MCQs on Audit & Assurance (Part-13) (451 to 500)

 

451. If auditor is unable to obtain sufficient appropriate audit evidence with respect to any material item(s) of the financial statements and possible effect if material but not pervasive, he shall express

a) Unmodified opinion

b) Adverse opinion

c) Disclaimer of opinion

d) Qualified opinion

452. If auditor is unable to obtain sufficient appropriate audit evidence with respect to any material item(s) of the financial statements and possible effect if pervasive, he shall express

a) Unmodified opinion

b) Adverse opinion

c) Disclaimer of opinion

d) Qualified opinion

453. Which of the following SAs deals with auditor’s responsibilities for forming an opinion and reporting on financial statements

a) SA 700

b) SA 701

c) SA 705

d) SA 706

454. Which of the following is title of auditor’s report

a) Auditor’s Report

b) Independent Auditor’s Report

c) Audit Report on the Financial Statements

d) Reporting on the Financial statements

455. As per SA 700, which of the following is addressee of auditor’s report

a) Those Charged With Governance of the Entity

b) Members of the Entity

c) It depends upon circumstances of the engagement

d) Central Government

456. If auditor concludes an unmodified opinion, which heading will auditor use for opinion section

a) Opinion

b) Unmodified Opinion

c) Unqualified Opinion

d) Reporting on True and Fair View

457. Under which of the following section auditor shall mention in his report that he has conducted audit engagement in accordance with SAs issued by ICAI and has complied with code of ethics and relevant ethical requirements

a) Opinion

b) SA and Code of Ethics

c) Compliance with Standards

d) Basis for Opinion

458. Which of the following is not content of basis of opinion section

a) Name of the entity

b) Statement that audit was conducted in accordance with SAs

c) Statement that auditor believes that audit evidence the auditor has obtained is sufficient and appropriate to provide a basis for the auditor’s opinion.

d) Reference to the section of auditor’s report that describes the auditor’s responsibilities under the SAs.

459. Under which of the following heading, auditor shall report those matters in his report which are required to be reported by him as his duties as per the law and regulation basis upon which audit has been conducted

a) Opinion

b) Basis for Opinion

c) Reporting on the Audit of Financial Statements

d) Reporting on Other Legal and Regulatory Requirements

460. The date in auditor’s report represent the date

a) Balance Sheet Date

b) Date when financial statements are approved by management of the entity

c) Date when audit report is signed by auditor

d) Date when audit report is submitted to management of the entity.

461. The place in auditor’s report represent

a) Address of auditor

b) Name of city, where audit report has been signed

c) Name of city, where office of entity is situated

d) None of these

462. If partnership firm is appointed as auditor, audit report shall be signed by

a) Any partner of the firm

b) Any practicing chartered accountant partner of the firm

c) All the partners of the firm

d) Any partner or any CA employee of the firm.

463. Which of the following is not mentioned along with signing in auditor’s report

a) Membership number of individual/partner

b) Firm’s Registration Number

c) Date & Place

d) Time

464. The opinion section of the auditor’s report shall:

a) Identify the entity whose financial statements have been audited;

b) State that the financial statements have been audited;

c) Identify the title of each statement comprising the financial statements

d) All of the above

465. Which of the following SAs deals with auditor’s responsibility to communicate key audit matters in the auditor’s report

a) SA 701

b) SA 705

c) SA 706

d) SA 700

466. _________________ are those matters that in the auditor’s professional judgement, were of most significance in the audit of the financial statements of the current period.

a) Significant Matters

b) Key Audit Matters

c) Noteworthy Audit Matters

d) Remarkable Audit Matters

467. Key Audit Matters are selected from matters

a) Communicated to members of engagement team

b) Communicated to management of the entity

c) Communicated to TCWG of the entity

d) Communicated to CG.

468. In making determination of key audit matters, the auditor shall consider the following

a) Areas of higher assessed risk of material misstatements or significant risk identified in accordance with SA 315

b) Significant auditor judgements relating to area in the financial statements that involved significant management judgement, including accounting estimates that have been identified as having estimation uncertainty.

c) The effect on audit of significant events or transaction that occurred during the period.

d) All of the above

469. The auditor shall describe each key audit matter, using an appropriate subheading, in a separate section of the audit report under the heading_____________________

a) Audit Matters

b) Key Audit Matters

c) Any appropriate heading as per the auditor’s judgement

d) None of the above.

470. Which of following statement is incorrect’

a) Communicating key audit matters in the auditor’s report is not a separate opinion on individual matters.

b) SA 701 also applies when the auditor is required by law or regulation to communicate key audit matters in the auditor’s report.

c) The purpose of communicating key audit matters to enhance the communicative value of the auditor’s report by providing greater transparency about the audit that has been performed.

d) Key audit matter is a substitute for expressing a modified opinion.

471. The auditor shall describe each key audit matter in the auditor’s report unless

a) Law or regulation precludes public disclosure about the matter

b) In extremely rare circumstances, the auditor determines that the matter should not be communicated in the auditor’s report because the adverse consequences of doing so would reasonably be expected outweigh the public interest benefits of such communication

c) (a) or (b)

d) None of these

472. Which of the following SAs deals with auditor’s additional responsibilities w.r.t modified opinion

a) SA 700

b) SA 701

c) SA 705

d) SA 706

473. When auditor modifies the opinion the opinion the auditor shall give reason of modified opinion in a section under the heading

a) Basis for Opinion

b) ‘Basis for Qualified Opinion’ or ‘Basis for Adverse Opinion’ or ‘Basis for Disclaimer of Opinion’ as appropriate

c) Reason for Modified Opinion

d) None of these

474. The auditor’s report shall not include a Key Audit Matter section in accordance with SA 701, in case of

a) Disclaimer of Opinion

b) Adverse Opinion

c) Qualified Opinion

d) All of the above

475. Which of the following SA deals with auditor’s responsibility to communicate emphasis of matter and other matter paragraph in independent auditor’s report

a) SA 700

b) SA 701

c) SA 705

d) SA 706

476. ________________ is a paragraph included in the auditor’s report that refers to a matter appropriately presented or disclosed in the financial statements that, in the auditor’s judgement, is of such importance that is fundamental to user’s understanding of the financial statements.

a) Emphasis of Matters Paragraph

b) Other Matters Paragraph

c) Key Audit Matter

d) None of the above

477. ________________ is a paragraph included in the auditor’s report that refers to a matter other than those presented or disclosed in the financial statements that, in the auditor’s judgement, is of such importance that is fundamental to user’s understanding of audit, the auditor’s responsibilities or the auditor’s report.

a) Emphasis of Matters Paragraph

b) Other Matters Paragraph

c) Key Audit Matter

d) None of the above

478. To disclose the fact that financial statements of the prior period have been audited by predecessor auditor, the auditor shall introduce _____________________ paragraph in his report.

a) Emphasis of Matter

b) Other Matter

c) Key Audit Matter

d) None of the above

479. To disclose an early application by entity (where permitted) of a new accounting standards that has a pervasive effect on the financial statements in advance of its effective date, auditor shall introduce_________________ paragraph in his report.

a) Emphasis of Matter

b) Other Matter

c) Key Audit Matter

d) Basis for Modified Opinion

480. Emphasis of matter paragraph shall in auditor’s report

a) Immediately following opinion section

b) Immediately following Basis for opinion section

c) Immediately following management’s responsibility section

d) Immediately following auditor’s responsibility section

481. Which of the following sequence in audit report is correct

a) Title, Opinion section , Basis For Opinion section, Addressee, Key Audit Matter section

b) Title, Addressee, Basis For Opinion section, Opinion section, Key Audit Matter section

c) Title, Addressee, Key Audit Matter section, Opinion section, Basis For Opinion section

d) Title, Addressee, Opinion section, Basis for opinion section, Key Audit Matter section.

482. Which of the following SA deals with deals with special consideration by auditor in obtaining sufficient appropriate audit evidence with respect to existence and condition of inventory, completeness of litigation and claim and presentation and disclosure of segment information:

a) SA 500

b) SA 501

c) SA 505

d) SA 510

483. The responsibility for determining the quantity and value of inventory rests with

a) Management

b) Auditor

c) Auditor and Management both

d) None of these

484. The auditor shall obtain sufficient appropriate audit evidence regarding the existence and condition of inventory by attending physical inventory count, unless impracticable, to

a) Evaluate the management’s instruction and procedures for recording and controlling the results of the entity’s physical inventory counting

b) Observe the performance of management’s count procedures

c) Inspect the inventory

d) All of above

485. If auditor is unable to attend physical inventory counting due to unforeseen circumstances the auditor shall

a) Obtain a written representation from management of entity

b) Conduct external confirmation form third party

c) Make or observe some physical count on an alternative date, and perform audit procedures on intervening transactions

d) All of these.

486. If attendance at physical inventory counting is impracticable, the auditor shall

a) Perform Alternative audit procedures

b) Perform Additional audit procedures

c) Obtain written representation from management of entity

d) None of the above

487. The auditor shall design and perform audit procedures in order to identify litigation and claims involving the entity which may give rise to a risk of material misstatement including:

a) Inquiry of management and others within the entity

b) Performing analytical procedures as are appropriate

c) Reviewing minutes of meetings of members

d) All of above

488. If management does not permit auditor to communicate with legal counsel or legal counsel refuses to respond to auditor, the auditor shall

a) Express unmodified opinion

b) Modify opinion

c) Provide key audit matter section in his report

d) All of these

489. With respect to segment information, the auditor shall obtain evidences regarding ________ of segment information as per___________.

a) Preparation, Standard on auditing

b) Disclosure, Standard on auditing

c) Preparation, Financial reporting framework

d) Presentation and Disclosure, Financial reporting framework.

490. Which of the following SA deals with the auditor’s responsibilities relating to Opening balances when conducting an initial audit engagement:

a) SA 500

b) SA 510

c) SA 710

d) SA 540

491. An initial audit engagement in engagement in which :

a) The financial statements for the prior period were not audited

b) The financial statements for the prior period were audited by a predecessor auditor

c) Either (a) or (b)

d) None of (a) or (b)

492. Predecessor auditor is:

a) Joint auditor

b) Auditor of component’

c) Internal auditor

d) The auditor from a different audit firm, who audited the financial statements of an entity in the prior period and who has been replaced by the current auditor.

493. To obtain information relevant to opening balances including disclosures, the auditor shall

a) Read the most recent financial statement, if any and auditor’s report thereon

b) Conduct written communication with predecessor auditor

c) Inquire with management

d) All of the above

494. Which of the following is true

a) If auditor concludes that opening balances contain misstatements that materially affects the current period’s financial statements, the auditor shall express disclaimer of opinion.

b) If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening balances, the auditor shall express a qualified opinion or disclaimer of opinion, as appropriate, in accordance with SA 705.

c) If auditor concludes that the current period’s accounting policies are not consistently applied in relation to opening balances, or a change in accounting policies is not properly accounted for , or not adequately disclosed in accordance with applicable reporting framework, the auditor shall express a qualified opinion or an adverse opinion as appropriate, in accordance with SA 705.

d) Both (b) and (c)

495. Which of the following SA deals with auditor’s responsibilities regarding accounting estimates including fair value accounting estimates and related disclosure in an audit of financial statements

a) SA 501

b) SA 540

c) SA 510

d) SA 550

496. Accounting estimate is ____________ of a monetary amount in _______________ a precise means of measurement.

a) Exact amount, in the absence of

b) Approximation, in the absence of

c) Exact amount, in the presence of

d) Approximation, in the presence of

497. Which of the following in not an example of accounting estimate that may have high estimation uncertainty:

a) Accounting estimates that are highly dependent upon judgement.

b) Accounting estimates that are not calculated using recognized measurement techniques.

c) Accounting estimate for outstanding expenses

d) Accounting estimates where results of auditor’s views of similar accounting estimates made in prior period financial statements indicate a substantial difference between original accounting estimate and actual outcome.

498. The susceptibility of an accounting estimate and related disclosure to an inherent lack of precision in its measurement is called as:

a) Risk of material misstatements

b) Estimate uncertainty

c) Significant risk

d) Inherent risk.

499. Which of the following is false

a) The auditor shall obtain an understanding of requirements of standards of auditing to identify and assess risk of material misstatements for accounting estimates

b) The auditor shall obtain sufficient appropriate audit evidence about whether the accounting estimate and their disclosure in financial statements is appropriate.

c) For accounting estimates that give rise to significant risk, auditor shall examine adequacy of disclosure of their estimation uncertainty in the financial statements.

d) The auditor shall obtain written representation from management whether management believes significant assumptions used by it in making accounting estimates are reasonable.

500. A lack of neutrality by management in the preparation and presentation of information is called:

a) Management’s point estimate

b) Management’s range

c) Estimation uncertainty

d) Management bias