Auditing MCQs

Page No. 12

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


aBackground i.e. industry

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

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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

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

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cA matter is material only if it affects directors’ emoluments

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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

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bUntil the financial statements are complete

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cUntil the next AGM (Annual General Meeting)

✓


dUntil the directors remove them

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The independent auditor’s primary responsibility is to______________?


athe directors

✖


b the company’s creditors (payables)

✖


cthe company’s bank

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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

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cThe board of directors in a board meeting

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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

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cDuty to sign the audit report

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dDuty to report on any violation of law

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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

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

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


aError of omission

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b Error of commission

✓


cCompensating error

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dError of principle

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


aThe auditor should express an opinion on financial statements.

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bHis opinion is no guarantee to future viability of business

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

✓


dHe should examine whether recognised accounting principle have been consistently

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International auditing standards are issued by the______________?


aInternational Accounting Standards Board

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bInternational Federation of Accountants

✓


cInternational Standards Board

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dAuditing Practices Board

✖



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