Auditing Mcqs

Which of the following is correct in relation to materiality?

• (A)  A matter is material only if it changes the audit report
• (B)  A matter is material if the auditor and the directors both decide that further work needs to be done in the area under question
• (C)  A matter is material only if it affects directors’ emoluments
• (D)  A matter is material if its omission or misstatement would reasonably influence the decisions of an addressee of the auditors’ report

Answer

Submitted By :Ali Uppal

How long is the auditor’s term of office?

• (A)  Until the audit is complete
• (B)  Until the financial statements are complete
• (C)  Until the next AGM (Annual General Meeting)
• (D)  Until the directors remove them

Answer

Submitted By :Ali Uppal

The independent auditor’s primary responsibility is to______________?

• (A)  the directors
• (B)  the company’s creditors (payables)
• (C)  the company’s bank
• (D)  the shareholders

Answer

Submitted By :Ali Uppal

Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of the auditor?

• (A)  The shareholders in a general meeting
• (B)  The managing director
• (C)  The board of directors in a board meeting
• (D)  The audit committee

Answer

Submitted By :Ali Uppal

Which one of the following is NOT a duty of the auditor?

• (A)  Duty to report to the company’s bankers
• (B)  Duty to report to the members
• (C)  Duty to sign the audit report
• (D)  Duty to report on any violation of law

Answer

Submitted By :Ali Uppal

When an auditor is proposed for removal from office, which one of the following is he NOT permitted to do?

• (A)  Circulate representations to members
• (B)  Apply to the court to have the proposal removed
• (C)  Speak at the AGM/EGM where the removal is proposed
• (D)  Receive notification of the AGM/EGM where the removal is proposed

Answer

Submitted By :Ali Uppal

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

• (A)  Error of omission
• (B)  Error of commission
• (C)  Compensating error
• (D)  Error of principle

Answer

Submitted By :Ali Uppal

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

• (A)  The auditor should express an opinion on financial statements.
• (B)  His opinion is no guarantee to future viability of business
• (C)  He is responsible for detection and prevention of frauds and errors in financial statements
• (D)  He should examine whether recognised accounting principle have been consistently

Answer

Submitted By :Ali Uppal

International auditing standards are issued by the______________?

• (A)  International Accounting Standards Board
• (B)  International Federation of Accountants
• (C)  International Standards Board
• (D)  Auditing Practices Board

Answer

Submitted By :Ali Uppal

Which of the following is NOT the responsibility of a company’s directors?

• (A)  Reporting to the shareholders on the accuracy of the accounts
• (B)  Establishment of internal controls
• (C)  Keeping proper accounting records
• (D)  Supplying information and explanations to the auditor

Answer

Submitted By :Ali Uppal