CA Inter Auditing and Assurance Quiz ( ICAI 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.

(c) establishing the overall audit plan for the engagement

(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.

(c) the auditor need not consider what would make the financial information materially misstated at planning stage

(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.

(c) should not consider materiality but should consider 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

(c) audit plan and audit strategy

(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.

(c) Other planned audit procedures that are required to be carried out so that the engagement complies with SAs.

(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

(c) Both 1 & 2 are incorrect

(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.

(c) Deleting or discarding superseded documents.

(d) Recalculation of Depreciation.

30. Which of the following is not correct?

(a) SA 230- Audit Documentation

(b) SA 500- Audit Evidence

(c) SA 505- Written Representation

(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

(c) Substantive Analytical Procedures

(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.

(c) evidence of the auditor’s basis for a conclusion about the achievement of the overall objectives of the auditor.

(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.

(c) 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.

(c) Reviewing legal expense accounts.

(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

(c) a qualified opinion or a disclaimer of opinion, as appropriate, in accordance with SA 705.

(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

(c) Size and characteristics of the population.

(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.

(c) Inquire how management intends to address the matter in the financial statements.

(d) All of the above

39. Audit risk is a function of __________

(a) detection risk.

(b) inherent risk

(c) control 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

(c) no relationship

(d) either (a) or (c)

Chartered Notes

CA Inter Auditing and Assurance Quiz ( ICAI MCQ 21-40 )

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