The Institute of Chartered Accountants of Bangladesh

Sample Multiple Choice Question (MCQ)

Course Name: Assurance
Chapter 04: Process of Assurance: Evidence and Reporting

Prepared by: Abdullah Al Mamun, FCA (En # 1142)

1. ISA 500 Audit Evidence requires auditors to obtain:

(a) Sufficient audit evidence

(b) Appropriate audit evidence
(c) (a) + (b)
(d) None of the above

2. Audit evidence includes:

(a) Accounting records

(b) Signed financial statements
(c) Confirmation from third parties
(d) All of the above

3. In order to reach a position in which they can express a professional opinion, the
auditors need to gather evidence from various sources. The types of test which will carry
out by auditors:

(a) Tests of controls

(b) Substantive procedures
(c) (a) + (b)
(d) None of the above

4. Substantive procedures comprise of:

(a) Tests of detail of classes of transactions, account balances and disclosures

(b) Substantive analytical procedures.
(c) (a) + (b)
(d) None of the above

5. The auditor must always carry out the following substantive procedures:

(a) Agreeing the financial statements to the underlying accounting records

(b) Examining the material journal entries.
(c) Examining other adjustments made in preparing the financial statements.
(d) All of the above

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6. ISA 500 Audit Evidence requires auditors to obtain sufficient appropriate audit evidence
to be able to draw reasonable conclusions on which to base the audit opinion. Here
sufficiency means:

(a) Quantity of audit evidence

(b) Quality of audit evidence
(c) Reliability of audit evidence
(d) All of the above

7. ISA 500 Audit Evidence requires auditors to obtain sufficient appropriate audit evidence
to be able to draw reasonable conclusions on which to base the audit opinion. Here
appropriateness means:

(a) Quantity of audit evidence

(b) Quality of audit evidence
(c) Reliability of audit evidence
(d) (b) + (c)

8. Which of the following generalizations may help in assessing the reliability of audit
evidence?

(a) Audit evidence from external sources

(b) Evidence obtained directly by auditors
(c) Evidence obtained from the entity which have effective control systems
(d) Evidence in the form of documents (paper or electronic)
(e) Original documents
(f) All of the above

9. Which of the following is the assertion about classes of transactions and events?

(a) Occurrence
(b) Completeness
(c) Cut-off
(d) All of the above

10. For gathering audit evidence the auditors carried out -

(a) Two types of test

(b) Three types of test
(c) Four types of test
(d) Five types of test

11. A physical examination of an asset falls under the category of –

(a) Observation
(b) Inspection
(c) External confirmation

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 (d) Recalculation

12. Looking at a process or procedure being performed by others falls under the category of
–

(a) Re-performance
(b) Inspection
(c) Observation
(d) Inquiry

13. The auditor may ask direct confirmation of receivables by communication with debtors
fall under the category of

(a) Re-performance
(b) Inquiry
(c) External confirmation
(d) Inspection

For each of the following statements, indicate whether they are true or false.

14. Tests of controls are tests designed to give evidence whether the controls in a company
are operating effectively or not.

(a) True
(b) False

15. Analytical procedures are a type of substantive procedure.

(a) True
(b) False

16. The date of the auditor’s report should not be before the date of approval of the
financial statements by the board/competent authority.

(a) True
(b) False

17. The auditor’s report shall be dated no earlier than the date on which the auditor has
obtained sufficient appropriate audit evidence on which to base the auditor’s opinion on
the financial statements.

(a) True
(b) False

18. The auditor’s report shall name the location in the jurisdiction where the auditor
practices.

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 (a) True
(b) False

19. The auditor’s signature is either in the name of the audit firm, the personal name of the
auditor or both, as appropriate for the particular jurisdiction

(a) True
(b) False

20. Which three of the following are reported by exception in the auditor’s report?

(a) All information and explanations required for the audit have been
received
(b) Adequate accounting records have been kept
(c) The financial statements have been prepared in accordance with the Companies
Act 1994
(d) Details of directors’ emoluments have been properly disclosed in the
financial statements

21. Which three of the following are included under ‘opinion paragraph’ in the auditor’s
report?

(a) Identify the entity whose financial statements have been audited
(b) Identify the title of each statement comprising the financial statements
(c) Refer to the notes, including the summary of significant accounting
policies
(d) States that the audit was conducted in accordance with International Standards
on Auditing

22. Which three of the following are included under ‘Basis for Opinion’ in the auditor’s
report?

(a) States that the audit was conducted in accordance with International
Standards on Auditing
(b) Refers to the section of the auditor’s report that describes the auditor’s
responsibilities under the ISAs
(c) State that the financial statements have been audited
(d) Includes a statement that the auditor is independent of the entity in
accordance with the relevant ethical requirements relating to the audit

23. Which of the following paragraphs have been newly inserted in the auditor’s report as
per ISA 700 (Revised) forming an opinion and reporting on financial statements?

(a) Basis for Opinion

(b) Key Audit Matters
(c) Other Information
(d) Name of Engagement Partner
(e) All of the above

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24. “State that reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists.” This statement is mentioned in the following paragraph of
the auditor’s report:

(a) Basis for Opinion

(b) Key Audit Matters
(c) Opinion Paragraph
(d) Auditor’s Responsibilities for the Audit of the Financial Statement

25. “Assessing the entity’s ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate as well as disclosing, if applicable,
matters relating to going concern.” This statement is mentioned in the following
paragraph of the auditor’s report:

(a) Basis for Opinion

(b) Responsibilities of Management and Those Charged with Governance
for the Financial Statements
(c) Opinion Paragraph
(d) Other Information

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