Internal Audit & Control Semester – III (Fin) Section - A (1 mark each

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December 24, 2011

1. The statutory auditor is a representative of _______________. a. Shareholders of the company. b. Board of Directors c. Employees d. Government 2. When an interim audit is being conducted? a. Between two annual audit b. Between two half yearly audit c. Between two quarterly audit d. Between two Internal audit 3. Which one is a kind of General Audit? a. Cost audit b. Internal audit c. Tax audit d. Interim audit 4. Which one is a kind of Specific Audit? a. Management audit b. Independent audit c. Government audit d. Internal audit 5. Out of the following activities, which one will be classified as financial audit? a. The examination and the ascertainment of the extent to which established policies, plans and procedures are complied with. b. A continuous review of internal accounting control. c. The assessment of budgetary standard setting d. The study and assessment of operating practices to promote increased efficiency and economy 6. To whom External auditor of a company submits his report? a. Management b. Shareholders c. Audit committee d. Government
Internal Audit & Control 1 MF0013

Audit procedure c. which one is different from others? a. Suggesting improvements b. Find errors and frauds. Internal auditor should have a basic knowledge of information technology.7. Prevention of errors and frauds d. Audit policy d. Audit programme b. b. c. Safeguarding and adequate utilization of business assets c. Generally Accepted Accounting Policies Internal Audit & Control 2 MF0013 . Internal audit programme. Company secretary d. Generally Accepted Accounting Practices c.Out of the following attributes of internal auditor. Name the tool which auditors use to communicate of audit directions to their assistants. Prevention of errors b. Cost Accountant c. Audit manual 10.What is the specific qualification for an internal auditor as per law? a. Internal auditor should be a person of high integrity and ethics. No specific qualification 12. Which one is the ultimate objective of internal audit? a. Internal auditor should have a basic knowledge of economics. d. What is the main purpose of internal check? a.What is the full form of GAAPs? a. b.What is last phase of Internal Audit Planning? a. Chartered Accountant b. Enhancing reliability of Management Information System (MIS) d. Acquiring of knowledge of internal control processes c. Development of internal audit policies 13. Generally Accepted Accounting Principles b. 8. Internal auditor should have a basic knowledge of commerce. Evaluation of business control system 9. Development of an overall internal audit plan d. a. Prevention of fraud c. 11.

Balance sheet b. b. Follow up stage 19. 16.Under which SA . SA 500 c. Execution stage c. Sales Book c. Profit & loss account 17.Which element is the foundation of the all the other elements of internal controls? Internal Audit & Control 3 MF0013 . SA 200 20. Internal Audit Policies b. SA 300 d.What is the the key to an effective and efficient internal audit? a. d. Sample size does not matter d.d.The auditor is willing to accept lower risk. Relevance of the audit reports given by the statutory auditors.If you develop a fixed audit programme. The company c. a. a. Cash Book d. Risk assessment and internal control issued by the Institute of Chartered Accountants of India. Reporting stage d. Generally Accepted Accounting Programmes 14. Sample size should be smaller c. an internal auditor must consider in developing his overall audit plan? a. Internal Audit Planning c. Internal Audit Programme 15. SA 400 Correct b. Internal Audit Procedures d. The terms of his engagement and any statutory responsibilities or professional obligations. Planning stage b. New or closed premises and plant facilities. what should be the sample size? a.Tolerable error is considered during the ____________. which item you will keep last for checking? a. Sample size should be larger b.Which matters from the following. Sample size should be equal to population 18.

Control Environment 21. appropriate division of work 24.Which company believed to be the first user of a computerized accounting system in 1954? a. increasing the reliability of books of account and records b. Internal auditor b. Financial control system d. General Motors c. Information and Communication b. by another.Internal check is an important process of _________. Control Activities c. helps directly in ___________. early detection of errors and frauds c.Which one is a kind of General Electronic Data Process Control? a. Output controls Internal Audit & Control 4 MF0013 . Relational Database Management Systems d. Hardware controls b. Shareholders 22. a. Internal control system b. increasing the profitability of Business d. Proctor and Gamble 26.a. Reverse Database Management Systems 25. Rotational Database Management Systems c. Unilever d. General Electric b.The mechanism of compulsory checking of every individuals work.What is the full form of RDBMS? a. Internal audit system c. Management d. a.Who is ultimately responsible for establishing an effective internal control in a company? a. Relative Database Management Systems b. Risk Assessment d. Accounting control system 23. Statutory auditor c.

Manager 30. at the end of the year c.Normally. Monthly 29.For having an effective internal control system for cash and bank balances. Stocks can be classified? a. At the right of the chart 32. Purchases and Creditors b. Four b. who should carried out surprise verification of cash periodically? a. a. Input controls 27. Accounts officer c.If the requirement for narration is slightly bigger. Sales and Debtors c. At the bottom of the chart c.c. at the end of the month d. Fixed assets 28. Daily b. Two d. Fortnightly d. Processing controls d.Into how many categories. Weekly c. Three c. At the top of the chart b. Cashier b. at the beginning of the year b. how frequently Cheques should be deposited into the bank? a.Credit policy is related to _________. Internal auditor d. at the beginning of the month Internal Audit & Control 5 MF0013 . Five 31. where the narration should be given on the flow chart? a. Stocks d. At the left of the chart d. investments and cash are physically verified ___________ a.For having an effective internal control system for cash and bank balances.

a symbolic presentation of internal controls c. The entity's organizational structure and methods of assigning authority and responsibility. Control Environment b. control risk.Which factors are reflected in the control environment? a. control risk and detection risk d. Control Activities d. a graphic presentation of internal controls d. Risk Recognition and Assessment c. Letter of inadequacies and weaknesses c. inherent risk and detection risk 37.Name the letter through which the communication of inadequacies and weaknesses in the internal control system is made by the auditor. a pictorial presentation of internal controls b.33. Management's philosophy and operating style d. Letter of inadequacies d. SAP 2 Internal Audit & Control 6 MF0013 . control risk and inherent risk c. c. Letter from auditor 35.Reporting and reviewing reconciliations' is related to which component of Internal control system in banks? a. a.When planning the audit approach. a questionnaire presentation of internal controls 34. Segregation and Rotation of Duties 36. All of the above 38.Through which Standard Auditing Practices (SAP). ICAI has issued "Basic Principles Governing an Audit". The function of the board of directors and its committees in the case of a company or the corresponding governing body in case of any other entity. b.The flow charting technique is ___________ a. Letter of weaknesses b. the auditor should consider the initial assessment of: a. SAP 4 b. SAP 3 c. a. control risk b.

Good presentation d.Which one is not a primary concept of philosophy of Auditing? a. Independence 43. Social audit b. Internal Audit b. Profit and Loss Account c.Which audit is being conducted as per provisions of Income tax Act? a. Statutory audit b. Government Audit d. Governmental Audit 45. Internal audit b.Which audit is generally related to Proprietary audit? a. Cost audit d. Tax Audit d.Which one of the following is an element of internal audit? a. Evidence b. Internal audit c. Due audit care c. Independent audit c. Statements of changes in financial position d. SAP 1 39. Balance sheet b.Which one is a different audit in nature with rests? a. cost audit c. Tax audit 44.Financial Statements do not cover: a.Which Audit has become the buzzword in modern Auditing? a. Cost Audit 42. Cash Book Section . Internal Audit & Control 7 MF0013 .B (2 marks each) 41. Statutory Audit c. Internal audit is an independent activity. Efficiency audit 40. Cost audit d.d.

SA 200 Internal Audit & Control 8 MF0013 . All of the above 46. It helps the organization to achieve its objectives.b. Rotational tests d.The internal auditor should necessarily follow the key fundamental principles of audit namely: a. objectivity c. External auditor c. accounting control systems d. financial control systems c. It provides assurance and consulting services. business control systems b. Due to the misapplication of an audit procedure c. integrity b. SA 300 d. c. SA 500 b. All of the above 51. Compliance tests b. SA 400 c. Internal auditor d.Who determines the scope of internal audit in an organization? a. all of the above 48. a.The internal auditor should possess necessary expertise to evaluate: a. Depth tests c. a. ICAI has described regarding Audit Evidence. All of the above 50. professional diligence d. especially financial and accounting controls 49. Management b. Shareholders 47.Name the test which an auditor applied to check that the internal control procedures as laid down are actually followed in practice. d. business control systems. Due to misinterpretation of audit results d. Due to the selection of an inappropriate audit procedure b.Due to which reason mentioned below Detection risk may arise? a.Under which SA.

a. may be difficult b. 57. the internal check system achieves by separating the custodial and recording functions? a. more authentic than those maintained in manual systems. Control Activities d. Audit trails are often __________. is not possible 56.Which one is not an advantage of Internal Check? a. Accounts department c. b. Increase the profitability of Business d. a.In a computer system.In a well designed computer systems. is not required d. Efficiency and cost savings b. Prevention of errors and frauds c. more intensive than those maintained in manual systems. Information and Communication c. more extensive than those maintained in manual systems. is very easy c. Store Manager Internal Audit & Control 9 MF0013 . Detection of errors and frauds c.52. more accurate than those maintained in manual systems. Internal audit department 58. Personnel department b. a. Non occurrence of errors and frauds d.Name the last element of internal control system. Monitoring and Supervision b. Prevention of errors and frauds b. delegating authority and responsibility in an unambiguous way ___________. Correct c. d.Which objective. Early preparation of Final Accounts 55. Proper division of work 54.Who should be authorized to write off the Stocks? a. Risk Assessment 53.Which department should examine in details all the travel expenditure before its approval for re-imbursement? a. Administration department d.

C (4 marks each) 61. All of the above Section . financial and operating controls. Its complexity c.The purchase department should send copies of the order to the: a. about internal controls system. c. Either accounting controls or administrative controls d. Procedure manuals and flow chart c. procedure manuals and flow chart 60. To study and evaluate the coverage and effectiveness of accounting.Which are some of the tools to have an idea. Finance Manager c. Organization charts. Production Manager 59.b. Top Management d. a. Accounting controls and administrative controls both 62. To express an opinion as to the truthfulness and fairness of financial statements. Statutory Auditor b.Who are responsible for the preparation of financial accounts of the company? a.Internal control structure of any organization depends upon ______________. Directors c. Organization charts and flow chart d. Only accounting controls c. b. Only administrative controls b. Its size b.Internal control incorporates: a. Accounts Department Internal Audit & Control 10 MF0013 . Organization charts and procedure manuals b.What is the most important object of internal audit? a. out of the following? a. d. To express an opinion as to the accuracy and fairness of financial statements. To detect errors and frauds 64. the risk profile of its operation d. Shareholders d. Internal Auditors 63.

Management control system Internal Audit & Control 11 MF0013 . 67. Board of Directors and their committees c. Variable in nature b. all of above 68. Objectivity and confidentiality c. The department which has made the requisition 65. class of transactions d. a. Does not required a framework 69.Which of the following is one of the action for achieving compliance of security integrity? a. regarding how and within what period the particular audit work is to be completed.Segregation of incompatible functions helps in fixing accountability is the example of which factor that influences the control environment? a. Managements philosophy and operating style d. Independence and integrity b. b. objectivity. diligently and with responsibility.Which of the following are professional requirement for the personnel of an audit firm as per SA 220? a. Stores department c. Protect his/her objectivity against political influence. Fixed in nature c. Avoid accepting anything that may damage his/her objective professional assessment. Perform his/her job honestly.Fixed Audit Programme has a frame work. which is _______________. integrity. Semi Fixed in nature d. the nature of the account balance c. Independence.b. confidentiality and professional behavior 66. the entity b. The department which has made the requisition d. d.Inherent risk is a function of ________________. a. Confidentiality and professional behavior d. Avoid taking part in activities or relations which may damage his/her unbiased assessment. c. Organization Structure b.

Which one of the following is not a direct objective of Internal Control ? a. Delegation of authority and responsibility d. which problems of EDP relating to Internal Control.Auditing is primarily related to ____________ a. The result was excess payments made to supplier without receiving the materials. Prevention of errors and frauds d. Personnel department d.70. Prevention and detection of fraud and error Internal Audit & Control 12 MF0013 . The safeguarding of assets d. This is an example of which type of inherent limitations of internal control? a. System of authorizations 73. Separation of duties b. Possibility of collusion b.What is the ultimate objective of an effective internal check system? a. Accounts department 74. accuracy of books of accounts 75.Some organizations have attempted to overcome. Maximization of profit c. Competent and trustworthy personnel c. Increase the profitability of Business 72. by designating a single user as the owner of data? a. Appropriate division of work b. Production department b.The Finance Manager did not check the Goods Received Note before authorizing the payment to supplier’s bill. Human error c.Who should check records regarding time and piece wages of permanent and casual workers? a. forming an opinion on financial statements of an enterprise c. Clear-cut demarcation of authority and responsibility c. The orderly and efficient conduct of its business b. Managements consideration that a control be cost effective 71. early preparation of financial statements of an enterprise d. Internal audit department c. early detection of error and fraud b. Manipulation by Management d.

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