Auditing MCQs

Page No. 8

Which of the following statement best describes the understanding with respect to ownership and custody of working papers prepared by an auditor?


aThe working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation


bThe safe custody of working papers is the responsibility of client, if kept at his premises


cThe working papers must be retained by an audit firm for a period of 10 years


dSuccessor auditors may have access to working papers of the predecessor auditors. The approval of client is not required.



Which of the following statement is true regarding an auditor’s working papers?


aThey document the level of independence maintained by the auditor


bThey should be considered as the principle support for the auditor’s report


cThey should not contain details regarding weaknesses in the internal control system


dThey help the auditor to monitor the effectiveness of the audit firm’s quality control



Which of the following factors would least likely affect the quantity and content of an auditor’s working papers


aThe assessed level of control risk


bThe possibility of peer review


cThe nature of auditor’s report


dThe content of management representation letter



For what minimum period should audit working papers be retained by audit firm?


aFor the time period the entity remains a client of the audit firm.


bFor a period of ten years


cFor a period auditor opines them to be useful in servicing the client


dFor the period the audit firm is in existence.



The auditor’s permanent working paper file should not normally, include__________?


aExtracts from client’s bank statements


bPast year’s financial statements


cAttorney’s letters


dDebt agreements



Which of the following is not an advantage of the preparation of working paper?


aTo provide a basis for review of audit work


bTo provide a basis for subsequent audits


cTo ensure audit work is being carried out as per programme


dTo provide a guide for advising another client on similar issues



Which of the following best describes the primary purpose of audit programme preparation?


aTo detect errors or fraud


bTo comply with GAAP appropriate evidence


cTo gather sufficient


dTo assess audit risk


View Answer To gather sufficient

The quantity of audit working papers complied on engagement would most be affected by__________?


aManagement’s integrity


bAuditor’s experience and professional judgment


cAuditor’s qualification


dControl risk



The working papers which auditor prepares for financial statements audit are___________?


aEvidence for audit conclusions


bOwned by the client


cOwned by the auditor


dRetained in auditor’s office until a change in auditors


View Answer Owned by the auditor

Audit programme is prepared by____________?


aThe auditor


bThe client


cThe audit assistants


dThe auditor and his audit assistants



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