MCQs on Auditing (Part-7) (151-200)

 151. Under section 140(5), the power of order to change of auditor has been given to 

a) Tribunal 

b) CAG 

c) ROC 

d) BOD 

152. Any auditor removed under section 140(5) shall not be appointed as auditor of any company for a period of __________ years from the date of order of Tribunal 

a) 10 

b) 8 

c) 5 

d) 3 

153. Special notice is requires when auditor is to be removed 

a) After expiry of term 

b) Before expiry of term 

c) By order of Tribunal

d) All of the above 

154. If the branch office is situated in a country outside India, the accounts of the branch office shall be audited by 

a) The Company’s Auditor 

b) By An Accountant 

c) By any other person duly qualified to act as an auditor of the accounts of the branch office in accordance with the laws of that country 

d) Any of the above 

155. Which of the following is incorrect 

a) Branch office in relation to company means any establishment described as branch by the company. 

 b) The provisions of regarding reporting of fraud by the auditor shall not be applicable to the branch auditor. 

c) The duties and power of the company’s auditor with reference to the audit of the branch and branch auditor, if any, shall be as contained u/s 143(1) to 143(4). 

d) The branch auditor shall prepare a report on the accounts of the branch examined by him and sent it to the auditor of the company who shall deal with it in his report in such manner as he considers necessary. 

156. Auditor’s right to access to books of account and vouchers of company extends to all the books 

a) Kept at registered office 

b) Kept at any other place 

c) Kept at registered office or at any other place 

d) He is not entitled to such a right 

157. The auditor should comply with Auditing Standards. It is ____________ of the auditor 

a) Right 

b) Duty 

c) Moral responsibility 

d) None of these 

158. Under section 143(3), auditor has duty to report on internal financial controls of the company. However, this requirement shall not apply to 

a) A listed company 

b) A foreign company 

c) One Person Company 

d) A Public Company 

159. Reporting on fraud is made by auditor to CG 

 a) Within 2 days of his knowledge of fraud 

b) Within 15 days of his knowledge of fraud 

c) Within 45 days of his knowledge of fraud 

d) Within 60 days of his knowledge of fraud 

160. Reporting on fraud is made by auditor to CG when fraud amount is 

a) Exceeding Rs. 10 Lakhs 

b) Exceeding Rs. 50 Lakhs 

c) Exceeding Rs. 1 Crore 

d) Rs. 1Crore or above 

161. Reporting on fraud is made by auditor to CG in statement in the form 

a) ADT-1 

b) ADT-2 

c) ADT-3 

d) ADT-4 

162. For the purpose of reporting on fraud to CG, CG means 

a) ROC 

b) CBI 

c) Director General 

d) Secretary of Ministry of Corporate Affairs. 

163. Which of the following in not right of auditor: 

a) To attend general meetings 

b) To receive all notices and other communications relating to any general meeting 

c) To make a representation against his removal 

d) To be heard at such meeting on any part of the business which concerns him as the auditor 

164. CARO (2016) is applicable on which of the following companies 

a) One Person Company 

b) Small Company 

c) Public Company 

d) Banking Company 

165. A Private Limited Company is exempted from applicability of CARO (2016) if which of following conditions is satisfied 

a) Paid up Share Capital and Reserve & Surplus is not more than Rs. 1 Crore 

b) Borrowing from Bank/FI is not more than Rs. 1 Crore at any point of time during FY 

c) Revenue as per Schedule III is not more than Rs. 10 Crore during FY 

d) All of these 

166. CARO (2016) is applicable from FY 

a) FY 2014-15 

b) FY 2015-16 

c) FY 2016-17 

d) FY 2017-18 

167. Which of the following statement is incorrect 

a) CARO is applicable on reporting of consolidated financial statements 

b) One Person Companies and Small Companies are exempted from applicability of CARO 

c) If CARO is applicable of the company, it will also be applicable on audit of branch offices of the company 

d) Insurance Companies are exempted from applicability of CARO. 

168. Which of the following is not reporting requirement w.r.t fixed assets under CARO (2016) 

a) Purchase and sale of fixed assets made during the FY

b) Maintenance of proper records 

c) Physical verification by management at reasonable intervals 

d) Title deeds of immovable properties 

169. Which of the following is reporting requirement w.r.t inventories under CARO (2016) 

a) Purchase and sale of inventories made during the FY 

b) Maintenance of proper records 

c) Physical verification by management at reasonable intervals 

d) All of these  

170. Outstanding statutory dues as at last day of financial year concerned for a period of more than __________ months from the day they became payable, shall be indicated by the auditor. 

a) 1 

b) 2

 c) 5 

d) 6 

171. In respect of loans, investments, guarantees and security whether provisions of section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide details thereof. This matter is to be reported under which clause of para 3 of the CARO (2016) 

a) Clause (i)

 b) Clause (ii) 

c) Clause (iii) 

d) Clause (iv) 

172. With respect of cost records, what is the reporting requirement under CARO (2016) 

a) Whether such accounts and record are properly audited 

b) Whether such accounts and records have been made and maintained 

c) Both (a) and (b) 

d) None of these 

173. Reporting on fraud is made by auditor under which of the following clause of para 3 of CARO (2016) 

a) Clause (x) 

b) Clause (xii) 

c) Clause (xiii) 

d) Clause (xiv) 

174. Which of the following frauds are reported by auditor under CARO (2016) 

a) Any fraud on the company by vendor of the company

 b) Any fraud by the company or any fraud on the company by its officers or employees 

c) All types of frauds 

d) None of these 

175. Any default in the repayment of loans or borrowings to _______________________________ are reported by auditor under CARO (2016) 

a) Bank, Financial Institution 

b) Government 

c) Debenture holders 

d) All of above 

176. Application of money raised by way of public offer is reported under which clause of CARO (2016) 

a) Clause (vii) 

b) Clause (viii) 

c) Clause (ix) 

d) Clause (x) 

177. Application of money raised by way of preferential allotment or private placement is reported under which clause of CARO (2016) 

a) Clause (xi) 

b) Clause (xii) 

c) Clause (xiii) 

d) Clause (xiv) 

178. Compliance with provision of section 192 of the Companies Act, 2013 w.r.t non cash transactions entered by company with directors or persons connected with him, is reported under which of the following clause of para 3 of CARO (2016) 

a) Clause (xv) 

b) Clause (xvi) 

c) Clause (xi) 

d) Clause (xii) 

179. For the purpose of applicability of CARO(2016), status of company is considered 

a) As on 1st day of FY 

b) Though out the FY 

c) As on Balance Sheet date of FY 

d) As on Balance Sheet date of immediate preceding FY 

180. How many matters are specified under CARO(2016) for reporting by Co’s auditor 

a) 12 

b) 13 

c) 15 

d) 16 

181. The auditor shall address audit report on the financial statement of company 

a) To BoD of Company 

b) To the Members of Company 

c) To CG 

d) To RoC 

182. The date on auditor’s report shall be 

a) As on balance sheet date 

b) Any date after balance sheet date 

c) After balance sheet date but not earlier than the date of approval of financial statement of the entity

 d) Date of AGM 

183. Under section 148, the maintenance of cost accounting records are not required for

a) A micro enterprise or small enterprise 

b) The company whose revenue from exports in Forex exceeds 75% of total revenue 

c) Which is operating from SEZ d) All of these  

184. Cost audit will not be applicable to those companies 

a) Whose revenue from exports in Forex exceeds 75% of total revenue

 b) Which is operating from SEZ 

c) Which is engaged in generation of electricity for captive consumption through captive generation plant. 

d) All of these 

185. Cost auditor of company is appointed by 

a) CG 

b) BoD 

c) Members 

d) CAG 

186. Cost auditor of company shall be appointed by BoD within __________days from commencement of FY 

a) 30 

b) 60 

c) 120 

d) 180 

187. Intimation of appointment of cost auditor is filed by Co to CG in the form 

a) ADT-1

 b) CRA-1 

c) CRA-2 

d) CRA-3 

188. Any casual vacancy in the office of cost auditor of company is filed by 

a) BoD within 1 month 

b) BoD within 30 days 

c) CG within 30 days 

d) CAG within 60 days 

189. Cost Auditor performs cost audit in accordance with 

a) Standards on Auditing 

b) Basic principles of cost audit 

c) Cost Audit Standards 

d) Standards on Related Services 

190. Cost audit report shall be submitted in Form 

a) CRA-1 

b) CRA-2 

c) CRA-3 

d) CRA-4 

191. Cost audit report shall be submitted by Cost auditor to BoD within __________ days from closure of FY

 a) 90 

b) 120  

c) 150 

d) 180 

192. Company shall within __________days from receipt of cost audit report furnish the CG with such report along with full information and explanation on every reservation or qualification contained therein, in Form____________. 

a) 30, CRA-4 

b) 60, CRA-5 

c) 120, CRA-6 

d) 180, CRA-7 

193. When credit purchases of Rs. 5100 is recorded on credit side and credit sales of Rs. 5100 is recorded on debit side, this kind of error is called____________________.

 a) Error of omission. 

b) Compensating error. 

c) Error of principle. 

d) Error of commission. 

194. If, as a result of s misstatement resulting from fraud, the auditor encounters exceptional circumstances that bring into question his ability to continue performing the auditor shall

a) Withdraw from the engagement immediately. 

b) Report to audit team regarding withdrawal. 

c) Determine the professional and legal responsibilities applicable in the circumstances. 

d) Ask the management for his withdrawal. 

195. Which of the following is an example of inflating cash payments? 

a) Making payments against purchase vouchers. 

b) Teeming and lading. 

c) Not accounting for cash sales fully. 

d) Making payments against inflated vouchers. 

196. The type of errors, existence of which becomes apparent in the process of compilation of accounts is known as

a) Self-revealing errors.

b) Intentional errors. 

c) Concealed errors. 

d) Unconcealed errors. 

197. Misappropriation of assets may occur because there is

a) Adequate record keeping with respect to assets. 

b) Know history of violations of securities laws. 

c) Lack of complete and timely reconciliations of assets. 

d) Dispute between shareholders in a closely held entity. 

198. The risk of management fraud increases in the presence of : 

a) Frequent changes in supplies 

b) Improved internal control system 

c) Substantial increases in sales 

d) Management incentive system based on sale done in a quarter. 

199. Which of the following is an example of fraudulent financial reporting 

a) Defalcation of cash by cashier 

b) Misappropriation of inventory by store keeper 

c) Overvaluation of assets 

d) All of these

 200. Which of the following frauds is more difficult to detect 

a) Fraud by employees 

b) Fraud by management & TCWG 

c) Both (a) and (b) 

d) None of these