MCQs on Audit & Assurance (Part-16) (551 to 600)

 

551. Principal auditor should __________ his audit opinion if he cannot use another auditor’s work and is not able to perform sufficient additional procedures-

a) Qualify

b) Disclaim

c) Adverse

d) Qualify or disclaim

552. Statement (1)

Principal auditor may use the work of another auditor in accordance with SA 600 and there is no need to mention about division of responsibility in his audit report.

Statement (2)

SA 600 is applicable to all the components whether material or immaterial as components by their very nature need to be considered by the principal auditors

a) Only statement 1 is true

b) Only statement 2 is true

c) Both the statements are true

d) None of the statement is true

553. Which of the following SA deals with auditor’s responsibilities for using the work of internal auditor

a) SA 600

b) SA 610

c) SA 620

d) SA 402

554. SA 610 deals with the external auditor’s responsibilities if using the work of internal auditors. This includes

a) Using the work of internal audit function in obtaining audit evidence

b) Using internal auditors to provide direct assistance under the direction, supervision and review of external auditor.

c) (a) and (b)

d) None of these

555. The external auditor shall determine whether work of internal audit function can be used for purpose of audit by evaluating of following

a) The extent to which internal audit function’s organization status and relevant policies and procedures support the objectivity of internal auditors

b) The level of competence of the internal audit function

c) Whether the internal audit function applies a systematic and disciplined approach including quality control

d) All of the above

556. The external auditor shall perform audit procedures on the body of work of internal auditor that the external auditor plan to use to determine its adequacy for the purpose of audit, including evaluating whether

a) The work of internal auditor had been properly planned, performed, supervised, reviewed and documented

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b) Sufficient appropriate evidence had been obtained to draw reasonable conclusions

c) Both (a) and (b)

d) Internal auditor has necessary competency

557. If using internal auditor to provide direct assistance is not prohibited by law or regulation and external auditor plans to use internal auditors to provide direct assistance on the audit, the external auditor shall consider

a) The amount of judgement involved in planning and performing relevant audit procedures and evaluating the audit evidence gathered

b) The risk of material misstatement assessed

c) Threats to the objectivity and level of competence to internal auditors

d) All of the above

558. Which of the following in incorrect

a) The external auditor may use internal auditor to provide direct assistance w.r.t. area that involve significant judgements in audit

b) The external auditor shall not use internal auditor to provide direct assistance w.r.t. area where risk of material misstatements is highly assessed by auditor

c) Both (a) and (b)

d) None of these

559. Statement (1)

Auditor’s expert is an individual and organization possessing expertise in a field including accounting and auditing whose work is used by auditor in obtaining evidences.

Statement (2)

Auditor’s expert as per SA 620 needs to be an external expert so as to maintain his independence.

a) Only statement 1 is true

b) Only statement 2 is true

c) Both the statements are true

d) None of the statement is true

560. SA 620 deals with auditors responsibilities regarding using the work of –

a) Managements expert

b) Auditors expert

c) Option (a) or (b)

d) Both option (a) and option (b)

561. Statement 1

If auditor uses the work of auditor expert, his responsibility to express opinion is reduced to the extent he has used expert’s work.

Statement 2

As per SA, the sole objective of auditor is to determine whether to use the work of auditor’s expert or not.

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a) Only statement 1 is true

b) Only statement 2 is true

c) Both the statements are true

d) None of the statement is true

562. Auditor’s expert may be

a) Auditor’s internal expert

b) Auditor’s external expert

c) (a) or (b)

d) Management’s expert

563. Auditor’s internal expert may be

a) Any partner of auditor’s firm

b) Any staff of auditor’s firm

c) (a) or (b)

d) Management’s expert

564. Which of the following is correct

a) An auditor’s internal expert is subject to quality control policies and procedures of firm in accordance with SQC-1

b) An auditor’s internal expert is subject to quality control policies and procedures of firm in accordance with SQC-1

c) Both (a) and (b)

d) None of these

565. Which of the following is source of information for evaluating competency, capability and objectivity of auditor’s expert

a) Personal experience with previous work of that expert

b) Discussion with that expert

c) Expert’s qualification, membership of professional body

d) All of the above

566. Which of the following is not a content of written agreement which is entered with expert before appointing him

a) The nature, scope and objectives of expert’s work

b) The Scope and objectives of audit

c) The nature, timing and extent of communication between auditor and expert

d) Form of any report to be provided by that expert

567. Auditor should be aware of ________ that may _________ expert’s independence----

a) Relationships, hamper

b) Education, increase

c) Education, decrease

d) Knowledge, enhance

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568. The auditor should agree with auditor’s expert _____ before relying on him.

a) In writing

b) Orally

c) Either option (a) or option (b)

d) Option (a) and subsequently option (b)

569. If the auditor evaluates whether the auditors expert work is adequate, he shall consider----

a) Reasonableness of experts findings and consistency with other evidences

b) Reasonableness of assumptions used by expert

c) Reasonableness and accuracy of source data

d) All of these

570. Auditor shall not refer to the work of auditor’s expert in the report containing---

a) Unmodified opinion

b) Modified opinion

c) Both option (a) and option (b)

d) Either option (a) or option (b)

571. SA _______ relates to comparative information.

a) 520

b) 705

c) 710

d) 720

572. ____________ financial statements include comparative information which are included for comparison with current financial statements but if audited are referred to in the auditor’s opinion----

a) Comparative

b) Prior period

c) Corresponding

d) All of these

573. __________ framework means comparative information is included as an integral part of current period financial statements---

a) Corresponding figures

b) Comparative financial statements

c) Both option (a) and option (b)

d) Either option (a) or option (b)

574. As per SA 710, the auditor shall also consider—

a) SA 510

b) SA 560

c) SA 720

d) Both (a) and (b)

575. In SA-710, if there is a doubt of material misstatement in comparative information, then auditor shall not-

a) Apply professional skepticism

b) Perform additional audit procedures

c) Obtain sufficient appropriate evidences regarding existence of material misstatements

d) None of these

576. If the prior year’s financial statements were audited by another auditor, then current year auditor shall as per SA 710, state in other matters paragraph---

a) That last year financial statements are audited by predecessor auditor

b) Type of opinion expressed by him

c) Date of that report

d) All of these

577. If last year financial statements are unaudited, then as per SA 710 the auditor shall state in ______ section of audit report that corresponding financial statements are unaudited---

a) Auditor’s responsibility

b) Opinion

c) Emphasis of matter

d) Other matters

578. Statement (1)

If client has disclosed comparative information as per corresponding figures framework, the auditor shall not refer to corresponding figures in any case.

Statement (2)

In the case of comparative financial statements, the audit opinion shall refer to each period for which financial statements are presented and on which opinion is expressed.

a) Only statement 1 is true

b) Only statement 2 is true

c) Both the statements are true

d) None of the statement is true

579. SA 720 deals with the auditor’s responsibility in relation to__________ in ________

a) Comparative information, financial statements

b) Other information, annual report

c) Financial information, financial statements

d) Other information, last year’s financial statements

580. As per SA 720, the documents containing audited financial statements refers to----

a) Agenda of general meeting

b) Annual reports

c) Audit reports

d) All of these

581. As per SA 720, other information can be ___________ information which is included in a document containing audited financial statements and auditor’s report thereon---

a) Financial

b) Non-financial

c) Financial and Non-financial

d) None of these

582. Statement (1)

As per SA 720, inconsistency means other information that is unrelated to matters appearing in the audited financial statements that is incorrectly stated or presented.

Statement (2)

As per SA 720, misstatement of fact refers to other information that contradicts information contained in the audited financial statements.

a) Only statement 1 is true

b) Only statement 2 is true

c) Both the statements are true

d) None of the statement is true

583. If auditor concludes that revision of other information is necessary but management refuses to make the revision, then auditor shall include this matter in---

a) Opinion paragraph

b) Other matter paragraph

c) Emphasis of matter paragraph

d) None of these

584. If auditor after reading the other information as per SA 720 becomes aware of an apparent material misstatement of fact, the auditor shall---

a) Discuss the matter with management

b) Request the management to consult with a qualified third party

c) Shall consider the advice received from entity’s legal counsel

d) All of these

585. SA 580 relates to

a) External Confirmation

b) Audit Materiality

c) Written Representation

d) Going Concern

586. Written representation are obtained from

a) TCWG

b) Management

c) Third Parties

d) TCWG or Management

587. Written representation is a written statement by management provided to auditor

a) To confirm certain matters

b) To support other audit evidence

c) (a) or (b)

d) None of these

588. Statement 1

Written representation do not include financial statements and supporting records etc.

Statement 2

Written representation should be addressed to the management and TCWG

a) Only Statement 1 is true

b) Only Statement 2 is true

c) Both the statements are true

d) None of the Statements is true

589. If auditor concludes that there is a sufficient doubt about the integrity of management such that written representation are not reliable or management does not provide the necessary written representation, he shall

a) Express unmodified opinion

b) Disclaim an opinion

c) Express adverse opinion

d) Withdraw from engagement.

590. Pick the odd one out

a) Written representation is a written statement by management or TCWG of the entity to the auditor

b) Written representation shall be dated before the date of auditor’s report

c) Written representations do not include financial statements or supporting books and records

d) Written representation is a substitution of audit procedures

591. Audit materiality is to be considered from

a) Qualitative angle

b) Quantitative angle

c) Both (a) and (b)

d) None of these

592. Which of the following SA prescribes auditor’s responsibilities for materiality in planning and performing an audit

a) SA 320

b) SA 300

c) SA 330

d) SA 500

593. As per SA 320, materiality is to be applied

a) In planning the audit

b) In performing an audit

c) In planning and performing an audit

d) In planning, performing and concluding an audit

594. Materiality of item depends upon

a) Size of item

b) Nature of item

c) Statutory provision

d) All of these

595. Factors that may affect identification of an appropriate benchmark include

a) Elements of financial statements

b) Nature of entity

c) Entity’s ownership structure

d) All of these

596. Performance materiality means the amount or amounts set by the auditor at _______________ the amount of materiality level for the financial statements as a whole.

a) Less than

b) More than

c) Equal to

d) Any of above

597. _________________ deals with principle for effective conduct of joint audit.

a) SA 220

b) SA 600

c) SA 299

d) SA 610

598. SA 299 does not deal with the relationship between

a) Principal auditor and component’s auditor

b) Auditor and expert

c) Auditor and internal auditor

d) All of these.

599. SA 299 deals with the auditor’s responsibilities regarding joint audits at following stages

a) Audit planning and risk assessment

b) Performance of work and coordination stage

c) Conclusion and reporting stage

d) All of these

600. When joint auditors are appointed, they should

a) Divide audit work among themselves on the basis of instruction of client

b) Divide the audit work among themselves by mutual discussion

c) Divide audit work among themselves as per law

d) None of these