Auditing MCQs

Page No. 5

Which of the following factors is most important in determining the appropriations of audit evidence?


aThe reliability of audit evidence and its relevance in meeting the audit objective


bThe objectivity and integrity of the auditor


cThe quantity of audit evidence


dThe independence of the source of evidence



What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?


aThe auditor has ascertained that the balance is materially correct when in actual fact it is not


bThe auditor concludes the balance is materially misstated when in actual fact is not


cThe auditor has rejected an item from sample which was not supported by documentary evidence


dHe applies random sampling on data which is inaccurate and inconsistent



What would most appropriately describe the risk of incorrect rejection in terms of substantive testing?


aThe auditor concludes balance is materially correct when in actual fact it is not


bThe auditor concludes that the balance is materially misstated when in actual fact it not


cThe auditor has rejected an item for sample which was material


dNone of the above



Which of the following statements is not true with respect to management representations obtained as per AAS­11?


aAuthenticated copy of relevant minutes of meetings may be regarded as management representation


b It should always be in working


cIt may be dated prior to the report date


d It should be addressed to the auditor



Which of the following affects audit effectiveness?


aRisk of over reliance


bRisk of incorrect rejection


cRisk of incorrect acceptance


dBoth A. and C.


View Answer Both A. and C.

Which of the following is not a corroborative evidence?


aMinutes of meetings


bConfirmations from debtors


cInformation gathered by auditor through observation


dWorksheet supporting consolidated financial statements



When is evidential matter, generally, considered sufficient?


aWhen it constitutes entire population


bWhen it is enough to provide a basis for giving reasonable assurance regarding truthfulness


cWhen it is objective and relevant


dWhen auditor collects and evaluates it independently



Which of the following statements is, generally, correct about the reliability of auditevidence?


aTo be reliable, evidence should conclusive rather than persuasive


bEffective internal control system provides reliable audit evidence


cEvidence obtained from outside sources routed through the client


dAll are correct.



The nature, timing and extent of substantive procedures is _________ related to assessed level of control risk?


arandomly


bdisproportionately


cdirectly


dinversely


View Answer directly

In an audit of financial statements, substantive tests are audit procedures that___________?


amay be eliminated for an account balance under certain conditions


b are designed to discover significant subsequent events


c will increase proportionately when the auditor decreases the assessed level of control risk


dmay be test of transactions, test of balance and analytical procedures



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