MCQs on Audit & Assurance (Part-12) (351 to 400)

 

351.As per SQC-1 “An appropriate time limit within which to complete the assemble of the final audit file is ordinarily not more than _____ days after the date of auditor’s report. 

a) 30 

b) 60 

c) 90

d) 45 

352.As per SQC-1, auditor should retain audit documentation for at least _________ years 

a) 5 

b) 6 

c) 7 

d) 8 

353.Which of the following factors may affect the form, content and extent of audit documentation: 

a) Size and complexity of the entity 

b) Identified risk of material misstatements 

c) Significance of audit evidence obtained 

d) All of above 

354.Audit documentation can be made by auditor:

a) Paper mode 

b) Electronic mode 

c) Both (a) and (b) 

355.Who is the owner of audit working papers? 

a) Auditee 

b) Auditor 

c) (a) and (b) 

 d) ICAI 

356.Additional numbers of purposes served by audit documentation are: 

a) Enabling the engagement team to plan and perform the audit 

b) Enabling the engagement team to be accountable for its work 

c) To enable the engagement partner for direction, supervision and review the work performed by engagement team members. 

d) All of above 

357.If in exceptional circumstances the auditor departs from Standards on Auditing, he shall___________ 

a) Document the reason for departure 

b) Perform alternative procedures 

c) Both (a) and (b) 

d) Auditor is not allowed to depart from SAs. 

358.Which of the following is not content of permanent audit file: 

a) Record of study and evaluation of internal control 

b) Audit planning and audit documentation 

c) Memorandum and Article of Association 

 d) Notes relating to significant accounting policies 

359.Which of the following is content of current audit file: 

a) Correspondence relating to acceptance of annual reappointment

 b) Copies of communication with experts or other auditors 

c) Audit evidence obtained 

d) All of above

360.Loan agreement are the integral parts of 

a) Permanent audit file 

b) Current audit file 

c) Temporary audit file 

d) None of the above

 361.Working on trial balance is the part of

 a) Permanent audit

 b) Current audit file 

c) Temporary audit file 

d) None of the above 

362.Pick the odd one 

a) Written representations and confirmation from clients. 

b) Audit planning and audit programme 

c) Correspondence relating to annual reappointment 

d) Memorandum and Article of Association of the Company. 

363.From the initial client interview to the preparation of audit report an auditor must keep a record of all the work you do in 

a) Audit file 

b) Audit report 

c) Audit papers 

d) None of the above 

364.Which of the following is not true of working papers? 

a) They record the audit evidence to provide support for the auditor’s opinion 

b) They assist in review of the audit work

 c) They are a direct aid in the planning of the audit 

d) They provide proof of the correctness of the financial statements. 

365.The audit working papers should contain information on planning the audit work, the nature, timing and extent of audit procedures performed, _______________________ and the conclusion drawn leading to an opinion.

 a) The results of the audit procedures

 b) The auditor’s opinion of management 

c) All gratuities received by auditor 

d) Names of the employees who cooperated with the auditor. 

366.The extent of what is included in working paper is 

a) Thoroughly specified in SAs 

b) Determined by each staff auditor 

c) Thoroughly specified under law 

d) A matter of professional judgement. 

367.Which of the following factors would least likely affect the quantity and content of an auditor’s working papers 

a) The nature of auditor’s report

 b) The assessed level of control risk

 c) The possibility of peer review 

d) The content of management representation letter. 

368.A current audit file would always contain which of following? 

a) Loan agreements, pension plans, agreements with parent company and subsidiaries 

b) Company documents such as corporate charter or articles of association and corporate bylaws. 

c) A record of the nature, timing and extent of audit procedures performed and the results of such procedures. 

d) Prior year analysis of fixed assets, long term debt, and terms of stock and bond issues. 

369.Which of the following SAs deals with auditor’s responsibilities w.r.t. audit documentation: 

a) SA 580 

b) SA 230 

c) SA 505 

d) SA 700 

370.Audit documentation may be useful for 

a) Engagement team 

b) Quality control reviewer 

c) External inspector 

d) All of these 

371.After assembly of audit file, the auditor_______________ 

a) May delete audit documentation if it is of no use 

b) May delete audit documentation if it is occupying much of its space 

c) Shall not delete audit documentation before its retention time period 

d) May delete audit documentation before its retention period if it is required by any law. 

372.Audit note book 

a) Contains all details of work carried out 

b) Cannot be defense for auditor 

c) It is a record but not useful in formulating audit programme 

d) All of these 

373.Which of following SAs deals with auditor’s responsibilities w.r.t audit sampling: 

a) SA 200 

b) SA 580 

c) SA 530 

d) SA 500 

374.When auditor decides to select less than 100% of the population for testing, the auditor is said using 

a) Audit sampling 

b) Representative sampling 

c) Poor judgement 

d) None of the above 

375.The entire set of data from which a sample is selected and about which the auditor wishes to draw conclusions is called as________________ 

a) Population 

b) Monitor 

c) Data center 

d) Source data 

376.The individual items constituting a population is called as_______________ 

a) Transaction 

b) Sampling unit 

c) Sample 

d) Data 

377. ______________ is the risk that auditor’s conclusion based on a sample may be different from conclusion if the entire population were subjected to the same audit procedure. 

a) Audit Risk 

b) Inherent Risk 

c) Control Risk 

d) Sampling Risk 

378.Size of sample is affected by 

a) Tolerable error 

b) Expected error 

c) Sampling risk 

d) All of these 

379.Type 1 sampling risk affects________________ 

a) Audit efficiency 

b) Audit effectiveness 

c) Both (a) and (b) 

d) None of above 

380.Type 2 sampling risk affects________________ 

a) Audit efficiency 

b) Audit effectiveness 

c) Both (a) and (b) 

d) None of above 

381. _____________________ is the risk that the auditor reaches an erroneous conclusion for any reason not related to sampling risk. 

a) Inherent Risk 

b) Control Risk 

c) Sampling Risk 

d) Non-Sampling Risk 

382.Which of the following item is not suitable for test checking? 

a) Purchase transactions 

b) Sale transactions 

c) Balance Sheet items 

d) All of above 

383.Precautions to be considered by auditor while performing audit engagement on the basis of test checking are 

a) Auditor should identify the items which are not suitable for test checking 

b) There should be no personal bias 

c) Examination in depth should be done 

d) All of above 

384.Approaches to sampling are 

a) Non- Statistical Sampling 

b) Statistical Sampling 

c) Both (a) and (b) 

d) None of these 

385.In non-statistical sampling, the sample size and its composition are determined on the basis of 

a) Personal experience of auditor 

b) Knowledge of auditor 

c) Judgement of auditor 

d) All of above 

386. ____________________ is a method of audit testing which is more scientific than testing based entirely on the auditor’s own judgement because it involves use of mathematical laws of probability in determining the appropriate sample size. 

a) Statistical Sampling 

b) Non statistical Sampling 

c) Haphazard Sampling 

d) Cluster Sampling 

387. Judgmental sampling is 

a) Based on probability theory 

b) Not having any personal bias 

c) Widely accepted way of sampling 

d) None of these 

388.The main advantage of using statistical sampling techniques is that such techniques: 

a) Mathematically measure risk 

b) Eliminate the need for judgmental sampling 

c) Defines the values of tolerable error 

d) All of them 

389.Which of the following factor is (are) considered in determining the sample size for test of controls? 

a) Projected error 

b) Tolerable error 

c) Expected error 

d) Both (b) and (c) 

390.Tolerable error, is the maximum monetary error that the auditor is prepared to accept in the population and still concludes that audit objectives has been achieved, is directly related to 

a) Sample size 

b) Audit risk 

c) Materiality 

d) Expected error 

391.Which of the following is source of Non Sampling risk 

a) Human Mistakes 

b) Applying audit procedures not appropriate to the objectives of audit 

c) Misinterpreting the sample results 

d) All of the above 

392.Which of the following is more scientific 

a) Statistical 

b) Non-Statistical 

c) Both (a) and (b) 

d) None of the above 

393.In which of the following sampling, population is divided into number of groups 

a) Block Sampling 

b) Haphazard Sampling 

c) Cluster Sampling 

d) None of these 

394.In which of the following sampling, sampling units are selected from population on the basis of random number tables 

a) Systematic Sampling 

b) Random Sampling 

c) Cluster Sampling 

d) Both (b) and (c) 

395.In which of the following sampling, sampling units are selected from population at fixed intervals 

a) Random Sampling 

b) Systematic Sampling 

c) Block Sampling 

d) Cluster Sampling 

396.In which of the following sampling, sampling units are selected from population in a defined block of consecutive items 

a) Random Sampling 

b) Systematic Sampling 

c) Block Sampling 

d) Haphazard sampling 

397.In which of the following sampling, population is divided into number of groups 

a) Random Sampling 

b) Interval Sampling 

c) Block Sampling 

d) Cluster Sampling 

398.Which of the following is a type of random sampling 

a) Simple Random 

b) Stratified Random 

c) Both (a) and (b) 

d) Haphazard Random 

399.In random sample, each item of population 

a) Has equal chance of selection 

b) Has varying chances of selection depending upon the placing of items 

c) May have a chance of selection depends upon the auditor’s professional judgement 

d) None of these 

400.Simple random sample can be selected by 

a) Random number bias 

b) Help of computers 

c) Just by picking up a number without any order 

d) All of these