Auditing MCQs

Page No. 12

Which one of the following is NOT considered to be part of planning?


aBackground i.e. industry


bPrevious year’s audit i.e. any qualifications in the report


cConsidering the work to be done by the client staff e.g. internal audit


dConsidering whether the financial statements show a true and fair view



Which of the following is correct in relation to materiality?


aA matter is material only if it changes the audit report


bA matter is material if the auditor and the directors both decide that further work needs


cA matter is material only if it affects directors’ emoluments


dA matter is material if its omission or misstatement would reasonably influence the decisions of an addressee of the auditors’ report



How long is the auditor’s term of office?


aUntil the audit is complete


bUntil the financial statements are complete


cUntil the next AGM (Annual General Meeting)


dUntil the directors remove them



The independent auditor’s primary responsibility is to______________?


athe directors


b the company’s creditors (payables)


cthe company’s bank


d the shareholders


View Answer the shareholders

Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of the auditor?


aThe shareholders in a general meeting


bThe managing director


cThe board of directors in a board meeting


dThe audit committee



Which one of the following is NOT a duty of the auditor?


aDuty to report to the company’s bankers


bDuty to report to the members


cDuty to sign the audit report


dDuty to report on any violation of law



When an auditor is proposed for removal from office, which one of the following is he NOT permitted to do?


aCirculate representations to members


bApply to the court to have the proposal removed


cSpeak at the AGM/EGM where the removal is proposed


dReceive notification of the AGM/EGM where the removal is proposed



A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of____________?


aError of omission


b Error of commission


cCompensating error


dError of principle



Which of the following is not true about opinion on financial statements?


aThe auditor should express an opinion on financial statements.


bHis opinion is no guarantee to future viability of business


cHe is responsible for detection and prevention of frauds and errors in financial statement


dHe should examine whether recognised accounting principle have been consistently



International auditing standards are issued by the______________?


aInternational Accounting Standards Board


bInternational Federation of Accountants


cInternational Standards Board


dAuditing Practices Board



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