Assignment
a) Registered Mortgage
b) Equitable Mortgage 766. ____________ is a statutory right of a creditor to adjust, wholly or
c) Both (a) and (b) partly, the debit balance in the debtor’s account against any credit
d) None of these balance lying in another account of the debtor.
a) Adjustment
761. _________________ can be effected by a registered instrument b) Agreement
called the “Mortgage Deed” signed by the mortgagor. c) Set-off
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d) Deduction c) In case of advance with moratorium period for payment of

interest, payment of interest becomes due only after the expiry of
767. ___________ is creation of legal charge with consent of the owner, moratorium period, therefore such interests do not become
which gives lender a legal right to seize and dispose /liquidate the overdue and hence do not become NPA with reference to date of
asset under lease. debit of interest.
a) Set-off d) The credit facilities backed by State Government though overdue,
b) Lien will be classified as NPA only when the State Government
c) Disposal repudiates its guarantee when invoked.
d) Release
772. The credit facilities backed by__________though overdue, will be
768. An advance will be classified as NPA, if classified as NPA only when the ___________ repudiates its
a) It ceases to generate income for a bank guarantee when invoked
b) Interest and/or installment of principal in respect of such an a) Central Government
advance have been remain overdue or out of order for a specified b) State Government
period of time (exceeding 90 days as on balance sheet date) c) RBI
c) (a) or (b) d) Any Guarantor
d) None of these
773. Loan granted for short duration crop shall be classified as NPA if
769. An account should be treated as ‘Out-of-Order’ if interest and/or instalments of principal is overdue for
a) Outstanding balance remains continuously in excess of the a) One crop season
sanctioned limit/drawing power b) Two crop season
b) There are no credits continuously for 90 days as on the balance c) Exceeding 90 days
sheet date or the credits are not enough to cover the interest d) Exceeding 120 days
debited during the same period
c) (a) or (b) 774. Loan granted for long duration crop shall be classified as NPA if
d) None of these interest and/or instalments of principal is overdue for
a) One crop season
770. Where it appears that an account has inherent weakness and few b) Two crop season
credits near balance sheet tries to make it regular, the account c) Exceeding 90 days
should be classified as _________ d) Exceeding 120 days
a) Standard Asset
b) Non-Performing Asset 775. Credit card account shall be classified as NPA, if ___________
c) Loss Asset amount due, as mentioned in the credit card statement is not paid
d) None of these fully within ___________ days from next statement date
a) Total, 90
771. Which of the following statement is incorrect w.r.t classification of b) Minimum, 30
advance as NPA c) Minimum, 90
a) All the facilities granted by bank to borrower will have to be d) None of these
treated as NPA and not the particular facility or part thereof.
b) In case of consortium advance, asset classification should be based
on the record of recovery of individual member of banks.
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776. Which of the following is not exception to norms for classification of 781. If a loan/advance is treated as NPA for the first time, interest
assets as NPA accrued which had not been realized but credited to the income
a) Temporary Deficiencies account should be reversed by transfer to a separate account called
b) Natural Calamities w.r.t. short term agricultural advance ___________
c) Advances against Term Deposits, NSC, KVP, IVP a) Suspense Account
d) Facilities Backed by State Government b) Income Reversal Account
c) Interest Suspense Account
777. Banks should recognize income from NPA d) Account Suspense
a) On cash basis
b) On accrual basis 782. In carrying out audit of advance, the auditor is primarily concerned
c) As the policy of the Bank with obtaining evidence about the following
d) Substandard assets on accrual basis, and other NPAs on cash basis. a) Amounts included in balance sheet in respect of advances are
outstanding at the date of the balance sheet
778. Interest income from advances though overdue but not classifies as b) Advances represents amount due to bank
NPA as secured against Term Deposits, NSC, KVP, IVP may be c) There are no unrecorded advances
recognize d) All of the above
a) On cash basis
b) On accrual basis 783. _____________ basically refers to a business environment where the
c) Substandard assets on accrual basis, and other NPAs on cash basis. processes, operations, accounting and even decisions are carried by
d) On Secured portion accrual basis and on secured portion on cash using computer system.
basis. a) Automated environment
b) Computer environment
779. Interest income from advances though overdue but not classifies as c) IT environment
NPA as secured against guarantee of the Central Government, d) None of these
recognized as
a) On cash basis 784. Some of the key features of an automated environment are
b) On accrual basis a) Enables faster business operations
c) Substandard assets on accrual basis, and other NPAs on cash basis b) Better security and controls
d) On Secured portion accrual basis and on secured portion on cash c) Provide latest information
basis d) All of above
780. The auditor can obtain sufficient appropriate audit evidence about 785. Which of the following is not IT related risk
advances by study and evaluation of the internal controls relating to a) Unauthorized access to data
advances, and by: b) Unauthorized changes to system of program
a) Examining loan documents c) Sampling Risk
b) Examining the existence, enforceability and valuation of the d) Lack of adequate segregation of duties
security
c) Checking compliance with RBI norms including classification and 786. Types of Controls in an Automated Environment
provisioning a) General IT Controls
d) All of the above b) Application Controls
c) IT Dependent Manual Controls
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d) All of above b) Access Security

c) Data Center and Network Operations
787. __________________ are policies and procedures that relates to d) Application System acquisition, development and maintenance
many applications and support the effective functioning application
controls 793. The objective of which of the following is to ensure that modified
a) General IT Controls system continue to meet financial reporting objectives
b) IT Dependent Manual Controls a) Data Center and Network Operation
c) Both (a) and (b) b) Program Change
d) None of these c) Access Security
d) Application system, acquisition, development and maintenance
788. Which of the following the auditor should consider to obtain an
understanding of the company’s automated environment 794. The objective of which of the following is to ensure that access to
a) Information system being used programs and data is authenticated and authorized to meet financial
b) Key Persons reporting objectives
c) Outsourced activities a) Data Center and Network Operations
d) All of the above b) Program Change
c) Access Security
789. General IT Controls that maintain integrity of information and d) Application system, acquisition, development and maintenance
security of data commonly include controls over following
a) Inputs 795. A Society may invest its funds
b) Access Security a) In stock market through stock exchange
c) Processing b) In the Central or Other Co-Operative Bank
d) Output c) In the shares, securities, bonds or debentures of any other society
whether limited liability or unlimited liability
790. Which of the following is not method for testing of controls in d) None of these
automated environment
a) Inspect the configuration defined in an application 796. A Society may invest its funds
b) Inspect technical manual/user manual of system and application a) In any of the securities specified in section 20 of the Indian
c) Analytical Review Trusts Act, 1882
d) Observe how a user processes transactions under different b) In the shares, securities, bonds or debentures of any other society
scenarios. with limited liability
c) In any co-operative bank, other than a Central or State Co-
791. Which of the following is an automated control? Operative bank, as approved by the Registrar on specified terms
a) Program change and conditions.
b) System generated report d) Any of the above
c) Application control
d) Configuration 797. ________ % of the profits should be transferred to Reserve Fund,
before distribution as dividend or bonus to members.
792. General IT control that ensure backups, performance monitoring, a) 10
recovery from failures commonly include controls over b) 20
a) Program Change c) 25
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d) 30 c) Members, 90 days of date of registration of such society

d) Central Registrar, One month of date of registration of such
798. A registered society may, with the sanction of the Registrar, society.
contribute an amount not exceeding ______ of _______________
for any charitable purpose. 803. Subsequent Auditor of Multi State Co-Operative Society is appointed
a) 10%, Net profits remaining after the compulsory transfer to the a) At Board’s Meeting
reserve fund b) By Central Registrar
b) 10%, Net profits before compulsory transfer to the reserve fund c) At AGM
c) 5%, Net profits remaining after the compulsory transfer to the d) By Secretary of the Society
reserve fund
d) 5%, Net profits before compulsory transfer to the reserve fund 804. Subsequent Auditor of Multi State Co-Operative Society shall hole
office of auditor until
799. Society may use the Reserve Fund a) Submission of audit report
a) In the business of a society, as working capital b) Conclusion of 6th AGM
b) May invest as per the provision of the Co-Operative Societies Act, c) Conclusion of 5 Years
1912 d) Conclusion of next AGM
c) May be used for some public purposes likely to promote the
objective of the society 805. The audit report on the financial statements of society shall contain
d) Any of the above schedule with particular of
a) All transactions which appears to be contrary to the provisions of
800. Special Report to the Registrar is required the Act, Rules or Byelaws of society
a) If auditor detect fraud b) All sums, which ought to have been, but have not brought into
b) Personal profiteering by members of the managing committee in account by the society
transaction of the society c) Any material, or property belonging to society which appears to the
c) Mis-management auditor to be bad or doubtful of recovery
d) All of the above d) All of the above
801. Who can be appointed as auditor of Multi State Co-Operative Society 806. _______________ has power to direct Special Audit in certain cases
a) Chartered Accountant within the meaning of the Chartered of Multi-State Co-Operative Society
Accountants Act, 1949 a) Central Government
b) Person holding a government diploma in co-operative accounts and b) Central Registrar
accountancy c) Managing Committee
c) Person who has served as an auditor in the co-operative d) Members of Society
department of government to act as an auditor.
d) Any of the above 807. Under which of the following circumstances order of Special Audit is
passed
802. The First Auditor of Multi State Co-Operative Society shall be a) The affairs of any MSCO are not being managed in accordance with
appointed by ____________ within_______________. self-help and mutual did and co-operative principles or prudent
a) Registrar of Society, One month of date of registration of such commercial practices or with sound business principles; or
society
b) Board, One month of date of registration of such society
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b) Any MSCO is being managed in a manner likely to cause serious 813. The auditor LLP is appointed by designated partner
injury or damage to the interests of the trade industry or business a) At any time for the first FY but before the end of first FY
to which it pertains; or b) At least 30 days prior to the end of each FY (Other than first FY)
c) The financial position of any MSCO is such as to endanger its c) Both (a) and (b)
solvency. d) Within 180 days from commencement of FY which is subject to
d) Any of the above audit
808. The Special Auditor shall submit his report to 814. If designated partners of LLP have failed to appoint auditor then
a) Managing Committee of Society auditor of LLP is appointed by
b) Members of Society a) Registrar
c) Central Government b) Central Government
d) Central Registrar c) Local Fund Audit Wing of State Government
d) Partner of LLP
809. Which of the following may request to Central Registrar to conduct
an inquiry 815. The auditor of LLP shall hold office of auditor till the period
a) Central Government a) The new auditor is appointed
b) A Creditor b) Auditor is reappointed
c) At least 10% of members of the Board c) (a) or (b)
d) At least 15% of the total number of members. d) 180 days from closure of FY
810. Inquiry by Central Registrar may be conducted into the 816. Every LLP shall file an annual return duly authenticated with the
a) Constitution ___________ within ___________ days of closure of its FY
b) Working a) Registrar, 30
c) Financial Condition b) Registrar, 60
d) Any of the above c) Central Government, 30
d) Local Fund Audit Wing of State Government, 60
811. LLP, whose turnover does not exceed Rs. ________ or whose
contribution does not exceed Rs. _________, is not required to get 817. LLP shall file Annual return with Registrar in _________
its accounts audited. a) Form 11
a) 40 Lakhs, 25 Lakhs b) Form 12
b) 50 Lakhs, 25 Lakhs c) Form 13
c) 40 Lakhs, 20 Lakhs d) Form 14
d) 60 Lakhs, 30 Lakhs
818. LLP are required to maintain books of accounts which shall contain
812. Who of the following can be appointed as auditor of LLP a) Particulars of all sums of money received and expended by the LLP
a) A Chartered Accountant and the matters in respect of which the receipt and expenditure
b) A Chartered Accountant in Practice take place
c) A Cost Accountant b) A record of the assets and liabilities of the LLP
d) A Chartered Accountant or A Cost Accountant c) Statements of cost of goods purchased , inventories, work-in
progress, finished goods and costs of goods sold
d) All of these
CA Inter CA Inter
819. LLP is required to submit Statement of Account and Solvency with 824. Main functions of Commercial banks are
the ____________ within a period_______________ a) Accepting Deposits
a) Central Government, 6 Months of FY to which the Statement of b) Granting Advances
Account and Solvency relates c) Both (a) and (b)
b) Registrar, 6 Months of FY to which the Statement of Account and d) None of these
Solvency relates
c) Registrar, 30 Days from end of 6 months of the FY of FY to which 825. The functioning of banking industry in India is regulated by the
the Statement of Account and Solvency relates. _______________
d) Local Fund Audit Wing of State Government, 6 Months of FY to a) Finance Ministry
which the Statement of Account and Solvency relates b) Reserve Bank of India
c) President of India
820. Which of the following document of LLP is not available for inspection d) CAG
by any person
a) Agreements entered by LLP 826. _______________ acts as Central Bank of India
b) Incorporation Document a) Reserve Bank of India
c) Statement of Account and Solvency b) State Bank of India
d) Annual Return c) Central Bank of India
d) Union Bank of India
821. The fees for inspection of document of LLP is
a) Rs 100 and Rs 10 per page for certified copy or extract of any 827. Important functions of RBI are
document a) Issuance of currency
b) Rs 50 and Rs 5 per page for certified copy or extract of any b) Regulation of currency issue
document c) Acting as banker to Central and State Governments
c) Rs 50 and Rs 10 per page for certified copy or extract of any d) All of the above
document
d) Rs 100 and Rs 5 per page for certified copy or extract of any 828. No bank can commence business of banking or open new branches
document without obtaining license from
a) President of India
822. Which of the following is not type of bank b) Finance Ministry
a) Commercial Banks c) Reserve Bank of India
b) Regional Rural Bank d) State Bank of India
c) Payment Bank
d) None of these 829. Which of the following are principal enactments which govern the
functioning of various types of banks
823. ________________ are the most wide spread banking in India a) Banking Regulation Act, 1949
a) Small Finance Banks b) Companies Act, 2013
b) Co-Operative Banks c) Information Technology Act, 2000
c) Commercial Banks d) All of these
d) Development Banks
CA Inter CA Inter
830. Which of the following section of the banking Regulation Act, 1949 836. The LFAR is to be submitted before _____________ every year
deal with from and content of financial statements of banking a) 30th September
company b) 31st July
a) Section 128 c) 30th June
b) Section 129 d) 31st May
c) Section 29
d) Section 28 837. Advances comprises of funded amounts by way of
a) Term loans
831. Auditor of nationalized bank is appointed by b) Cash Credits, Overdrafts, Demand Loans
a) BoD of the Bank c) Bills Discounted and Purchased
b) Reserve Bank of India d) All of the above
c) CAG
d) Central Government 838. In case of banking companies, Accounts showing stress signals are
classified as
832. Auditor of the State Bank of India is appointed by a) SMA 0
a) BoD of the SBI b) SMA 1
b) CAG c) SMA 2
c) Reserve Bank of India d) None of these
d) Central Government
839. In case of banking companies, Accounts overdue between 31 to 60
833. The auditors of Subsidiaries of SBI are to be appointed by days, are classified as
a) Reserve Bank of India a) SMA 0
b) CAG b) SMA 1
c) Central Government c) SMA 2
d) SBI d) None of these
834. The auditor of regional rural banks is appointed by 840. In case of banking companies, Accounts overdue between 31 to 60
a) Bank concerned with the approval of the Central Government days, are classified as
b) Bank concerned without any previous approval of the Central a) SMA 0
Government b) SMA 1
c) RBI c) SMA 2
d) CAG d) None of these
835. The matters which the banks require their auditors to deal with in 841. NPA Loans of Banking Companies are classifies as
the Long Form Audit Report is to be specified by a) Substandard
a) CAG b) Doubtful
b) RBI c) Loss
c) Central Government d) Any of the above, depending upon circumstances
d) Banking Regulation Act, 1949
CA Inter CA Inter
842. Assets which does not disclose any problem and does not carry more b) Manual Application Controls
than normal risk attached to the business, are classifies as c) Automated Application Controls
a) Standard Assets d) None of these
b) Substandard Assets
c) Good Assets 848. IT dependent controls are basically__________
d) Genuine Assets a) Manual Control
b) Automated Control
843. Assets which has been classifies as NPA for a period not exceeding c) Both (a) and (b)
12 months, are classified as d) None of these
a) Standard Assets
b) Substandard Assets 849. Which of the following is General IT control?
c) Doubtful Assets a) IT Environment
d) Loss Assets b) Application Control
c) Access Security
844. Assets which has been classifies as NPA for a period exceeding 12 d) IT Department Control
months, are classified as
a) Standard Assets 850. _________________ can be used in testing of electronic records
b) Substandard Assets and data residing in IT systems using spreadsheets and specialized
c) Doubtful Assets audit tools to perform fraud investigation analysis of journal entries
d) Loss Assets as required by SA 240 and selection of audit sample.
a) Data base
845. The objectives of which of the following is to ensure that system are b) Data analytics
developed, configured and implemented to meet financial reporting c) Information system
objectives d) None of these
a) Data Center and Network Operations
b) Program Change 851. Who can be appointed as auditor of Co-Operative Society
c) Access Security a) Chartered Accountant within the meaning of the Chartered
d) Application system, acquisition, development and maintenance. Accountants Act, 1949
b) Person holding a government diploma in co-operative accounts and
846. The combination of processes, tools and techniques that are used to accountancy
tap vast amounts of electronic data to obtain meaningful information c) Person who has served as an auditor in the co-operative
is called_________ department of government to act as an auditor.
a) Data Analytics d) Any of the above
b) Data base
c) Information system 852. Auditor of Co-Operative Society is appointed by
d) None of these a) Managing Committee of Co-Operative Society
b) Registrar of Co-Operative Society
847. Edit checks and validation of input data, sequence number checks, c) Members of Co-Operative Society
user limit checks, reasonableness checks, mandatory data fields, d) None of these
these are examples of
a) General IT Control
CA Inter
853. The auditor of Co-Operative Society submits his audit report to

a) The Members of Co-Operative Society
b) The Registrar of Co-Operative Society
c) The Co-Operative Society
d) Both (b) and (c)
854. The audit fees to the auditor of Co-Operative Society are paid by
____________ on the basis of ____________.
a) Society, Statutory scale of fees prescribed by the Registrar
b) Registrar, Statutory scale of fees prescribed by the Registrar
c) Society, Decision of Managing Committee of Society
d) Society, Resolution passed by its Members.
855. In case of a society where the liability of a member of society is

limited, no member of a society other than a registered society can
hold such portion of the share capital of the society as exceed a
maximum of
a) 20% of the total number of shares
b) Value of Shareholding to Rs. 1,000
c) (a) or (b)
d) None of these
856. Which of the following is correct

a) A registered society shall not make a loan to any person other than
a member.
b) With the special sanction of the Registrar, a registered society
may make a loan to another registered society.
c) The State Government may further put such restrictions as it
thinks fit on the loaning powers of the society
d) All of these
CA CS Pavan Sharma | Unique Academy of Commerce | 9175035823 MCQ Practice

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c) Within 1 month of appointment of auditor b) Members within 30 days

d) Any partner of auditor cannot be appointed as internal auditor of

c) Internal auditor to External Auditor b) Communication with Owners of the entity

c) SA 320 a) Discussion with people within client entity

a) Error 119. _______________ should carefully plan and control external

c) Limited assurance a) True and fair view

d) Whether it is caused by the auditor or the client

c) Standards on Review Engagement

a) General purpose financial reporting framework c) External confirmation

b) 8 c) Examination of a few selected transactions from the beginning to

b) 13 336. Cost auditor of company shall be appointed by BoD within

a) Examine alternative assumption d) All of these

c) Negative operating cash flows d) All of the above

c) Consider whether modification in his own audit report is required b) SA 220

411. Which of the following is not a term of engagement letter

a) Audit Risk c) Examination in depth should be done

b) Internal auditor d) All of above

a) SA 700 580. Emphasis of matter paragraph shall in auditor’s report

d) All of these 628. Statement (1)

As per SA 720, misstatement of fact refers to other information d) None of these

c) SA 330 d) All of these.

654. Wages paid to workers would always qualify as:

b) 40% b) Declared, Members

d) None of these d) All of these

744. Bonus share may be issued out of------ b) .50%

a) 10% a) Registered Mortgage

d) Deduction c) In case of advance with moratorium period for payment of

d) All of above b) Access Security

d) 30 c) Members, 90 days of date of registration of such society

853. The auditor of Co-Operative Society submits his audit report to

855. In case of a society where the liability of a member of society is

856. Which of the following is correct

CA CS Pavan Sharma | Unique Academy of Commerce | 9175035823 MCQ Practice

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