What would most effectively describe the risk of incorrect acceptance in terms ofsubstantive audit testing?
The auditor has ascertained that the balance is materially correct when in actual fact it is not
The auditor concludes the balance is materially misstated when in actual fact is not
The auditor has rejected an item from sample which was not supported by documentary evidence
He applies random sampling on data which is inaccurate and inconsistent
Q.2.
What would most appropriately describe the risk of incorrect rejection in terms ofsubstantive testing?
The auditor concludes balance is materially correct when in actual fact it is not
The auditor concludes that the balance is materially misstated when in actual fact it not
The auditor has rejected an item for sample which was material
None of the above
Q.3.
Which of the following is not true about opinion on financial statements?
The auditor should express an opinion on financial statements.
His opinion is no guarantee to future viability of business
He is responsible for detection and prevention of frauds and errors in financial statements
He should examine whether recognised accounting principle have been consistently
Q.4.
Internal check is carried on by
Staff specially appointed for the purpose
Internal auditor
Supervisor of the staff
Members of the staff
Q.5.
Institute of Chartered Accountants of India was established
1956
1949
1956
1948
Q.6.
An auditor is held criminally liable for
Loss to his client
Neglect of his duty
Offence against statutory provisions
Frauds
Q.7.
Which of the following statement is not true regard to auditor’s attendance atstock taking?
Auditor should attend physical stock taking only if inventory is material
Auditor may not attend physical verification of stock by management, if he does not find it appropriate to rely on it
If inventory is material, even when the auditor is not placing reliance on the physical verification by the management, he should attend it
The primary objective of an auditor’s observation of an entity’s observation of an entity’s stock take is to obtain direct knowledge that the stock and has been property counted
Q.8.
Which of the following financial statements assertions are addressed by testingthe cut off for plant asset addition?
Existence and ownership
Valuation and disclosure
Possession and ownership
Completeness and valuation
Q.9.
Which of the following report not result in qualification of the auditor’s opinion due to a scope limitation?
Restrictions the client imposed
Reliance on the report of other auditor
Inability to obtain sufficient appropriate evidential matter
Inadequacy of accounting records
Q.10.
Which of the following is true about explanatory notes?
These are given by the directors of the company
These are given to adhere to requirements of section 211.
These are given by auditors of the company in auditor’s report
All of the above
Q.11.
Which of the following would give the assurance that debtors mentioned on thedate of balance sheet actually exist?
Sending debtor’s confirmation letters
Reviewing subsequent collection
Verify debtors against sales document
Both (a) and (b)
Q.12.
The sequence of steps in the auditor’s consideration of internal control is asfollows –
Obtain an understanding, design substantive test, perform tests of control, and make a preliminary assessment of control risk
Design substantive tests, obtain an understanding, perform tests of control, and make a preliminary assessment of control risk
Obtain an understanding, make a preliminary assessment of control risk, perform tests of control, design substantive procedures.
Perform tests of control, obtain and understanding, make a preliminary assessment of control risk, design
Q.13.
The overall attitude and awareness of an entity’s board of directors concerningthe importance of internal control is reflected in
Accounting controls
Control environment
Control procedures
Supervision
Q.14.
Proper segregation of duties reduces the opportunities in which a person wouldboth
Establish controls and executes them
Records cash receipts and cash payments
Perpetuate errors and frauds and conceals them
Record the transaction in journal and ledger
Q.15.
Analytical procedures are least likely to be use in the audit of –
Cash balance
Investments
Bills receivables
Debtors
Q.16.
Which of the following statements is not true with regard to teeming andlading ?
It results in the deliberate misappropriation of cash receipts
It is associated with cash receipts
If same individual maintains cash receipts and cash payments teeming and lading is likely to exist
To conceal the shortage, the defraud, usually, tries to keep bank and book amounts in daily agreement so that a bank reconciliation will not detect the irregularity.
Q.17.
The independence of an internal auditor will most likely be assured if he reportsto the
President Finance
President System
Managing Director
CEO
Q.18.
The auditor has noticed existence of recurring losses sale of fixed assets thisindicates
Depreciation charges are insufficient
Policy of sale or disposal of fixed assets needs to be reviewed
The sale of assets have not been properly authorized
Accounting errors
Q.19.
The auditor is most likely to examine related party transactions very carefullywhile vouching
Credit sales
Sales returns
Credit purchases
Cash purchases
Q.20.
The first auditor of a company will hold office
For a period of one year
Till holding of statutory meeting
Till the conclusion of first annual general meeting
Till a new auditor is appointed
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