Auditing MCQs

Page No. 1

Which of these are types of Audit Report?


aUnqualified opinion


bQualified opinion


cAdverse opinion


dAll of above


View Answer All of above

You have been proposed as auditor of a company. What is the first step that you should take?


aObtain the client’s permission to communicate with the existing auditor


bObtain the existing auditor’s working papers


cObtain a copy of the company’s most recent board minutes


dObtain a copy of the existing auditor’s letter of engagement



Which one of the following may auditors NOT perform for their client?


aTaking management decisions


bPreparation of accounting records


cPreparing tax computations


dAdvising on weaknesses in the internal control systems



Which of the following are fundamental ethical principles for professional accountants? 1 Competence 2 Compliance 3 Integrity 4 Objectivity


a1, 2 and 3 only


b1, 3 and 4 only


c 2, 3 and 4 only


d1, 2 and 4 only


View Answer 1, 3 and 4 only

An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to his or her independence. The threat would be a___________?


aSelf-interest threat


bSelf-review threat


cAdvocacy threat


dFamiliarity threat


View Answer Self-interest threat

Which of the following statements is INCORRECT?


aAn auditor may serve on the board of directors of an audit client.


bAn auditor who is an immediate family member of the director of an audit client must not be assigned to the audit team.


cPurchasing goods from an audit client on normal commercial terms does not create a threat to the auditor’s independence.


dAn auditor who was recently a director of an audit client must not be assigned to the audit team for that client.



Which of the following is true about written representations?


aThey are the best source of audit evidence


bThey should be used only when there is a lack of other substantive audit evidence


c They should be used only when there is other substantive audit evidence to complement it


dShareholders receive a copy of all material written representations



Which of the following would you not use as a benchmark for comparison when undertaking analytical procedures?


aOther audit clients


b Previous years


cOther companies in the same industry


dBudget


View Answer Other audit clients

What is meant by the expression ‘expectation gap’?


aThe gap between how the directors of a company perform their duties and how the shareholders expect them to perform


bThe gap between how the directors of a company perform their duties and how the general public expects them to perform


cThe gap between the public perception of the role of company auditors and their statutory role and responsibilities


dThe gap between the auditors’ own perception of their duties and how they are set out in the Companies Act



Which of the following does NOT belong in the auditors’ report?


aIntroductory paragraph specifying the pages to which the report relates and the accounting convention adopted


bBasis of the opinion


c Involvement of any specialist


dStatement of responsibilities of directors and auditors



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