Auditing MCQs with Answers for Exam & Test Preparation - Page 10 of 10

auditing mcqs

Utilizing MCQs is considered an effective method to assess a student’s understanding of a concept. The auditing MCQs are available on GuruMcQs.com and prepared by subject experts, aligning with current trends and practices. These MCQs are particularly beneficial for competitive examinations and tests such as PPSC, FPSC, SPSC, KPPSC, BPSC, and ETEA. They are also valuable for various job positions like Senior Auditor, Junior Auditor, Accountant, Internal Auditors, and External Auditors. Covering topics such as Basic Auditing, Financial Audit, Income Tax Audit, Internal Audit, Operational Auditing, and more, these MCQs offer comprehensive preparation. Additionally, you can find Cost Accounting MCQs with answers on the platform.

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

A. Evidence for audit conclusions
B. Owned by the client
C. Owned by the auditor
D. Retained in auditor’s office until a change in auditors

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

A. Management’s integrity
B. Auditor’s experience and professional judgment
C. Auditor’s qualification
D. Control risk

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

A. To detect errors or fraud
B. To comply with GAAP appropriate evidence
C. To gather sufficient
D. To assess audit risk

The auditor should examine subsequent realization of revenue such as dividends, interest,commission, etc to:_____________?

A. identify cases of unrecorded revenue
B. ensure proper disclosure in the balance sheet
C. recompute accrued income on the data of balance sheet
D. Any of these

What is meant by negative assurance?

A. The auditor cannot give an opinion due to lack of evidence.
B. The client’s financial statements were found to be materially misstated.
C. The auditor could not conduct any tests due to lack of controls.
D. The auditor did not find anything to indicate that a material misstatement exists.

For companies required to produce interim financial statements (IFI):

A. one audit firm should audit the IFI and a different firm should audit the financial statements for the year as a whole.
B. one accountancy firm should review the IFI and a different firm should audit the financial statements for the year as a whole.
C. the same firm should audit the IFI and the financial statements for the year as a whole.
D. the same firm should review the IFI and the financial statements for the year as a whole.

Which of the following statements is correct?

A. When a company negotiates a ‘friendly’ takeover, it usually appoints a firm of accountants to carry out due diligence on the takeover target.
B. In an attestation engagement, the accountant is required to report on the quality of work performed.
C. In a review engagement, evidence is gathered mainly by means of computation and inspection.
D. In an engagement to review financial statements, the amount of work required is the same as for an audit

What sort of assurance is provided in a review engagement?

A. Positive assurance
B. Negative assurance
C. High level of assurance
D. No assurance

Which one of the following is part of the auditor’s function?

A. Conducting the inventory count
B. Obtaining and evaluating audit evidence on the financial statements
C. Calculating the year-end accruals figure for inclusion in the accounts
D. Providing representations to management

Which of the following does NOT belong in the auditors’ report?

A. Introductory paragraph specifying the pages to which the report relates and the accounting convention adopted
B. Basis of the opinion
C. Involvement of any specialist
D. Statement of responsibilities of directors and auditors

What is meant by the expression ‘expectation gap’?

A. The gap between how the directors of a company perform their duties and how the shareholders expect them to perform
B. The gap between how the directors of a company perform their duties and how the general public expects them to perform
C. The gap between the public perception of the role of company auditors and their statutory role and responsibilities
D. The gap between the auditors’ own perception of their duties and how they are set out in the Companies Act

Which of the following would you not use as a benchmark for comparison when undertaking analytical procedures?

A. Other audit clients
B. Previous years
C. Other companies in the same industry
D. Budget

Which of the following is true about written representations?

A. They are the best source of audit evidence
B. They should be used only when there is a lack of other substantive audit evidence
C. They should be used only when there is other substantive audit evidence to complement it
D. Shareholders receive a copy of all material written representations

Which of the following statements is INCORRECT?

A. An auditor may serve on the board of directors of an audit client.
B. An auditor who is an immediate family member of the director of an audit client must not be assigned to the audit team.
C. Purchasing goods from an audit client on normal commercial terms does not create a threat to the auditor’s independence.
D. An auditor who was recently a director of an audit client must not be assigned to the audit team for that client.

An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to his or her independence. The threat would be a___________?

A. Self-interest threat
B. Self-review threat
C. Advocacy threat
D. Familiarity threat

Which of the following are fundamental ethical principles for professional accountants?
1 Competence
2 Compliance
3 Integrity
4 Objectivity

A. 1, 2 and 3 only
B. 1, 3 and 4 only
C. 2, 3 and 4 only
D. 1, 2 and 4 only

Which one of the following may auditors NOT perform for their client?

A. Taking management decisions
B. Preparation of accounting records
C. Preparing tax computations
D. Advising on weaknesses in the internal control systems

You have been proposed as auditor of a company. What is the first step that you should take?

A. Obtain the client’s permission to communicate with the existing auditor
B. Obtain the existing auditor’s working papers
C. Obtain a copy of the company’s most recent board minutes
D. Obtain a copy of the existing auditor’s letter of engagement

Which of these are types of Audit Report?

A. Unqualified opinion
B. Qualified opinion
C. Adverse opinion
D. Disclaimer of opinion.
All of above

Submitted by: Naveed Ali

Pick the odd one:

A. Checking the vouchers
B. Preparation of vouchers
C. Evaluation of internal control
D. None of the above

Submitted by: ALIYA NAWAZ

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