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

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

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

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


aThey document the level of independence maintained by the auditor

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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

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

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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

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bThe possibility of peer review

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cThe nature of auditor’s report

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dThe content of management representation letter

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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.

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bFor a period of ten years

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

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dFor the period the audit firm is in existence.

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


aExtracts from client’s bank statements

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bPast year’s financial statements

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cAttorney’s letters

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dDebt agreements

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


aTo provide a basis for review of audit work

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bTo provide a basis for subsequent audits

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cTo ensure audit work is being carried out as per programme

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dTo provide a guide for advising another client on similar issues

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


aTo detect errors or fraud

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bTo comply with GAAP appropriate evidence

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cTo gather sufficient

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dTo assess audit risk

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View Answer To gather sufficient

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


aManagement’s integrity

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bAuditor’s experience and professional judgment

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cAuditor’s qualification

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dControl risk

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


aEvidence for audit conclusions

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bOwned by the client

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cOwned by the auditor

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dRetained in auditor’s office until a change in auditors

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View Answer Owned by the auditor

Audit programme is prepared by____________?


aThe auditor

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bThe client

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cThe audit assistants

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dThe auditor and his audit assistants

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