CA Inter Auditing and Assurance MCQ (ICAI MCQ 1-40)

Welcome to our CA Inter Auditing and Assurance quiz page! Our quiz covers questions from the ICAI MCQ booklet Question No. 1-20 to help you prepare for your upcoming exam. Test your knowledge and see how well you perform. Good luck!

MCQ 1-20

1. ____________ along with other disciplines such as accounting and law, equips you with all the knowledge that is required to enter into auditing as a profession.

Auditing

Taxation

Finance

Law

2. No business or institution can effectively carry on its activities without the help of proper ____________:

Audit

Record and accounts

neither (a) nor (b)

both (a) and (b)

3. As per SA-200 “Overall Objectives of the Independent Auditor”, in conducting an audit of financial statements, the overall objectives of the auditor are:

To obtain reasonable assurance

To report on the financial statements

Both (a) and (b) above

to obtain absolute assurance.

4. (IESBA Code) related to an audit of financial statements establishes which of the following as the fundamental principle of professional ethics relevant to

the auditor when professional judgement.

professional skepticism.

professional intelligence.

Professional competence and due care.

5. The auditor’s _________ safeguards the auditor’s ability to form an audit opinion without being affected by any influences.

Objectivity

independence

Confidentiality

Integrity

6. Which of the following is the responsibility of the auditor:

Preparation and presentation of the financial accordance with applicable financial reporting

Design, implementation and maintenance of internal controls

Express an opinion on the Financial Statements

To obtain limited assurance.

7. An employee of Fruits and Vegetables Limited was of the opinion that auditor of a company is required to express an opinion. On which one of the following the auditor of a company is required to express an opinion:

Only Balance Sheet of the Company.

Financial Statements of the Company.

Only Profit and Loss Account of the Company.

Only Cash Flow Statement of the Company.

8. The auditor of Delicious Sweets Limited was of the opinion that objective of audit of financial statements of a company is to provide reasonable assurance that financial statements of that company are free from misstatements. Which type of misstatements are mentioned by auditor of Delicious Sweets Limited:

Simple.

Material.

Easy.

Competent.

9. If the auditor concludes that there is reasonable justification to change the engagement and if the audit work performed complied with the SAs applicable to the changed engagement, the report issued would be appropriate for the revised terms of engagement. In order to avoid confusion, the report would not include reference to:

the original engagement; or any procedures that may have been performed in the original engagement.

the original engagement ;

any procedures that may have been performed in the original engagement

the original engagement and any procedures that may have been performed in the original engagement.

10. If the auditor is unable to agree to a change of the terms of the audit engagement and is not permitted by management to continue the original audit engagement, the auditor shall:

Withdraw from the audit engagement where possible under applicable law or regulation;

Determine whether there is any obligation, either contractual or otherwise, to report the circumstances to other parties, such as those charged with governance, owners or regulators.

Withdraw from the audit engagement where possible under applicable law or regulation and determine whether there is any obligation, either contractual or otherwise, to report the circumstances to other parties, such as those charged with governance, owners or regulators.

Withdraw from the audit engagement where possible under applicable law or regulation or determine whether there is any obligation, either contractual or otherwise, to report the circumstances to other parties, such as those charged with governance, owners or regulators.

11. A request from the client for the auditor to change the engagement may result from- 1. a change in circumstances affecting the need for the service, 2. a misunderstanding as to the nature of an audit or related service originally requested a restriction on the scope of the engagement, 3. whether imposed by management or caused by circumstances.

(1) only

(1) and (2)

(1), (2) and (3)

(1) or (2) or (3)

12. Standard on Quality Control (SQC) 1 provides that,

unless otherwise specified by law or regulation, audit documentation is the property of the management.

unless otherwise specified by law or regulation, audit documentation is the property of those charged with governance.

unless otherwise specified by law or regulation audit documentation is the property of management or those charged with governance.

unless otherwise specified by law or regulation audit documentation is the property of auditor.

13. As explained in SA 200, “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing”, _________is obtained when the auditor has obtained sufficient appropriate audit evidence to reduce audit risk (i.e., the risk that the auditor expresses an inappropriate opinion when the financial statements are materially misstated) to an acceptably low level.

absolute assurance

limited assurance

reasonable assurance

reasonable or absolute assurance

14. ________ sets the scope, timing & direction of the audit and guides the development of the more detailed plan.

Audit Programme

Overall Audit Strategy

Completion Memorandum

Audit Plan

15. Planning is ______ process of an audit that often begins shortly after (or in connection with) the completion of the previous audit and continues until the completion of current Audit engagement:

continuous

discrete

neither continuous nor discrete

strategic

16. Statement 1: The establishment of the overall audit strategy and the detailed audit plan are not necessarily discrete or sequential process but are closely inter-related. Statement 2: The auditor shall establish an overall audit strategy that guides the development of audit plan.

only Statement 1 is correct

Only Statement 2 is correct

Both Statements 1 & 2 are correct

Both Statements 1 & 2 are incorrect

17. which of the following is not addressed by the overall audit strategy :

scope of the audit

timing of the audit

direction of the audit

monitoring of the audit

18. The overall audit strategy and the audit plan remain the _______ responsibility

auditor’s

management’s

those charged with governance.

both management and those charged with governance.

19. Determining a percentage to be applied to a chosen benchmark (in relation to materiality) involves the exercise of ________

Independence

Professional judgement

Professional skepticism

Professional behaviour

20. Which of the following is not an example of benchmarks in determining materiality for the Financial Statements as whole:

Profit before tax

total revenue

audit programme

total equity

Time’s up

MCQ 21-40

21. Which of the following is correct:

(a) The auditor shall establish an audit plan that sets the scope, timing and direction of the audit, and development of the overall audit strategy.

(b) The auditor shall establish an overall audit strategy that sets the scope, timing and direction of the audit, and there is no need to guide the development of the audit plan.

(c) The auditor shall establish an overall audit strategy that sets the scope, timing and direction of the audit, and that guides the development of the audit plan.

(d) The auditor shall establish an audit plan that sets the scope, timing and direction of the audit, and that there is no need to guide the development of the overall audit strategy.

22. Planning an audit involves

(a) establishing the overall audit strategy for the engagement and developing an audit plan.

(b) establishing the overall audit plan for the engagement and developing an audit strategy.

(d) developing an audit strategy.

23. When planning the audit,

(a) the auditor considers what would make the financial information materially misstated.

(b) the auditor need not consider what would make the financial information materially misstated.

(d) the auditor needs to consider what would make the financial information materially misstated while conducting audit only

24. SA 320 on “Materiality in Planning and Performing an Audit” requires that an auditor

(a) should not consider materiality and its relationship with audit risk while conducting an audit.

(b) should consider materiality and its relationship with audit risk while conducting an audit.

(d) should consider materiality but need not consider its relationship with audit risk while conducting an audit.

25. Which of the following is true:

(a) The internal audit plan should be comprehensive enough to ensure that it helps in achieving of the above overall objectives of an internal audit.

(b) The internal audit plan should, generally be consistent with the goals and objectives of the internal audit function as listed out in the internal audit charter as well as the goals and objectives of the organisation.

(c) In case the entire internal audit or the particular internal audit engagement has been outsourced, the internal auditor should also ensure that the plan is consistent with the terms of the engagement.

(d) All the above

26. Once the overall audit strategy has been established, _______can be developed to address the various matters identified in the overall audit strategy, taking into account the need to achieve the audit objectives through the efficient use of the auditor’s resources.

(a) audit strategy

(b) audit plan

(d) audit note book

27. The auditor shall develop an audit plan that shall include a description of:

(a) The nature, timing and extent of planned risk assessment Procedures.

(b) The nature, timing and extent of planned of planned further audit at the assertion level.

(d) All of the above

28. Statement 1: A response that indicates a difference between information requested to be confirmed and information provided by confirming party is Negative Confirmation. Statement 2: A failure of the confirming party to respond, or fully respond, to a positive confirmation request, or a confirmation request returned undelivered is exception.

(a) Statement 1 is correct

(b) Statement 2 is correct

(d) Both 1 & 2 are correct

29. CA Vijay is the statutory auditor of XYZ Ltd. for the FY 2021-22. During the process of assembling the audit file, CA Vijay briefed his team as to what all changes can be made to the audit documentation at that stage. Which of the following changes cannot be made to the audit documentation during the final assembly process?

(a) Sorting, collating & cross referencing of working papers.

(b) Signing off completion checklists relating to the file assembly process.

(d) Recalculation of Depreciation.

30. Which of the following is not correct?

(a) SA 230- Audit Documentation

(b) SA 500- Audit Evidence

(d) SA 560- Subsequent Events

31. ____________refers to the audit procedures performed to obtain an understanding of the entity and its environment, including the entity’s internal control to identify and assess the risk of material misstatement.

(a) Risk Assessment procedures

(b) Test of controls

(d) Observation

32. Audit documentation provides:

(a) evidence of the auditor’s basis for a conclusion about the achievement of the overall objectives of the auditor; or evidence with SAs and applicable legal and regulatory requirements.

(b) evidence of the auditor’s basis for a conclusion about the achievement of the overall objectives of the auditor; and evidence that the audit was planned and performed in accordance with SAs and applicable legal and regulatory requirements.

(d) evidence that accordance the audit was planned and Performed in accordance with SAs and applicable legal and regulatory requirements.

33. Which of the following is correct:

(a) The auditor shall assemble the audit documentation in an audit file and complete the administrative process of assembling the final audit file on a timely basis after the date of the auditor’s report.

(b) The auditor shall assemble the audit documentation in an audit file and shall not complete the administrative process assembling the final audit file.

(c) The auditor shall assemble the audit documentation in an audit file and complete the administrative process of assembling the final audit file on a timely basis before the date of the auditor’s report.

(d) The auditor shall not assemble the audit documentation in an audit file.

34. Audit evidence includes

(a) information contained in the accounting records underlying the financial statements

(b) both information contained in the accounting records underlying the financial statements and other information.

(d) information contained in the accounting records underlying the financial statements or other information.

35. 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, where applicable, others within the entity, including in-house legal counsel.

(b) Reviewing minutes of meetings of those charged with governance and correspondence between the entity and its external legal counsel.

(d) All of the above

36. If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening balances, the auditor shall express:

(a) a disclaimer opinion

(b) a qualified opinion

(d) unmodified opinion

37. Auditor’s judgment as to sufficiency may be affected by the factors such as:

(a) Materiality

(b) Risk of material misstatement

(d) All of the above

38. The auditor has no obligation to perform any audit procedures regarding the financial statements after the date of the auditor’s report. However, when, after the date of the auditor’s report but before the date the financial statements are issued, a fact becomes known to the auditor that, had it been known to the auditor at the date of the auditor’s report, may have caused the auditor to amend the auditor’s report, the auditor shall:

(a) Discuss the matter with management and, where appropriate, those charged with governance.

(b) Determine whether the financial statements need amendment.

(d) All of the above

39. Audit risk is a function of __________

(a) detection risk.

(b) inherent risk

(d) business risk

40. For a given level of audit risk, the acceptable level of detection risk bears ________relationship to the assessed risks of material misstatement at the assertion level.

(a) direct.

(b) Inverse

(d) either (a) or (c)

Time’s up