MCQs on Audit & Assurance (Part-10) (301 to 325)

 301.Which of the following is not external audit evidence 

a) Bank Statements 

b) Purchase Invoice 

c) External Confirmation 

d) Salary Sheet 

302.Techniques to obtain audit evidence are 

a) Inspection 

b) Recalculation 

c) External confirmation 

d) All of these 

303.Pick the odd one 

a) Confirmation 

b) Inquiry 

c) Re-computation 

d) Ledger posting 

304.Pick the odd one 

a) Bank reconciliation statement 

b) Copy of sales invoice 

c) Purchase invoice 

d) Minutes book 

305.Which of following statement is incorrect 

a) Recalculation consists checking reasonableness of appropriates of accounting policies 

b) Inspection consists of examining records, documents whether internal or external in paper form or electronic form and physical examination of assets 

c) An external confirmation represents audit evidence obtained by auditor as direct written response to the auditor from a third party. 

d) Evaluating responses of inquiry is an integral part of inquiry process. 

306.Observation consists 

a) Review of financial statements 

b) Looking at a process, procedure being performed by others 

c) Independent execution of procedure or controls that were originally performed as part of entity’s internal control. 

d) All of these 

307.Before using the work of an expert the auditor shall evaluate 

a) Competency of expert. 

b) Capability of expert 

c) Objectivity of expert 

d) All of above 

308.Information regarding the competence, capabilities and objectivity of management’s expert may come from a variety sources such as: 

a) Discussion with expert 

b) Personal experience with previous work of that expert 

c) Published papers or books written by that expert 

d) All of these 

309.Pick the most appropriate. Auditing evidence is more reliable when 

a) Received from third party 

b) Received from reliable third party 

c) Received from audited organization resources 

d) Both a & b 

310.Which is NOT a technique of obtaining evidence 

a) Correction 

b) Computation 

c) Confirmation 

d) Both a & b 

311.Audit is usually conducted in three steps: 

1. A pre-examination or opening meeting with the auditee marks the beginning of the process 

2. Involves a suitability audit of the documented procedures against the selected reference standard 

3. The auditor examines in depth the implementation of the quality system 

a) True 

b) False 

c) Partially false 

d) None of the above 

312.For better assessing the audit risk, auditor inquires different groups in the organizations EXCEPT: 

a) Board of governance and top level management 

b) Legal counsel 

c) Middle level management 

d) Stakeholders 

313.Internal financial controls are policies and procedures adopted by company for 

a) Ensuring the orderly and efficient conduct of its business, including adherence to company’s policies 

b) The safeguarding of assets 

c) The prevention and detection of frauds and errors 

d) All of these 

314. ________________ has been defined as the “checks on day to day transactions which operates continuously as part of routine system whereby the work of one person is provided independently or is complementary to the work of another, the object being the prevention or early detection of errors or fraud” 

a) Internal check 

b) Internal audit 

c) Surprise check 

d) Internal control. 

315. ________________ is a complete and exhausted description of the system as found in operation by the auditors. 

a) Check List 

b) Flow Chart 

c) Narrative Records 

d) Internal Control Questionnaire 

316. ________________is a series of instruction and questions which the auditor should follow and answer. 

a) Narrative Records 

b) Check List 

c) Internal Control Questionnaire 

d) Flow Chart 

317. _______________is a graphic presentation of each part of the entity’s internal controls system. 

a) Narrative Records 

b) Check List

c) Internal Control Questionnaire 

d) Flow Chart 

318. ______________ gives a bird’s eye view of the system and flow of transactions. 

a) Narrative Records 

b) Check List 

c) Internal Control Questionnaire 

d) Flow Chart 

319. _______________ is mainly intended to ascertain whether the system of internal control is operating effective. 

a) Surprise check 

b) Analytical procedures 

c) Test of details 

d) None of these 

320.Objectives of internal controls can only be reasonably achieved but not absolutely due to 

a) Inherent limitation of audit 

b) Inherent limitation of internal controls 

c) Inherent risk 

d) Detection risk 

321.Which of the following in inherent limitation of internal controls 

a) Role of human judgement 

b) Ineffective operation of control 

c) Collusion among employees 

d) All of these 

322.Internal control system provides reasonable assurance about the achievements of entity’s objectives, except 

a) Reliability of financial reporting 

b) Safeguarding of assets 

c) Both (a) and (b) 

d) None of these 

323. _______________ is sent by auditor to management and TCWG to communicate weakness in internal control system 

a) Letter of weakness 

b) Engagement letter 

c) Internal control questionnaire 

d) Written representation 

324.Which of the following SA deals with auditor’s responsibility to communicate appropriately to TCWG and management deficiencies in internal control that the auditor has identified in an audit of financial statements 

a) SA 260 

b) SA 330 

c) SA 265 

d) SA 580 

325.Significant deficiency in internal control means 

a) Deficiency or combination of deficiencies in internal control that, in the auditor’s professional judgement is of sufficient importance of auditor 

b) Deficiency or combination of deficiencies in internal control that, in the auditor’s professional judgement is of sufficient importance of management. 

c) Deficiency or combination of deficiencies in internal control that, in the auditor’s professional judgement is of sufficient importance of entity’s owners. 

d) Deficiency or combination of deficiencies in internal control that, in the auditor’s professional judgement is of sufficient importance of TCWG