MCQs on Audit & Assurance (Part-17) (601 to 650)

601. Division of work among joint auditors should be

a) In writing

b) Properly documented

c) Communicated to client

d) All of above

602. If joint auditors are in disagreement with respect to the opinion to be covered by audit report, they shall

a) Express their opinion in a separate audit report

b) Notify to the client

c) Express their opinion in a common audit report through a note

d) Notify ROC regarding disagreement in audit opinion.

603. In case separate audit reports are issued by joint auditors, the reference of audit reports separately issued by others is made under the heading

a) Emphasis of matter

b) Basis for modified opinion

c) Other matter

d) Auditor’s responsibilities

604. All the joint auditors are jointly and severally responsible for

a) Examining that financial statements of the entity comply with requirements of relevant statutes

b) Presentation and disclosure of the financial statements as required by the applicable FRF

c) Ensuring that the audit report complies with requirements of relevant statutes, the applicable SA and other pronouncement issued by the ICAI

d) All of above

605. Which of the following statements is incorrect

a) The joint auditors shall obtain common engagement letter and common management representation letter

b) Joint auditors are not entitled to rely on the work of other joint auditors

c) After identification and allocation of work among joint auditors, the work allocation document shall be signed by all the joint auditors and the same shall be communicated to TCWG of the entity.

d) Before finalizing their audit report, the joint auditors shall discuss and communicate with each other their respective conclusions.

606. SA 402 deals with responsibilities of

a) User Auditor

b) Service Auditor

c) User Auditor and Service Auditor

d) Service organization and user auditor both

607. In case client outsources some aspects of their business to other organization, SA _________ is to be considered and applied by the auditor

a) 320

b) 500

c) 402

d) 450

608. As per SA 402, service auditor is an auditor who provides _______________ about ______________ of a service organization.

a) Audit report, financial statements

b) Audit report, controls

c) Assurance report, financial statements

d) Assurance report, controls

609. As per SA 402, ___________ report shall provide better assurance than ___________ report to the user auditor.

a) Type 2, Type 1

b) Type 1, Type 2

c) Type A, Type B

d) Type B, Type A

610. As per SA 402, user auditor is an auditor who audits and reports

a) On the internal controls of user entity

b) On the financial statements of user entity

c) On the controls of service organization

d) On the financial statements of a user entity and those of service organization both

611. The user auditor shall obtain un understanding about

a) The nature of service provided by SO

b) The materiality of transactions processed by SO

c) The degree of interaction between service organization and user entity

d) All of these

612. If user auditor is not able to obtain to obtain information from service organization or about the transactions being processed by service organization, he shall

a) Modify his audit report

b) Express an unqualified opinion

c) Express an unqualified opinion but mentions the same in EOM section

d) Express his audit opinion and mention the same in OM section.

613. The report on description and design of controls at service organization is termed as

a) Type 1 Report

b) Type 2 Report

c) Type A Report

d) Type B Report

614. The report on description , design and operating effectiveness of controls at service organization is termed as

a) Type 1 Report

b) Type 2 Report

c) Type A Report

d) Type B Report

615. Which of the following is a method of reporting in Type 1 or Type 2 Report by service auditor

a) Inclusive method

b) Carve out method

c) Both (a) and (b)

d) None of these

616. When Type1 or Type 2 Report of service auditor includes information of internal controls of sub service organization, such method is called

a) Inclusive method

b) Carve out method

c) Combined method

d) Exclusive method

617. When Type1 or Type 2 Report of service auditor excludes information of internal controls of sub service organization, such method is called

a) Inclusive method

b) Carve out method

c) Combined method

d) Exclusive method

618. Which of the following SA deals with auditor’s responsibility to consider law and regulation in an audit of financial statements

a) SA 230

b) SA 240

c) SA 250

d) SA 260

619. With respect to examining the compliance with law and regulations that do not have direct effect on the determination of amounts and disclosures in the financial statement

a) Auditor’s responsibility is to obtain sufficient and appropriate audit evidence

b) Auditor’s responsibility is limited to undertake specified audit procedures

c) Auditor’s responsibility is to report on these non-compliances, no matter how immaterial these can be

d) Auditor’s responsibility is not there to report with respect to non-compliance with these laws

620. With respect to examining the compliance with law and regulations that have direct effect on the determination of amounts and disclosures in the financial statement

a) Auditor’s responsibility is to obtain sufficient and appropriate audit evidence

b) Auditor’s responsibility is limited to undertake specified audit procedures

c) Auditor’s responsibility is to report on these non-compliances, no matter how immaterial these can be

d) Auditor’s responsibility is not there to report with respect to non-compliance with these laws

621. Primary responsibility to ensure compliance with applicable law and regulation is of

a) External auditor

b) Internal auditor

c) TCWG and management

d) Legal expert

622. Which of the following is indicator of non-compliance with law and regulation

a) Unusual cash payment

b) Unauthorized transactions or improperly recorded transactions

c) Payments made in tax haven countries

d) All of above

623. If auditor becomes aware of information concerning an instance of non-compliance or suspected non-compliance with law and regulations, the auditor shall

a) Obtain an understanding of nature of the act and circumstances in which it has occurred

b) Discuss the matter with management and TCWG

c) Evaluate the possible effect on the financial statements’

d) All of above

624. If non-compliance with law and regulation is material and affecting the financial statements, the auditor shall express

a) Unmodified opinion

b) Qualified/Adverse opinion

c) Disclaimer of opinion

d) Qualified/Adverse opinion with EOM section in audit report

625. If auditor is unable to determine whether non-compliance has occurred because of limitation imposed by circumstances rather than by management or TCWG, the auditor shall

a) Evaluate the effect on the auditor’s opinion in accordance with SA 705

b) Withdraw from engagement

c) Communicate the matter to ROC

d) Communicate the matter to ROC and CG.

626. If auditor identifies non-compliance with law and regulation, the auditor shall report such non-compliance

a) To TCWG

b) In Audit Report

c) To Regulatory Authority and Enforcement Authorities

d) All of above

627. Local self –government means the administration of a locality, a village, town or any other area smaller than

a) State

b) Country

c) City

d) Region

628. Municipal Government in India covers following

a) Municipal Corporation

b) Municipal Council

c) Cantonment Committee

d) All of these

629. Local bodies receive following grants from state administration

a) General Purpose Grants

b) Specific Purpose Grants

c) Statutory Grants

d) All of these

630. Which of the following is not objective of audit of local bodies

a) Reporting on the fairness of the content and presentation of financial statements

b) Reporting on office infrastructure and maintenance of local bodies

c) Reporting on the adherence to legal and/or administrative requirements

d) Detection and prevention of error, fraud and misuse of resources

631. _________________________ is generally in charge of the audit of municipal accounts.

a) CAG

b) CG

c) Local Fund Audit Wing of the State Government

d) ROC

632. In India, the function of government audit is discharged by the independent statutory authority of ______________ through the agency of ____________________________.

a) CG, ROC

b) CAG, Indian audit and Account Department

c) Both (a) and (b)

d) None of these

633. CAG of India is appointed by

a) Prime Minister of India

b) Parliament

c) President of India

d) CBI

634. CAG can resign any time through a resignation letter addressed to

a) Prime Minister of India

b) Parliament

c) CBI

d) President of India

635. The CAG shall be paid salary equivalent to

a) Judge of High Court

b) Judge of Supreme Court

c) Prime Minister

d) President of India

636. _________________ is competent to make laws to determine salary and other conditions of service

a) The Parliament

b) President of India

c) Prime Minister of India

d) CBI

637. The CAG shall hold office

a) For 6 Years

b) Up to the age of 65 Years

c) (a) or (b) whichever is earlier

d) (a) or (b) whichever is later

638. The CAG shall audit

a) Receipts of Union or State

b) Account of Store and Stock

c) Grants and Loans given from Consolidated Fund of

d) All of these

639. Which of the following is not power of CAG

a) To inspect any office of accounts under the control of the union or a State Government

b) To require that any account, book, paper and other documents which deal with or are otherwise relevant to the transaction under audit, be sent to specified places

c) To attend Parliament Session

d) To put such questions or make such observations as he may consider necessary to the person in charge.

640. CAG has a right to order conduct of supplementary audit within ____________ days from the date of receipt of audit report

a) 30

b) 60

c) 90

d) 120

641. Which of the following section of the Companies Act, 2013 provides right to the CAG to conduct test audit of accounts of Government Companies

a) 143(5)

b) 143(6)

c) 143(7)

d) 143(12)

642. Which of the following is not a standard for audit of public expenditure

a) Audit of Rules and Orders

b) Audit of Sanction

c) Audit of Propriety

d) None of these

643. According to _____________, the auditor try to bring out cases of improper, avoidable, or infructuous expenditure even though the expenditure has been incurred in conformity with the existing rules and regulation.

a) Propriety Audit

b) Audit of Sanction

c) Audit of Performance

d) Audit against Provision of Funds

644. Public money should not be utilized for the benefit of a particular person or a section of the community or for the person who is sanctioning the expenditure. These are the principles covered in

a) Performance Audit

b) Audit against rules and orders

c) Propriety Audit

d) Performance Audit

645. In the case of Government audits, performance audit covers the following

a) Efficiency Audit

b) Economy Audit

c) Effectiveness Audit

d) All of these

646. While auditing a cinema hall, the auditor needs to verify that

a) Entrance to the cinema hall during show is only through printed tickets

b) Tickets are serially numbered and bound into books

c) That for advance booking a separate series of tickets is issued

d) All of above

647. Reports of CAG relating to the accounts of the Union/State shall be submitted to the ___________ who shall cause to be laid

a) President/Governor

b) Prime Minister/Chief Minister

c) Union Finance Minister/State Finance Minister

d) All of the above

648. ______________________aims at ascertaining that the expenditure incurred has been on the purpose for which the grant and appropriation had been provided and that the amount of such expenditure does not exceed the appropriation made

a) Audit against provision of funds

b) Propriety audit

c) Audit of sanction

d) Audit against rules and orders

649. Which assertion is common among income statement and balance sheet captions:

(a) Existence

(b) Valuation

(c) Completeness

(d) Measurement

650. Direct confirmation procedures are performed during audit of accounts receivable balances to address the following balance sheet assertion:

(a) Rights and obligations

(b) Existence

(c) Valuation

(d) Completeness