CA - INTER

COURSE MATERIAL
Quality Education
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SUBJECT CODE: 6, MATERIAL NO: 65

AUDITING AND ASSURANCE_40e
MULTIPLE CHOICE QUESTIONS
(APPLICABLE FROM MAY 2019 EXAMS ONWARDS)

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 INDEX
S. No. Chapter Name No. of MCQ’s Starting Page

1. Introduction to Audit 102 3

2. Agreeing to an Audit 16 10

3. Appointment of Auditor and Allied Aspects 151 11

4. Risk assessment & Internal Controls 44 23

5. Planning an Audit 31 26

6. Performing an Audit 44 28

7. Audit of items of Financial statements 36 31

8. Audit reporting (including CARO, 2016) 32 34

9. Audit in an automated environment 60 36

10. Audit of different types of entities 38 41

11. Audit of Co-operative Societies 35 44

12. Audit of Banks 35 46

13. Government audit 25 49

14. Internal audit and Cost audit 68 51

15. Standards on Auditing 134 55

16. Miscellaneous 27 66

17. Key for all Chapters - 68

Total 878

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1. INTRODUCTION TO AUDIT
1. An audit is an _________ examination of financial information of any entity, whether profits oriented
(or) not, and irrespective of its size (or) legal form, when such an examination is conducted with a view
to express an opinion there on.
a) Critical b) Detailed c) Independent d) All of these

2. An audit is an independent examination of financial information of an entity, irrespective of _______

with a view to express an opinion thereon.
a) Legal form b) Size c) Profits oriented (or) not d) All of these

3. __________ is the point that the auditor has to satisfy himself before expression of opinion on the
financial statements.
a) Conformity with accounting standards b) Supported by sufficient and appropriate evidences
c) True and fair view d) All of the above

4. The accounts have been drawn up with reference to ______ in the books of account.
a) Ledgers b) Trial balance c) entries d) None of these

5. The entries in the books of accounts are adequately _______ by sufficient and appropriate evidences.
a) Prepared b) supported c) gathered d) grouped

6. Auditor need to satisfy himself whether the financial statements are present a _____ of the operational
results and of the assets and liabilities.
a) True (or) fair view b) True and correct picture
c) True and fair view d) All of the above

7. Objective of the auditor is dealt by ________.

a) SA 700 b) SA 200 c) SA 210 d) SA 220

8. Auditor can obtain only _______ assurance but not an absolute assurance.
a) Less b) partial c) reasonable d) All of these

9. Audit documentation is commonly known as _________.

a) Working papers b) work papers c) (a) and (b) d) None of these

10. Audit documentation will cover ______.

a) Audit procedures performed b) Audit evidences obtained
c) Conclusion reached d) All of the above

11. Auditor need to examine the internal control system to know whether it is _______.
a) Adequate b) Strong c) Weak d) All of these

12. Auditor need to verify assets with respect to their__________.

a) Title b) Existence c) Value d) All of these

13. Auditor needs to check the result shown by the _______ and to see its true and fair view.
a) Profit and loss statement b) Balance sheet
c) Cash flow statement d) None of the above.

14. ___ is not legally obligatory for all types of business organizations (or) institutions.
a) Audit b) Law c) Investigation d) None of these

15. An audit which is mandatorily required to be done as per law is called as ______ audit.
a) Voluntary b) Statutory c) Private d) All of these
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16. ________ Audit has no any legal requirement to be conduct.
a) Tax audit b) statutory audit c) Voluntary d) None of these

17. ________ Audits are not mandatory and are required to be undertaken only at the desire of the client.
a) Proprietary entities b) Partnership firms
c) Hindu undivided families d) All of the above

18. The objective and scope of ______ audit are determined by the respective appointing authorities.
a) Non - Statutory b) Statutory c) Tax d) None of these

19. Audit will safeguard the financial interest of persons who are not associated with the management of
the entity, whether they are __________.
a) Partners b) Shareholders c) Pubic at large d) All of these

20. Audit helpful in the settlement of _________.

a) Insurance claims b) Trade disputes for higher wages (or) bonus
c) Tax liability d) All of the above

21. ________ is the advantage of an independent audit.

a) Negotiating loans from lenders b) Obtaining government assistance
c) Detection of weakness in internal controls d) All of the above

22. The concept of fraud dealt by _________.

a) SA 230 b) SA 240 c) SA 530 d) SA 200

23. Fraud refers to an intentional act by one (or) more individuals among ________involving the use of
deception to obtain an unjust or illegal advantage.
a) Management b) Those charge with governance
c) Employees d) All of the above

24. The auditor’s ability to detect fraud depends on the ________

a) Skill fullness of the perpetrator b) Frequency of fraud committed
c) Degree of collusion d) All of the above

25. The term _____ refers to unintentional mistakes committed by clerks in financial statements
a) Fraud b) Error c) collusion d) Teeming & lading

26. _______ is one of the types of errors.

a) Fraudulent financial reporting b) Misappropriation of assets
c) Teeming and lading d) Error of principle

27. __________ do not reveal themselves during the course of accounts preparation.
a) Self - revealing errors b) Non self - revealing errors
c) Frauds d) All of the above

28. _________ dealing with provisions regarding maintenance of books of accounts

a) Sec 126 b) Sec 128 c) Sec 138 d) Sec 148

29. ________ Companies are not required to comply with schedule - III.
a) Insurance companies b) Banking companies
c) Electricity companies d) All of the above

30. Companies shall be required to follow formats specified in _______ in the companies Act, 2013 in the
preparation of financial statements.
a) Schedule - III b) Schedule - II c) Schedule - I d) Schedule - IV
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31. What constitutes a “true and fair view” is a matter of a ________ judgment in the particular
circumstances of a case.
a) Management b) Auditor’s
c) Those charged with governance d) none of the above

32. The profit and loss account discloses all the matters required to be disclosed by _____ of schedule III
and the balance sheet has been prepared in accordance with _____ of schedule III.
a) Part-I, Part-II b) Part-II, Part-I c) Part - I, Part - III d) None of these

33. The term ________ means that the judgement of auditor should not be made subordinate to the
wishes and directions of management (or) any other person.
a) Integrity b) Confidentiality c) Independence d) Objectivity

34. The auditor should not disclose the information collected by him, during the course of his professional
work, to any _______ without specific authority from the client.
a) Management b) Those charged with governance
c) Third party d) All of the above

35. The auditor shall comply with the relevant ethical requirements as prescribed below _______
a) Integrity b) Independence c) Confidentiality d) All of these

36. The code of ethics for professional accountants, prepared by the _______ identifies 5 types of threats.
a) ICAI b) IFAC c) AASB d) NFRA

37. _______ Which occur when an auditing firm or any of its partner could benefit from a financial interest
in an audit client.
a) Self review threats b) Advocacy threats
c) Familiarity threats d) Self- interest threats

38. _________ Which occur when during a review of any judgement or conclusion made by him in any
previous assignment rendered to clients.
a) Intimidation threats b) Self review threats
c) Advocacy threats d) Familiarity threats

39. _________ which occur when the auditor promotes a client’s opinion to a point where people may
believe that objectivity is getting compromised.
a) Advocacy threats b) Familiarity threats
c) Intimidation threats d) Self review threats

40. __________ Which occur when auditor has some association or relation with the clients either directly
(or) indirectly.
a) Familiarity threats b) Advocacy threats
c) Self review threats d) Intimidation threats

41. ________ which occur when auditors are prevented from acting objectively.
a) Familiarity threats b) Intimidation threats
c) Advocacy threats d) None of the above

42. ________ is not a technical quality of an ideal auditor

a) Judgement b) Accountancy Knowledge
c) Auditing knowledge d) Tax laws knowledge

43. _______ is the personal quality of an ideal auditor

a) Tact b) Caution c) Commonsense d) All of the above
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44. The auditor should decide the scope of his audit having regard to ______
a) Relevant regulations b) Pronouncements of ICAI
c) Terms of engagement d) All of the above

45. An auditor must be honest that is, he must not certify what he does not believe to be ____ and he
must take reasonable care and skill before he believes that what he certifies is true.
a) Complete b) False c) True d) None of the above

46. The _________ is not expected to and cannot reduce audit risk to zero and cannot therefore obtain
absolute assurance that the financial statements are free from material misstatements due to fraud or error.
a) Auditor b) Management c) Sampling d) TCWG

47. The preparation of financial statements involves judgements and subjective decisions made by
________ in the preparation and presentation of financial statements.
a) Auditor b) Management c) Outsiders d) Government

48. The auditor can only obtain ________ audit evidence but not conclusive evidence.
a) Persuasive b) Correct c) Partial d) Written

49. Due to time and cost considerations, auditor resorts for ___________
a) Test checking b) Investigation c) Surprise check d) None of the above

50. __________ are the inherent limitations of an audit.

a) Nature of accounting b) Nature of auditing
c) Time and cost considerations d) All of the above

51. Professional skepticism is an attitude of ___________ mind and alertness of mind.

a) Questioning b) Positive c) Negative d) Cool

52. Auditor should maintain ________, in a situation where one audit evidence contradicts other audit evidence.
a) Professional judgement b) Professional skepticism
c) Professional competence & due care d) All of the above

53. Professional judgement refers to taking decisions by the auditor during the course of his audit by using
his ___________.
a) Knowledge b) Training c) Experience d) All of the above

54. Even though the audit is properly planned and performed in accordance with SA’s, there is an
_______ risk that some material misstatements of the financial statements may not be detected.
a) Avoidable b) Control c) Detection d) Unavoidable

55. Fraudulent financial reporting is often done by ________

a) Employees b) Management c) Outsiders d) All of the above

56. ________ is not covered in fraudulent financial reporting

a) Manipulation of records b) Embezzling receipts
c) Intentional misapplication of accounting principles d) Intentional omission of transactions

57. Misappropriation of assets is often perpetrated by ______ in relatively small and immaterial amounts.
a) TCWG b) Management c) Employees d) Outsiders

58. ______ is not covered under misappropriation of assets

a) Embezzling receipts b) Stealing physical assets
c) Pay for goods and services not received d) Intentional omission of transactions

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59. As per SA 240, the primary responsibility for the prevention and detection of fraud rests with both
________ and _______
a) TCWG, Management b) Management, Employees
c) Client, Auditor d) Auditor, Management

60. Due to the __________ of an audit, there is an unavoidable risk.

a) Nature of accounting b) Nature of Auditing
c) Time and cost considerations d) All of the above

61. The risk of not detecting fraud is _______ than the risk of not detecting error because fraud may
involve sophisticated and carefully organized schemes designed to conceal it.
a) Similar b) Higher c) Lower d) None of the above

62. The risk of not detecting management fraud is __________ than employee fraud.
a) Higher b) Lower c) Similar d) None of the above

63. The liability of the auditor for failure to detect fraud exists only when such failure is clearly due to ________.
a) Inherent limitations of an audit b) Not exercising reasonable care and skill
c) Sampling d) None of the above

64. _________ is a condition for fraud risk factor.

a) Incentives / pressures b) Opportunities
c) Attitudes and rationalizations d) All of the above

65. _______ is one of the way for defalcation of cash.

a) Inflating cash payments b) Suppressing cash receipts
c) Casting wrong totals in the cashbook d) All of the above

66. Teeming and lading can be made only in respect of __________

a) Cash receipts b) Cash Payments
c) Cash receipts & cash payments d) None of the above

67. Teeming and lading is a _________

a) Technique b) Error c) Procedure d) Fraud

68. Pronouncements issued by ICAI will cover__________.

a) Accounting standards b) Standards on auditing
c) Guidance Notes d) All of the above

69. Guidance notes are ________ in nature

a) Recommendatory b) Mandatory
c) Few in mandatory and others in recommendatory d) none of the above

70. General clarifications are issued by _______ under the authority of the council of the institute with a
view to clarify any issues from the standards
a) AASB b) IAASB c) CAG d) NFRA

71. ________ To be applied in the audit of historical financial information.

a) SA b) SRE c) SAE d) SRS

72. The objective and function of AASB is to review the existing and emerging auditing practices
worldwide and identify areas in which ________ need to be developed.
a) Standards on quality control b) Engagement standards
c) Statements on auditing d) All of the above
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73. _________ to be applied in assurance engagements, dealing with subject matters other than historical
financial information.
a) SAE b) SRS c) SA d) SRE

74. _____ to be applied in the review of historical financial information.

a) SAE b) SRS c) SRE d) SA

75. _____ to be applied to engagements involving application of agreed upon procedures to information,
compilation engagements and other related services engagements, as may be specified by the ICAI.
a) SA b) SRE c) SAE d) SRS

76. The auditors are more concerned with _________ economics.

a) Micro b) Macro c) Micro and Macro d) None of these

77. The knowledge of ______ economics should include the nature of economic force that affect the firm,
relationship of price and the role of government and government regulations
a) Macro b) Micro c) Socio d) None of these

78. One of the basic elements in designing the internal control system is _______
a) Cash b) Personnel c) Review d) None of these

79. Auditing involves examination of various transactions from the view point of ________, whether or not
these have been properly entered into.
a) Law b) Financial Management
c) Behavioural Science d) Economics

80. _________ is one of the purposes behind the manipulation of accounts.

a) Avoid incidence of income tax b) Delaying a dividend
c) Receiving higher managerial remuneration d) All of the above

81. Audit of the financial statements does not relieve the _______ from their responsibilities.
a) Management b) Shareholders c) Creditors d) All of these

82. Management’s responsibilities include maintaining __________

a) Adequate accounting system b) Proper internal control system
c) Safeguarding assets d) All of the above

83. Audit is an _________examination.

a) Dependent b) Independent c) Ideal d) Identification

84. The primary purpose of audit is _____________________.

a) To express opinion b) To detect frauds and errors
c) To examine the management decisions d) All of the above

85. An audit which is mandatorily required to be done as per law is called __________________.
a) Legal audit b) Stable audit c) Statutory audit d) Concurrent audit

86. The auditor’s ability to detect fraud depends on skillfulness of perpetrator. The relationship between
these two is _____________.
a) Direct b) Inverse c) Either a) (or) b) d) None of these

87. Rules and regulations adopted by management in the preparation and presentation of financial
statements is
a) General purpose framework b) Applicable Financial Reporting Framework
c) Internal Control Systems d) Either a) or b) or c)
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88. It is high level of assurance, but not an absolute assurance
a) Limited assurance b) Moderate assurance
c) Reasonable assurance d) None of the above

89. The auditor’s ability to detect fraud depends upon extent of manipulation. The relation between these is
a) Direct b) Inverse c) Either a) (or) b) d) None of these

90. The more frequency the fraud is committed, the more the chance of detection of fraud.
a) True b) False c) Can’t Say

91. The auditor’s ability to detect fraud depends upon relative size of individual amounts manipulated. The
relationship between these is
a) Inverse b) Direct c) Either a) (or) b) d) None of the above

92. The auditor’s ability to detect fraud depends upon seniority of the person involved. The relationship is
a) Direct b) Inverse c) No relation d) Either a) (or) b)

93. To ensure true and fair view, an auditor has to see

a) Assets are neither under-valued (or) over-valued
b) All unusual, exceptional (or) non-recurring items have not been disclosed separately.
c) The change, if any, on assets are disclosed.
d) No material item is omitted.

94. As per SA-200, The following are the ethical requirements of auditor, except
a) Integrity b) objectivity c) Confidentiality d) Human Behaviour

95. _____________, which occur when an auditing firms (or) any of its partners could benefit from a
financial interest to an audit client.
a) Self-interest threat b) Self-review threat c) Advocacy Threat d) Familiarity Threat

96. _____________, which occur when during a review of any judgement (or) conclusion made by him in
any previous assignment rendered to clients.
a) Self-interest threat b) Self-review threat c) Advocacy Threat d) Familiarity Threat

97. _____________, which occur when the auditor promotes a client’s opinion to a point where the client’s
advocate in litigation and third party disputes.
a) Self-interest threat b) Self-review threat c) Advocacy Threat d) Familiarity Threat

98. ____________, which occur when auditor has some association (or) relation with clients indirectly.
a) Self-interest threat b) Self-review threat c) Advocacy Threat d) Familiarity Threat

99. The auditor should also possess certain personal qualities such as the following, except __________.
a) Reliability b) Relevability c) Tact d) Firmness

100. The auditors are ____________ concerned with micro economics rather than macroeconomics.
a) Less b) more c) more (or) less d) None of these
101. The basic responsibilities of management are _______________ which in any case, cannot be
reduced by audit.
a) Narrower b) Broader c) mandatory d) All of these

102. There are numerous ways of committing manipulation of accounts. The following are the methods used
a) Inflating (or) suppressing purchases and expenses
b) Charging items of capital expenditure to revenue
c) Capitalizing revenue expenses d) All the above

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2. AGREEING TO AN AUDIT
1. ___________ is the information which assists the auditor in accepting and continuing of relationship
with the clients as per SA 220.
a) Capability of engagement team b) Integrity of TCWG
c) Ethical requirements d) All of the above

2. The _______ shall perform appropriate procedures regarding the acceptance and continuance of
client relationships.
a) Engagement Team b) Engagement Partner
c) Engagement Staff d) All of the above

3. Management is responsible for designing and implementing necessary ______ to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
a) Books of accounts b) Internal controls
c) Trial Balance d) None of the above

4. ____________ to be applied by the management in the preparation of the financial statements.

a) Legal framework b) Financial reporting framework
c) BASELIII framework d) All of he above

5. Auditor needs to send the letter of engagement to the client in the case of __________
a) Statutory audit b) Non - Statutory audit
c) Statutory audit & Non - Statutory audit d) Cost Audit

6. In ______ audit, there may be a misunderstanding about the exact scope of the work.
a) Statutory b) Non - Statutory c) Cost d) Tax

7. The audit engagement letter is sent by the _____ to his _____ which documents, the objective and
scope of the audit, the extent of his responsibilities.
a) Auditor, Client b) Client, Auditor
c) Auditor, Third Parties d) Predecessor auditor, Successor auditor

8. A request from the client for the auditor to change the engagement may result from _________
a) Change in circumstances b) Misunderstanding of terms
c) Restriction on scope of engagement d) All of the above

9. If the auditor is unable to agree to a change of the terms of the audit engagements and is not
permitted by management to continue the original audit engagement, the auditor shall _________
a) Modify his audit report b) Withdraw from the engagement
c) Make compliant to ICAI d) Inform to shareholder

10. If management or TCWG impose a limitation on the scope of the auditor’s work before acceptance of
engagement, then the auditor shall ____________
a) Modify his audit report b) withdrawn from the engagement
c) Not accept the engagement d) Inform to shareholders

11. The auditor shall not agree to a change in the terms of the audit engagement where there is no
_______ for doing so.
a) Shareholders approval b) Reasonable justification
c) Right d) All of the above

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12. If auditor accepted for the change in terms of engagement requested by the management in such a
case new terms shall be record in __________
a) Audit report b) letter of management
c) Written representation d) new engagement letter

13. If auditor of previous year has also been appointed as auditor for current year, then the current year
engagement is known as ____________
a) Initial audit engagement b) Quality control review
c) Recurring audit d) Investigation

14. The auditor may decide not to send a new audit engagement letter or other written agreement each
__________ in case of recurring audits.
a) Period b) Client c) Predecessor auditors d) All of the above

15. ___________ is not a circumstance to send a new engagement letter for a recurring audit.
a) Change in legal requirements b) Recent change of senior management
c) Significant change in ownership d) Change of suppliers

16. Agreeing the terms of audit engagement will be covered in _________

a) SA 210 b) SA 200 c) SA 230 d) SA 700

3. APPOINTMENT OF AUDITOR AND ALLIED ASPECTS

1. Qualifications and disqualifications of an auditor are covered in ______ of the Companies Act, 2013.
a) Sec 141 b) Sec 142 c) Sec 143(1) d) Sec 143(3)

2. A person shall be eligible for appointment as an auditor of a company only if he is a chartered

accountant within the meaning of the _______
a) Companies Act, 2013 b) CA Act, 1949 c) SA 200 d) SA 500

3. Mr. NM a chartered accountant wants to accept the internal audit assignment of RAM LTD for the
financial year 2019-2020. Mr. NM has conducted statutory audit of RAM ltd for FY 2018-2019.
a) Yes b) No c) Can’t say d) NA

4. Under the Chartered Accountants Act, 1949 only a _________ can practice as an auditor
a) Chartered Accountant holding the COP b) Chartered Accounting holding COP (or) not
c) Cost auditor holding the COP d) Cost auditor hold COP (or) not

5. A Partnership firm or LLP shall be eligible for appointment as an auditor of a company only if _____ of
its partners practicing in India are CA’s holding cop.
a) All b) Minimum 2 c) Majority d) Minimum 3

6. If firm of auditors i.e. partnership firm or LLP is appointed as an auditor of a company, then only the
partners who are _____ having valid cop shall be authorised to act and sign on behalf of firm.
a) Chartered Accountants b) Cost Accountants c) CA / CMA d) All of these
7. _______ is not covered in business relationship.
a) Permitted professional services b) Transactions at arm’s length price
c) a) & b) d) None of the above

8. __________ Companies are excluded while computing he ceiling limit (i.e.20) on number of
appointments that an auditor can hold at a time.
a) One person Companies b) Small Companies
c) Dormant Companies d) All of the above

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9. If a relative acquires any security or interest in the company of face value exceeding Rs.1 Lakh then the
auditor need to vacate his office immediately and ________ time limit is given to take corrective action.
a) 50 days b) 60 days c) 30 days d) 90 days

10. _______ not covered in the relative definition as per Sec 2(77) of the Companies Act, 2013.
a) Father (including step father) b) Son’s wife
c) Grandparents d) Daughter’s Husband

11. Private limited companies are excluded while computing the ceiling limit (i.e. 20) if their paid up share
capital __________.
a) More than Rs.100 crores b) Less than Rs.10 crores
c) More than Rs.10 crores d) Less than Rs.100 crores

12. A person or partner of a firm holding appointments as an auditor of not more than _____ companies at
the date of such appointment or reappointment.
a) 20 b) 25 c) 30 d) 35

13. Where a person appointed as an auditor of a company incurs any of the disqualifications mentioned in
section 141(3) after his appointment, then it is treated as _______ in the office of the auditor.
a) Causal vacancy b) Expiry of term c) Rotation d) Rectification

14. If an auditor purchased goods on credit from the company of a value exceeding ______ he shall be
indebted to the company and consequently he shall vacate the office of auditor held by him.
a) Rs.1,00,000 b) Rs.5,00,000 c) Rs.1,00,001 d) Rs.5,00,001

15. Auditor is prohibited to render ___________ services along with the audit to his client.
a) Internal audit b) Actuarial services
c) Management services d) All of the above

16. Auditor shall provide to the company only such services as are approved by _________ as the case
may be.
a) Board of directors / Audit committee b) Shareholders
c) Government d) CAG

17. If an auditor recovers fees from the company on a _______ basis, even though the audit has not been
completed, he cannot be said to be indebted to the company and therefore, he shall not vacate the
office of auditor held by him.
a) Accrual b) Progressive c) Consistent d) Cash

18. The auditors of a company have a right ______ in the meetings of the audit committee, when they
considering the auditor’s report but not have the right __________
a) To be heard, to vote b) to vote, to be heard c) a) or b) d) None of the above

19. The first auditor of a non-government company shall be appointed by the BOD within_____ days from
the date of registration of the company.
a) 180 b) 30 c) 90 d) 60
20. ______ Companies should form an audit committee
a) Unlisted public companies having turnover 100 crores (or) more
b) Listed companies having turnover 100 crores (or) more
c) Listed companies having turnover less than Rs.100 crores
d) All of the above

21. _____ of the Companies Act, 2013 is dealing with provisions related to audit committee.
a) Sec 144 b) Sec 177 c) Sec 138 d) Sec 148

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22. The audit committee shall consist of minimum of ______ directors
a) 3 b) 2 c) 1 d) 5

23. All the related party transactions shall require the approval of the ________
a) Board of directors b) audit committee c) Management d) All of these

24. If the board disagrees with recommendation of the audit committee, regarding the name of proposed
auditor to be selected then ______ will send their own recommendation for consideration of members
in the AGM.
a) Board b) C&AG, if it is a government company
c) Audit committee d) Central Government

25. If board fails to appoint the first auditor in case of a non-government company, it shall inform the same
to the members of the company then they have to appoint the auditor within _____ days, at an EGM.
a) 30 b) 60 c) 90 d) 180

26. The first auditor of a government company shall be appointed by _____within ______ days from the
date of registration of the company.
a) BOD, 30 b) C&AG, 30 c) BOD, 60 d) C&AG, 60

27. If the CAG fails to appoint within 60 days, the_______ shall appoint the first auditor of a government
company within the next ________days.
a) BOD, 30 b) BOD, 60 c) BOD, 90 d) Members, 60

28. If the board fails to appoint the first auditor of a government company in the next ___ days from CAG failure,
it shall inform the members of the company who shall appoint such auditor within ___ days at an EGM.
a) 30, 60 b) 60, 90 c) 30, 90 d) 60, 30

29. First auditor shall hold office till the conclusion of the _______
a) 1st term of 5 years b) 2 terms of 5 years each
st
c) 1 AGM d) 2nd AGM

30. Government Company is a company in which_____ of the paid up share capital is held by the central
government or by any state government or governments or partly by the central government and partly
by one or more state governments.
a) 51% b) Less than 51% c) Not less than 51% d) More than 51%

31. If the appointment of subsequent auditor is not ratified by the members of a non-government
company, then it becomes a casual vacancy which is to be filled by the _______as per sec 139(8).
a) BOD b) C&AG c) Audit Committee d) CG

32. An individual auditor (or)firm who(or) which has completed their terms i.e.one term or two terms of 5
years, shall not be eligible for re-appointment as auditor in the same company for a period of _____
years from the completion of their respective term.
a) 10 b) 5 c) 5 (or) 10 d) None of the these
33. The non-government company shall inform about the appointment of subsequent auditor in the Form
_____ to the registrar within 15 days the meeting in which the auditor is appointed.
a) ADT-1 b) ADT-2 c) ADT-3 d) None of these

34. CAG has to appoint the subsequent auditor in case of a non-government company within_____ days
from the commencement of the financial year
a) 30 b) 180 c) 280 d) 80

35. casual vacancy is arising in the office of auditor due to any reason except on account of ______
a) Expiry of his term b) Resignation c) Other than resignation d) Death
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36. Casual vacancy in a non -government company shall be filled by the ______within _____days.
a) Shareholders, 30 b) BOD, 30 c) Shareholders, 90 d) BOD, 90

37. the tenure of auditor who appointed in the case of casual vacancy is till the conclusion of the _______
a) 1st AGM b) 6th AGM c) Next AGM d) 5 years

38. ________ is the form, in which the auditor, who resigned from his office, should specify the reasons
and other facts relevant to his resignation.
a) ADT-2 b) ADT-1 c) ADT-3 d) None of these

39. Auditor of a government company who resigned from his office shall file reasons for resignation to_______.
a) Company b) ROC C) CAG d) All of the these

40. The provisions relating to rotation of an auditor are applicable to all private limited companies having
paid up share capital of _______
a) Rs. 10 Cr. or more b) Rs. 50 Cr. or more c) Rs. 25 Cr. or more d) Rs. 5 Cr. or more

41. Transitional period of_______ years from the date of commencement of the companies act for the
compliance of rotation of auditors is given.
a) 5 b) 3 c) 10 d) 7

42. Auditor’s remuneration not include_______

a) Remuneration for any other services rendered by auditor at the request of the company
b) Audit fee payable
c) The expenses, if any, incurred by the auditor in connection with the auditor
d) Facility extended by company to the auditor

43. The specified number of tax audit assignments under section 44AB of income tax act, 1961 that an
auditor, as an individual or as a partner of a firm, can accept is ______numbers.
a) 20 b) 60 c) 30 d) 40

44. Auditor has the right of access to books, documents, vouchers at all-times i.e._________.
a) Any days any hours b) working days, working hours
c) Working days, any hours d) none of the above

45. Auditor has the power to access_______ books.

a) Financial books b) Minutes c) Statistical records d) All of these

46. Deciding the matters in respect of which the auditor is required to obtain information and explanation is
a matter of professional judgment of _______.
a) Management b) Auditor c) Predecessor auditor d) TCWG

47. If the auditor is unable to get the required information, then he can mention the same in his ______
a) Audit programme b) Letter of weakness c) Audit report d) None of these

48. All notices of _______ must be send to the auditor of the company
a) AGM b) EGM c) AGM & EGM d) Board Meeting

49. Retiring auditing can make representation against his removal to the ______
a) Shareholders b) Company c) Central Government d) ROC

50. Auditor can exercise lien on books and documents placed at his possession by the client for _______
a) Non-payment of fees b) disagreement with the management
c) If management has no integrity d) All of the above

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51. Under section 128 of the companies act, books of accounts of a company must be kept at the ______.
a) Head office b) Registered office
c) Any place other than registered office d) corporate office

52. Lien is exercised in respect of ________property.

a) auditor’s b) client’s c) debtors d) Immovable

53. _______of the companies act, 20013 describes the auditor’s duty to make inquire into some matters.
a) Sec.141(1) b) Sec.141 (3) c) Sec.143(1) d) Sec 143(3)

54. As per sec 143(1), auditor has to inquire whether transactions of the company which are represented
merely by _______ entries are prejudicial to the interest of the company.
a) Book b) contra c) opening d) closing

55. The auditor should make report to the members on the sec 143(1) matter only if there are ___.
a) Qualifications b) satisfactory remarks c) a & b d) None of these

56. The auditor should make a report to the members on the sec143 (3) matters only if there are ______.
a) Clean observations b) Adverse observations c) a) & b) d) None of these

57. ________ covers the provisions relating to the signing of audit report in the companies act, 2013.
a) Sec 141 b) sec 142 c) sec 145 d) Sec 143(2)

58. According to the companies act, 2013, only ____ has the authority to prescribe the standards on
auditing (or) addendum there to.
a) AASB b) CG c) NFRA d) All of these

59. Duties of the auditor to report on fraud are covered by ____ of the companies act ,2013
a) Sec 143(9) b) Sec 143(1) c) Sec 143 (2) d) Sec 143(12)

60. Auditor should report the matter relating to fraud only if the amount is Rs._______
a) Less than 1 cr. b) 1 crore c) 1 crore or more d) More than 1 crore

61. The auditor should report to the CG regarding fraud matter in the from ______
a) ADT-1 b) ADT-2 c) ADT-3 d) ADT-4

62. _______ is eligible to conduct audit of a branch, which is situated in a country outside India.
a) Company’s auditor b) accountant
c) Person duly qualified as per law of that country d) all of the above

63. The reporting of fraud by the auditor as per section 143(12) shall also extend to ______
a) Branch auditor b) cost accountant in practice
c) Company secretary in practice d) all of the above

64. ______can appoint branch auditor.

a) Members b) Board of directors with the approval of members
c) A or B d) None of the above

65. The details of fraud reported by auditor reported to the audit committee (or) the board shall be
disclosed in board’s report if the fraud amount in RS _______
a) less than 1cr b) 1cr c) 1cr or more d) more than 1cr

66. Auditor should report the matter to the board or the audit committee, as the case may be,
within______ days of his knowledge of the fraud.
a) 2 b) 15 c) 45 d) 60
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67. when more than one auditor is appointed for the same company for the same financial year, then,
such auditors are called ________
a) Joint auditors b) Principal auditor, another auditor
c) Statutory auditor, internal auditor. d) Financial auditor, cost auditor

68. _______is one of the disadvantages of joint audit

a) Lower work load b) Pooling and sharing of expertise
c) Improved services to the client d) none of the above

69. Joint auditors should divide work among themselves on basis of _______
a) Geographic location b) Functional areas c) Period d) all of the above

70. As per SA 299, each joint auditors is entitled to ______on the work of other joint auditors
a) Review b) rely c) investigate d) none of the above

71. The responsibilities of joint auditors concept is dealt by _____

a) SA 600 b) SA 299 c) SA 402 d) none of the above

72. Appointment of subsequent auditors of other than government companies are dealt in section ____.
a) 139(1) b) 139(2) c) 139(3) d) 139(4)

73. Appointment of subsequent auditors of government companies are dealt in section _______.
a) 139(4) b) 139(5) c) 139(6) d) 139(7)

74. Appointment of subsequent auditors of government of Government Company is appointed by _____.

a) C&AG b) CG c) Either (a) or (b) d) None of the above

75. Appointment of subsequent auditors of government of government company shall be done on (or) before
a) 27th September b) 28th September c) 26th September d) None of the above

76. The subsequent auditors appointed by CAG will hold the office till
a) 5 years with 2 terms b) 3 years with 2 terms
c) 3 years maximum of 3 terms d) none of the above

77. Notice of intimation of appointment of auditor has to be filed by

a) Company b) Shareholders c) Auditors d) All of the above

78. Notice of intimation of appointment of auditor has to be filed with

a) Auditors b) ROC c) CG d) All of the above

79. Notice of intimation of appointment of auditor has to be done in form no. _________.
a) ADT-1 b) ADT-2 c) ADT-3 d) ADT-4

80. Notice of intimation of appointment of auditor has to be done within…….days of meeting in which
auditor was appointed.
a) 15 b) 30 c) 45 d) 60

81. Filling of casual vacancy of auditor is dealt in

a) 139(5) b) 139(6) c) 139(7) d) 139(8)

82. Filling of casual vacancy other than resignation for other than government companies has to be done by
a) CAG b) BOD c) ROC d) CG

83. Filling of casual vacancy by resignation of auditors in other than government companies has to be
done by
a) Shareholders b) BOD
c) BOD & to be approved at AGM d) BOD & to be approved at board meeting
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84. Filling of casual vacancy by other than resignation of government company shall be done by
a) CG b) CAG c) BOD d) None of the above

85. In case of government company, where CAG fails to appoint auditors, where there is a casual vacancy
other than resignation, it has to be filed by
a) CG b) SH’s c) BOD d) None of the above

86. In case of government company, where CAG fails to appoint auditors, where there is a casual vacancy
other than resignation, it has to be filed within
a) 15 days b) 30 days c) 45 days d) 60 days

87. Auditor who has resigned to company has to intimate to

a) Company b) ROC c) Both (a) & (b) d) None of the above

88. Resignation of auditors has to be filled with

a) Company b) ROC c) Both (a) & (b) d) None of the above

89. Resignation of auditors has to be filled by

a) Company b) Auditor c) Both (a) & (b) d) None of the above

90. Resignation of auditors has to be filled in form no.

a) ADT-1 b) ADT-3 c) ADT-3 d) ADT-4

91. Resignation of auditors has to be filled within ______ days of registration

a) 15 b) 25 c) 30 d) 45

92. Rotation of auditors is dealt in section

a) 139(1) b) 139(2) c) 139(3) d) 139(4)

93. The following are not class of companies required to rotate auditors by rotation.
a) All listed companies
b) Unlisted public companies with paid-up share capital of Rs. 10 crores (or) more.
c) All private limited companies with paid-up share capital of Rs. 50 crores (or) more.
d) Companies having borrowings from directors, relatives exceeding fifty crores (or) more.

94. Rotation of auditors is not applicable to all, except:

a) Small companies b) All listed companies
c) All private limited companies with paid-up share capital not exceeding 50 crores.
d) All unlisted public companies with paid-up share capital of less than 10 crores.

95. While computing borrowings in case of class of companies for which rotation of auditors is applicable,
the following has to be considered.
a) Directors b) Related parties c) Banks d) Both (a) & (b)

96. While computing borrowings in case of class of companies for which rotation of auditors is applicable,
the following has to be considered except
a) Directors b) Related parties c) Banks d) Both (a) & (b)

97. For calculating ceiling on number of audits that can be accepted by a firm, the following are excluded except
a) One person company
b) Private companies with paid-up capital 100 crores (or) more
c) Private companies with paid-up capital up to 100 crores
d) Dormant companies

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98. Which kind of resolution is required for Re-appointment of auditor at every annual general meeting
a) Ordinary resolution b) No resolution c) Special resolution d) None of the above

99. X Ltd., company failed to get ratify the re-appointment of auditors in its 4th AGM. It is presumed that
a) There is casual vacancy b) There is no casual vacancy
c) Auditor is re-appointed for next year d) Auditor has to resign and go.

100. Removal of auditor before the expiry of term is dealt in section

a) 140(1) b) 140(2) c) 140(3) d) 140(4)

101. For removal of auditors, form to be filled in

a) ADT-1 b) ADT-2 c) ADT-3 d) ADT-4

102. For removal of auditors, application has to be made by company to

a) CG b) ROC c) MCA d) None of the above

103. After the receipt of confirmation from central government, the company has to hold general meeting
with ________ days.
a) 15 b) 30 c) 45 d) 60

104. Procedure to appoint an auditor other than retiring auditor was laid down in section _____.
a) 140(2) b) 140(3) c) 140(4) d) 140(5)]

105. Can an un registered partnership firm become the auditor of company?

a) No b) Yes c) can’t say d) None of the above

106. There are 12 partners in a partnership firm. 7 partners are in USA. 5 are in India. In India 3 are
practicing Chartered Accountants has 2 are practicing cost accountants. Can the firm accept cost audit
in India for a company?
a) No b) Yes c) can’t say d) None of the above

107. Raj and co, Chartered Accountants are holding 12 public companies with a paid up capital of Rs. 25
crores each, 8 private companies with paid up capital Rs. 25 crores each. Now, private limited
company with paid up capital of Rs. 150 crores. Can Raj & Co. accept the said assignments?
a) No b) Yes c) can’t say d) None of the above

108. First auditors of Government Company shall be appointed by _____.

a) CAG b) BOD c) CG d) all the above

109. Where CAG fails to appoint auditors of government company, it has to be filled by
a) BOD b) CG c) other members d) None of the above

110. First auditors of government company shall be appointed with in

a) 30 days from date of registration by C&AG
b) 60 days from date of certificate of comment of business by C&AG
c) 90 days from date of registration by C&AG d) None of the above

111. Government Company is defined u/s _________ of companies act, 2013.

a) 2 (42) b) 2 (43) c) 2 (44) d) 2 (45)

112. First auditors of Government Company shall be appointed u/s ________.

a) 139(4) b) 139(6) c) 139(7) d) 139(8)

113. First auditors of other than government company shall be appointed by

a) BOD b) Shareholder’s c) C&AG d) CG
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114. In case of criminal liability of audit firm, other than fine, _____________ be liable
a) All partners of the firm
b) Only concerned partner (or) partners who acted in such manner
c) Only partner who signed audit report d) Only partner who has knowledge of fraud

115. Where auditor contravenes the provisions of sec. 139, 143, 144 or 145, he shall be punishable with
fine of maximum ______________.
a) 5,00,000 b) 4 times of remuneration
c) Least of (a) or (b) d) highest of (a) or (b)

116. Where auditor contravenes the provisions of sec. 139, 143, 144 or 145, he shall be punishable with
fine of minimum ______________.
a) 25,000 b) 50,000
c) 10,000 for first and 50,000 for sub sequent d) 5,000

117. Where company contravenes the provisions of sec. 139, 143, 144 or 145, company shall be
punishable with fine of minimum ______________.
a) 1,00,000 b) 50,000 c) 25,000 d) least of 50,000

118. Where company contravenes the provisions of sec. 139, 143, 144 or 145, company shall be
punishable with fine of maximum ______________.
a) 25,00,000 b) 8 times of remuneration
c) Least of (a) or (b) d) high of (a) or (b)

119. Casual vacancy by resignation at cost auditor shall be filled by

a) Board of directors b) Audit committee
c) Share holders d) None of the above

120. Every cost auditor shall submit his report in form no:
a) CRA -1 b) CRA -2 c) CRA -3 d) CRA -4

121. Every cost auditor shall submit his report with __________.
a) 180 days from the beginning of FY b) 180 days from the closure of FY
c) 180 days after the date of his appointment d) None of the above

122. Neet & Co., Chartered Accountants have been auditors of XYZ ltd, since 2009-2010. They were
reappointed upto FY 2018-19. During the AGM of XYZ Ltd. in 2019, which notice is required to remove
the auditors.
a) Special notice b) Ordinary notice
c) No notice is required d) None of the above

123. Comment on applicability of cost audit and maintenance of cost records in given cases below:
Turnover Total Turnover
Regulated Non- Regulated Other
X Ltd 10 5 15 30
Y Ltd 25 15 20 60
Z Ltd 20 20 61 101
XY Ltd 0 38 63 101
XYZ Ltd 1 4 170 175
ABC Ltd 0 0 145 145
i) Which companies has to maintain cost records
a) All companies b) All companies except X Ltd only
c) All companies except X Ltd and ABC Ltd. d) None of the above
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ii) Which companies has to get its cost records audited
a) Y Ltd, Z Ltd, XY Ltd, XYZ Ltd and ABC Ltd b) Z ltd, XY Ltd, XYZ Ltd only
c) All companies except ABC Ltd and X Ltd d) All companies except Y Ltd, X Ltd

124. Rahim & Co. Chartered Accountants failed to intimate the registration to the authorities’ concerned /
competent authority. Incase continuous failure, further penalty that can be levied is
a) 500 per day, subject to max of 5 lakhs b) 200 per day, subject to max of 5 lakhs
c) 100 per day, subject to max of 5 lakhs d) 1000 per day, subject to max of 5 lakhs

125. Mr. X a person concerned u/s 140(5); made on application to NCLT, pune for removal of Nani & Co. as
auditors of ABC Ltd. The tribunal is satisfied about the application _______________ will be directed.
a) Company i.e. ABC Ltd b) Central Government
c) Tribunal d) Mr. X

126. In the case of firm of auditors the liability u/s 140(5): (Removal of auditors by tribunal) shall be
a) On all partners, as they are jointly and severally responsible
b) On partners who acted as such
c) On partners who signed audit report u/s 145 d) On partners who conducted audit

127. Mr. X, Cost Accountant was appointed as cost auditor u/s 148 of Companies Act, 2013. He shall
comply with
a) Cost Accounting Standards, issued by NFRA b) Cost Auditing Standards, issued by NFRA
c) Cost Auditing Standards, issued by CWA, 1959
d) Cost Accounting Standards, issued by CWA, 1959

128. Roy, a practicing chartered accountant is holding securities of XYZ Ltd. with Face Value of Rs. 99,500.
The Market Value of securities is Rs. 1,01,250. Is he qualified for appointment as auditor?
a) Yes, as Mr. Roy is holding securities of Face Value of < Rs.1 lakh
b) No, Holding of Securities with XYZ will leads to substantial interest and hence not qualified.
c) Yes, only on becoming market value of shares < Rs. 1 lakh
d) No, as an date of appointment the Market Value of Shares is > Rs. 1 lakh

129. Roy, a relative of Mr. R, partner of RB associates chartered accountants is holding securities of XYZ
Ltd. with Face Value of Rs. 99,500. The Market Value of securities is Rs. 1,01,250. Is Roy qualified for
appointment as auditor?
a) Yes, as relatives can hold securities of Face Value < Rs. 1 lakh
b) No, Holding of Securities with XYZ will leads to substantial interest and hence not qualified.
c) No, as relative of partner cannot hold securities
d) Yes, as and when market value of securities < Rs. 1 lakh

130. BC & Co. Chartered Accountants having partner Mr. Zee, a relative of Mr. B has availed a loan of
Rs.5,05,250 on 01.04.2017 from dawn Ltd. The outstanding balance as on 30.09.2017 is Rs.4,95,210.
Can BC & Co. accept the auditor’s position of dawn Ltd. for the year 2017-18.
a) Yes, as relatives can take loan upto 5 lakhs b) Yes, only after the clearance of o/s debt of zee
c) Yes, as relatives can be indebted up to Rs. 1 lakh
d) No, as relatives cannot be indebted

131. India ltd, a listed company wants Mr. Rao and co to conduct statutory audit under companies Act and
tax audit assignment for same year. Can Mr. Rao and co accept such appointment as tax auditor.
a) No, as statutory auditor cannot render any other service
b) Yes, upon taking special permission from ROC/CG
c) Yes, upon taking special resolution from members
d) Yes, with out any permission in general meeting
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132. Radha ltd was incorporated on 10.04.2006. M/s R & Co. a firm of Chartered Accountants was
appointed for conduct of audit of Radha ltd on 12.04.2006 by BOD. They were continuously re
appointed upto 2014-15. As per companies Act 2013, you are required to indicate the year of audit
that required no notice for removal of R& Co. in case Radha Ltd. was a listed company.
a) 2014-15 b) 2015-16 c) 2016-17 d) 2017-18

133. Radha ltd was incorporated on 10.04.2006. M/s R & Co. a firm of Chartered Accountants was
appointed for conduct of audit of Radha ltd on 12.04.2006 by BOD. They were continuously re
appointed upto 2014-15. As per companies Act 2013, you are required to indicate the year of audit
that required no notice for removal of R& Co. in case Radha Ltd. was a Small company.
a) 2015-16 b) 2016-17 c) 2017-18 d) None of the above

134. In case of unlisted Public companies, Audit committee shall be formed by the company in its first year
of incorporation.
a) True b) False

135. Mrs. Rao who is a qualified chartered accountant and having valid certificate of practices was offered
as auditors of ABC ltd. the father in law of Mrs. Rao is director of ABC ltd. can Mrs. Rao accept the
assignment as auditor.
a) No, as relations hold key managerial position
b) No, as director in relative to Mrs. Rao
c) Yes, as any person can be key managerial person in relatives
d) Yes, as there is no relationship between Mrs. Rao and her father in law.

136. UCO ltd, wishes to appoint D & co chartered accountants as their auditors you are given with following data:
Partners Relatives Total
Share held (face value) - 95,000 95,000
o/s debt 1,75,000 2,40,000 4,15,000
Guarantee given 20,000 75,000 95,000
1,95,000 4,15,000 6,05,000
Share value (market) - 1,20,500 -
Can D & Co. accept the assignment given by UCO LTD.?
a) Yes, as all conditions for accepting the assignment u/s 141 have been fulfilled and there is no
disqualification
b) No, as relatives held shares of market value exceeding 1 lakh
c) No, as total shares indebted ness and guarantee given is exceeding 5 lakhs
d) Yes, as partners alone has to be considered for calculating the prescribed limits under the
provisions of companies Act, 2013

137. M/s ABC & Co. appointed as auditors of XYZ ltd on 14.05.2018. The company was incorporated on
11.05.18 on board meeting dated 12.05.2018, the auditors were selected. Who has to fix the
remuneration for auditors?
a) Members in general meeting b) ABC and Co.
c) XYZ ltd in its first AGM d) Board of Directors

138. Audit report was read out in XYZ ltd of annual general meeting. It shall be kept open to inspection to
_______ of the company.
a) Auditors of XYZ ltd b) Board of Directors of XYZ ltd
c) Members of XYZ ltd d) All the above

139. Auditor has _________ at general meeting on any part which concerns him as auditor
a) Right to be heard b) Right to participate
c) Right to vote d) All the above
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140. The CAG has received audit report of XY Government Company on 10.10.2018. C&AG has right to make
supplement report on or before _______.
a) 30 days 09.11.2018 b) 45 days 24.11.2018
c) 60 days 08.12.2018 d) 90 days 07.11.2018

141. Sec 143(9) levies every auditor to complies with

a) Accounting standards b) auditing standards
c) Both of the above d) either of (a) or (b)

142. As per section 143(12) all auditors shall report on fraud except
a) Cost auditor u/s 148 b) secretarial auditor u/s 204
c) Internal auditor u/s 138 d) none of the above

143. Vijay bank has invested in shares of union inc. on 10.10.2004 Rs.25 lakhs on 04.10.2017, there
investments were sold for Rs. 24.75 lakhs as an auditor RB & Co. has to
a) Report the amount of loss in his audit report
b) Report on loss and reasons there of shall be asked for
c) As the investments are related to other coy and as per 143(1)(c) reporting to be made
d) None of the above

144. Mr. H a director of HMP ltd was disqualified u/s 164(2) of companies Act, 2013. As an auditor of HMP
ltd, M/s KR & co has to
a) Report the matter to central government / ROC b) Report the matter in his audit report u/s 143(3) (9)
c) Report to HMP ltd and to ensure that Mr. H is removed as director before issue of audit report
d) No reporting requirements as auditor has to inquire into dis qualification matter of directors only.

145. ________ resolution is required for removal of auditors before the expiry of their term
a) Special b) General c) Specific d) either (a) or (b)

146. Application for removal of auditors has to be filed by company in form no

a) ADT - 1 b) ADT - 2 c) ADT - 3 d) ADT - 4

147. The company X ltd proposes to remove the auditors R & Co. at the general meeting on 30.10.2018 form no
ADT - 2 has to be filed by company on (or) before
a) 15 days (14.11.2018) b) 30 days (29.11.2018)
c) 1 month (30.11.2018) d) 45 days (14.12.2018)

148. Maximum number of tax audit assignments that an auditor can accept is
a) Up to 59 b) 60 c) 60 or more d) None of the above
149. The company has filed ADT - 2 on 14.10.2018. it has received approval from on 18.11.2018. the company
shall hold general meeting on or before
a) 17.01.2019 b) 17.12.2018 c) 02.01.2019 d) None of the above

150. The company has defaulted in payments to creditors. As a company auditor you should
a) Report on such defaults under CARO, 2016
b) Don’t report as it is not a matter concerned for auditor
c) Don’t report as the enterprise has to comply with other payments
d) Don’t report as it is a non-material item

151. The company X Inc. has made public issue during the year 2018-19. As an the auditor of x Inc. you should
(under CARO, 2016)
a) Report on such issue under clause b) Need not be reported
c) Both (a) and (b) d) either (a) or (b)

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4. RISK ASSESSMENT AND INTERNAL CONTROL

1. Misstatements can arise from ________.
a) Error b) fraud c) error or fraud d) none of the above

2. Audit risk is the risk that an auditor gives _______ opinion when the financial statements are materially
misstated.
a) Qualified b) in appropriate c) adverse d) disclaimer

3. Audit risk is a function of the risks of material misstatement and______

a) Inherent risk b) control risk c) detection risk d) none of the above

4. Management is responsible for ________ risk.

a) Inherent b) control c) detection d) inherent and control

5. _______ risk is raised due to failure of controls

a) Inherent risk b) control risk
c) Risk of material misstatement d) detection risk

6. The auditor cannot control the _______ risk but he can only assess such risk.
a) Risk of material misstatement b) Detection risk
c) Sampling risk d) none of the above

7. _______ Risk is raised due to failure of auditor.

a) Detection risk b) inherent risk c) control risk d) all of the above

8. There is ______ relation between the risk of material misstatement and detection risk
a) Close b) direct c) inverse d) none of the above

9. If the auditor assessee the risks of material misstatement as high, then he will perform _____audit
procedures, thereby, the detection risk automatically reduced.
a) Less b) normal c) more d) none of the above

10. Auditor can obtain knowledge of client’s business from ________

a) Previous year audit working papers b) Publications
c) Minutes of shareholders d) all of the above

11. Internal controls refers to policies and procedures designed , implemented and maintained by _____
and _____
a) Management, internal auditor b) Internal auditor, statutory auditor
c) Management, statutory auditor d) Management, those charged with governance

12. ______ is one of the objectives of internal control

a) Safeguarding of assets b) Reliability of the entity’s financial reporting
c) Effective compliance of applicable laws d) all of the above

13. Internal controls can only provide _____assurance but not______, regarding the achievement of its
stated objectives due to inherent limitations of internal controls.
a) Absolute, reasonable b) Reasonable, absolute
c) Absolute, conclusion d) None of the above

14. _______error may occur while carrying onto I.C. system due to carelessness, misjudgment and
misunderstanding of instructions.
a) System b) human c) Tolerable d) all of the above

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15. Internal check has been defined as the checks on the ______ transaction whereby the work of one person
is automatically checked by the work of another by making both jobs complementary to each other.
a) Non-recurring b) day-to-day c) exceptional d) all of the above

16. Every member of the staff should be encouraged to go on leave at least once in a______, so that the
frauds committed and concealed by such employee can be detected in his absence.
a) month b) quarter c) year d) half- year

17. During the year end stock taking, trading activities should be suspended and physical verification of
stock should not be done exclusively by the ______
a) Production staff b) Stores staff c) Delivery staff d) All of the above

18. To prevent misappropriation of cash, mechanical devices, such as the ______, should be employed.
a) Automatic cash register b) Cash register
c) Division of work d) Petty cashier

19. Elements of the control environment that may be relevant when auditor obtaining an understanding
of the control environment include ______
a) Commitment to competence b) Organizational structure
c) Human resource policies and practices d) All of the above

20. Control activities are the policies and procedures that help ensure that _______ directives are carried out
a) Management b) Audit committee c) CIO d) CISO

21. Tests of control may include ______

a) Inspection b) Re-performance c) Inquiries d) All of the above

22. ________ is a complete and exhaustive description of the system as found in operation by the auditor
a) Check list b) Narrative record c) Flow chart d) ICQ

23. Narrative record is recommended in cases where ______ control system is in operation
a) Internal b) No formal c) Formal d) All of the above

24. _______ method is more suited to small business for evaluation of internal controls by the auditor
a) Narrative record b) ICQ c) Checklist d) Flowchart

25. _______ is a series of instructions or questions which a member of the auditing staff must follow or answer.
a) Narrative record b) Flow chart c) ICQ d) Check list

26. _______ refers to a complete series of questions in a logical & sequential order prepared by the
auditor concerning internal control and answered by the client’s employees.
a) ICQ b) Check list c) Narrative record d) Flow chart

27. The auditor prepares a report of deficiencies i.e. ________ observed by him through ICQ and send it
to management along with recommendations for improvement.
a) Written representation b) Letter of weakness
c) Engagement letter d) Auditor report

28. _______ is a graphic presentation of each part of the company’s system of internal control of the
company’s system of internal control such as the nature of its activities and various channels of goods
and materials as well as cash, both inward and outward
a) ICQ b) Narrative record c) Flowchart d) Check list

29. ________ gives bird’s eye view of the entire process of manufacturing, trading and administration of
an entity.
a) Flow chart b) Check list c) ICQ d) Narrative record
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30. ________ is not a method for evaluation of internal controls by the auditor.
a) Surprise check b) ICQ c) Check list d) Flow chart

31. The auditor does _______ procedure to ascertain that the existence, effectiveness and working of the
internal control system
a) Substantive b) compliance c) Cut - off d) None of these

32. Letter of weakness is a report issued by auditor stating the weakness in internal control mechanism
along with its potential effect to the _______.
a) Shareholders b) Stake holders c) Management d) Employees

33. Letter of weakness is a statement that auditor’s observations are not based on ______ checking but
on ____ check.
a) Test, surprise b) Surprise c) Exhaustive Test d) Test, exhaustive

34. The auditor is considering ________ to determine the nature, timing and extent of audit procedures to
be performed.
a) Organisational structure b) Internal control
c) Integrity of management d) Accounting system

35. It is not the auditor’s objective to express opinion on _______ for management purpose.
a) Financial statements b) Internal controls c) Statement of affairs d) None of these

36. As part of the risk assessment, the _______ shall determine whether any of the risks identified are, in
the________ judgment, a significant risk.
a) Auditor, auditor’s b) Management, auditors
c) Auditor, management’s d) Management, management’s

37. ________ dealing with identifying and assessing the risks of material misstatement through
understanding the entity and its environment
a) SA 330 b) SA 315 c) SA 420 d) SA 402

38. Risk assessment procedures shall include _______

a) Inquiry management b) Analytical procedures
c) Observation and inspection d) All of the above

39. Obtaining an understanding of the entity is a _______ process of gathering, updating and analyzing
information throughout the audit
a) Final b) Continuous c) Single time d) None of these

40. Significant deficiency is a deficiency or combination of deficiencies in internal control that is of

sufficient importance, in the auditor’s professional judgment, to merit the attention of ________
a) Management b) TCWG
c) Management & TCWG d) None of the above

41. The auditor shall communicate ______ in writing to management on a timely basis.
a) Significant deficiencies b) Other deficiencies c) a) & b) d) None of these

42. ________ in internal control identified during the audit that are of sufficient importance to merit
management’s attention as per auditor’s professional judgment but not to TCWG.
a) Significant deficiencies b) Other deficiencies c) a & b d) None of these

43. ________ procedures are performed by the auditor to obtain an understanding of the entity and its
environment.
a) Substantive b) Compliance c) Risk assessment d) Cut -off

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44. Mr. intelligent is a manager at Good ltd, who is vested with authority to sign cheques up to Rs. 10,000.
While performing the audit, Bad & Co.; the auditor noticed that there were many cheques of Rs. 9,999
which were signed by Mr. intelligent. It was further found that he has spitted a payment (amounting to
more than 10,000 each into two or more cheques less than 10,000). This type of fraud is
a) Misappropriation of assets b) Misappropriation of cash
c) Misappropriation of goods d) Manipulation of accounts

5. PLANNING AN AUDIT
1. Misstatements are considered to be material if they_______, could influence the economic decisions
of users taken on the basis of the financial statements.
a) Individually b) In the aggregate c) a or b d) None of these

2. If applicable financial reporting framework provides any reference to the auditor in determining
materiality for the audit , then he shall consider_______.
a) Size of misstatement b) Such reference accordingly
c) Nature of misstatement d) Needs of users of financial statements

3. The concept of materiality is applied by the auditor both in planning and performing the audit, and in
evaluating the effect of identified misstatements on the audit and of ______, if any, on the financial
statements and informing the opinion in the auditor’s report.
a) Misstatements b) Uncorrected misstatements
c) Corrected misstatements d) All of the above

4. An item may not be _______ in current year but it was important when compared with previous year
then that item would become ______ this year also.
a) Important, important b) Important, Unimportant
c) Unimportant, important d) All of the above

5. _______ deals with materiality in planning and performing an audit.

a) SA 300 b) SA 320 c) SA 315 d) SA 330

6. As per SA 320, determining materiality involves the exercise of professional Judgment of the ___.
a) Direct b) An inverse c) Close d) None of these

7. _______ Audit is commonly understood to be an audit which begins after the books have closed at the
end of the accounting period and thereafter is carried on continuously until completed.
a) Final b) Continuous c) Concurrent d) All of these

8. An ______ consists of a series of verification procedures to be applied to the financial statements and
accounts of a given company for the purpose of obtaining sufficient evidence to enable the auditor to
express an informed opinion.
a) Audit report b) Audit programme c) Audit note book d) All of these

9. _______ audit is one in which the auditor’s staff is engaged continuously in checking the accounts of
the client, during the whole year around at quiet frequent intervals say weekly, monthly, quarterly etc.
a) Final b) Continuous c) Annual d) Completed

10. The auditor shall establish an overall audit _____ that sets the scope, timing and direction of the audit,
and that guides the development of the audit _______.
a) Plan, strategy b) Programme, strategy
c) Strategy plan d) none of the above

11. The _______ of the audit staff can be reviewed in comparison with the audit programme for evaluating
the performance of audit staff.
a) Audit report b) Working papers
c) Letter of weakness d) Written representation
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12. The term ______ stands for examination of a few selected transactions instead of a complete
examination of all the transactions.
a) Test check b) Internal check c) Check list d) None of the above

13. The extent of test checking is determined on the basis of examination of ______ system.
a) Computer b) Internal control c) Accounting d) All of the above

14. _______ is the application of audit procedures to less than 100% of items within a population such that
all sampling units have a chance of selection in order to draw conclusions about the entire population.
a) Audit sampling b) Sample size c) Sample design d) Sample selection

15. ______ is the risk that the auditor’s conclusion based on a sample may be different from the
conclusion if the entire population were subjected to the same audit procedure.
a) Audit risk b) Sampling risk c) Non- sampling risk d) None of these

16. ______ deals with the concept of audit sampling.

a) SA 230 b) SA 500 c) SA 530 d) SA 600

17. Random sampling includes two very popular methods which are _____ and _____.
a) Simple random sampling, cluster sampling
b) Simple random sampling, stratified sampling
c) Block sampling cluster sampling d) None of the above

18. ______ Method is suitable for homogeneous populations without any wide variations.
a) Stratified sampling b) Simple random sampling
c) Monetary unit sampling d) All of the above

19. ________method is suitable in case of heterogeneous populations where are wide variations within
the population
a) Stratified sampling b) Monetary unit sampling
c) Simple random sampling d) All of the above

20. Under the stratified sampling, whole population is divided into groups such group name is known as
a) Strata b) Cluster c) Block d) Stratum

21. The process of dividing the whole population into groups is known as _______
a) Stratification b) Ratification c) Stratum d) Systematic selection

22. It can be seen that the stratified sampling is simply an extension of _______
a) Simple random sampling b) Block sampling
c) Cluster sampling d) Haphazard sampling

23. Block selection / sampling method involves selection of a block(s) of ______items from the population.
a) Homogenous b) Heterogeneous c) Consecutive d) Material

24. Under cluster sampling method, ______ are examined by the auditor
a) Material clusters b) All clusters c) Only selected clusters d) None of the above

25. ________method is a type of value-weighted selection in which sample size, selection and evaluation
results in a conclusion in monetary amounts.
a) Haphazard selection b) Block selection c) Cluster sample d) Monetary unit sampling

26. In ______ method, the auditor selects the sample without following a structures technique.
a) Haphazard selection b) Monetary unit sampling
c) Cluster sampling d) Block selection
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27. The auditor shall undertake the preliminary engagement activities _____ the current audit
engagement.
a) At the ending of b) at the beginning of c) During d) All of the above

28. The auditor shall document ________

a) The overall audit strategy
b) Significant changes made during the audit to plan/ strategy
c) The audit plan d) All of the above

29. Sampling units are the individual items constituting a______

a) Sample b) Population c) Anomaly d) None of the above

30. An audit procedure designed to evaluate the operating effectiveness of controls preventing or
detecting and correcting material mis- statements at assertion level is____
a) Test of details b)Test of controls
c) Substantive procedures d) all of the above

31. The application of procedures to some or all items in a population

a) Test b) Sample c) Either (a) or(b) d) Both (a) & (b)

6. PERFORMING AN AUDIT
1. As per _______, audit evidence is the information obtained by the auditor by performing audit
procedures in order to arrive at the conclusions on which the auditor’s opinion is based.
a) SA 500 b) SA 501 c) SA 505 d) SA 510

2. Audit evidence includes both ________

a) Information contained in the books of accounts.
b) Information contained in the financial statements.
c) Other information obtained by the auditor d) All of the above

3. Types of audit evidence based on form or nature are ______ evidences.

a) Documentary b) Oral c) Visual d) All of the above

4. ______ Evidence, which is obtained by the auditor through actual observation procedure.
a) Visual b) Oral c) Written d) None of the above

5. ______ is the example for internal evidence.

a) Purchase invoice b) Sales invoice c) External Confirmation d) quotations
6. _______ is the example for external evidence.
a) Purchase invoice b) GRN c) Sales invoice d) MRN

7. Evidence, which is created outside the entity being audited, is called ______.
a) External evidence b) Internal evidence c) Written evidence d) Visual evidence

8. In an audit situation, the bulk of evidence that an auditor gets is _______ in nature
a) External b) Internal c) A & b d) None of the above

9. Where external evidence is not readily available to match, the auditor should try to match various
________ in support of each other
a) Written evidence b) Visual evidences c) Internal evidences d) None of the above

10. Sufficiency refers to _______ and appropriateness refers to _______

a) Quality, quantity b) Quantity, quality c) Quantity, poor quality d) None of the above
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11. _______ involves examining records, or documents, whether internal or external, in paper form
electronic form, or other media, or a physical examination of an asset.
a) Inspection b) Observation c) Re-calculation d) Re- performance

12. _______ consists of seeking information form knowledgeable persons, both financial and non-
financial, within the entity or outside the entity.
a) Inspection b) Re- calculation c) Observation d) Inquiry

13. Inquiries may range from formal written to _____ inquiries.

a) Formal oral b) Informal written c) Informal oral d) None of the above

14. Evolution of responses to inquiries is an integral part _____ process.

a) Inspection b) Inquiry c) observation d) external confirmation

15. ________ consists of looking at a process or procedure being performed by others

a) Observation b) Inspection c) Inquiry d) Analytical procedure

16. _______ consist of evaluation of financial information by a study of acceptable relationships among
both financial and non-financial data.
a) Re-performance b) Re-calculation c) Inspection d) Analytical procedures

17. _______ involves the auditor’s independent execution of procedures or controls that were originally
performed by the entity’s internal control.
a) Re-calculation b) Re-performance
c) Analytical procedure d) External confirmation

18. Analytical procedures include _______

a) Analysis of trends and rations b) Identification of abnormal deviations
c) Investigation of abnormal deviations d) All of the above

19. _______ Procedures deals with examination of internal control to determine the effectiveness of internal
controls, which in turn helps in determining the nature, timing and extent of substantive procedures.
a) Substantive b) Compliance c) Risk assessment d) Cut off

20. _______procedures involves examination of accounting records including financial statements to

determine the authenticity of the information produced by the accounting system.
a) Substantive b) Compliance c) Risk assessment d) Cut off

21. Audit _______ refer to tools adopted for collection and accumulation of audit evidence.
a) Procedures b) Techniques c) Methods d) None of the above

22. Assertions refer to representations given by the _______, either implicitly (or) explicitly, with respect
disclosures in financial statements.
a) Auditor b) Management c) Employees d) Government

23. As per ______ “audit documentation,” audit working papers are the record of audit procedures
performed, relevant audit evidence obtained, and conclusions that the auditor has reached.
a) SA 530 b) SA 330 c) SA 230 d) SA 500

24. Audit documentation is the property of the _________

a) Company b) Managements c) TCWG d) Auditor

25. The retention period for audit engagements ordinarily is minimum ______ years from the date of the
auditor’s report, or, if later, the date of the group auditor’s report.
a) 8 b) 10 c) 7 d) 5

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26. In case of recurring audits, auditor’s generally prepare two types of audit files they are _____
a) Permanent audit file, temporary audit file b) Permanent audit file semi-permanent audit file
c) Permanent audit file, current audit file d) None of the above

27. An audit note book is usually a ______ book in which a large variety of matters observed during the
course of audit are recorded.
a) Important b) Permanent c) Temporary d) Bound

28. Surprise checks are ________.

a) Not form part of normal audit procedures b) Part of normal audit procedures.
c) Rare in audit procedures d) None of the above

29. Areas of surprise check include _______.

a) Cash and investments b) Store and inventories
c) Statutory registers d) All of the above

30. The results of the surprise checks should be communicated to the management if they reveal ___.
a) Any weakness in internal control system b) Any fraud or error
c) Any deficiency in the maintenance of records d) All of the above

31. The element of surprise in an audit in the regard to _____.

a) Time b) Area c) a & b d) None of these

32. _______ implies examination of a few selected transactions from the beginning to the end through the
entire flow of the transaction
a) Audit trial b) Examination in depth
c) Investigation d) All of the above

33. ______ deals with external confirmation.

a) SA 505 b) SA 705 c) SA 501 d) SA 710

34. In the case of positive confirmation request the third party has to give reply to the auditor in ____.
a) Agreement case b) Disagreement case
c) All cases (agreement /disagreement) d) None of the above

35. In the case of negative confirmation request, the third party has to give reply to the auditor in _____.
a) Agreement case b) Disagreement case
c) All cases (agreement/disagreement) d) None of the above

36. _______ is the other information which the auditor may use as audit evidence.
a) Minutes of the meetings b) Manuals containing details of internal controls
c) Conformations from debtors d) All of the above

37. The auditor shall assemble the audit documentation in an audit file and complete the administrative
process of assembling the final audit file within ___ days as per SQC1 after the date of the auditor’s report.
a) 60 b) 45 c) 30 d) 90

38. Expert is an individual or organization possessing expertise in a field ______

a) Accounting b) Auditing
c) Accounting or auditing d) Other than accounting or auditing

39. The ______ in the firm who is a member of the institute of chartered accountants of India and is in full
time practice and is responsible for the engagement and its performance, and for the report that is
issued on behalf of the firm.
a) Engagement partner b) Engagement quality control reviewer
c) Senior partner d) None of the above
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40. If differences of opinion arise between the engagement partner and the engagement quality control
reviewer, then the engagement team shall follow ________.
a) Firms policies and procedures to resolve difference
b) Engagement partner’s guidelines
c) Reviewer guidelines d) None of the above

41. The engagement partner shall take responsibility for ______ of the performance of the audit
engagement by the engagement team as per firm’s review policies and procedures.
a) Direction b) Supervision c) Review d) All of the above

42. ________ deals with quality control for an audit of financial statements.
a) SA 320 b) SA 220 c) SA 620 d) SA 520

43. ___involves tracking a few transactions through the financial reporting system
a) Vouching b) verification c) Walk through test d)Both (a) &(b)

44. An audit procedure designed to detect material mis-statement at assertion level is___
a) Compliance procedures b) substantive procedures
c) Both (a) &(b) d) Either (a) or (b)

7. AUDIT OF ITEMS OF FINANCIAL STATEMENTS

1. Auditor has to ensure that the ______ have passed a resolution for allotment of shares.
a) Shareholders b) Directors c) Audit committee d) none of the above

2. ______ of the companies Act, 2013 deals with issue of shares at premium
a) SEC 52 b) SEC 53 c) SEC 54 d) SEC 62

3. Auditor should ascertain that the nominal value of shares allotted does not, exceed the______ capital.
a) Authorized b) Issued c) Subscribed d) Called up

4. The premium amount collected on the issue of shares should be transferred to the _________
a) Shares premium account b) Reserves
c) Securities premium account d) Share capital account

5. A company shall not issue shares at a discount, except in the case of an issue of _______
a) Right shares b) Bonus shares c) Sweat equity shares d) None of the above
6. The issue of sweat equity shares should be authorized by a______ passed by _____
a) Ordinary resolution, shareholders b) Special resolution, shareholders
c) Resolution board of directors. d) None of the above.

7. Auditor should check that the sweat equity shares are issued to only the ______ of the company
a) Employees b) Director c) Auditors d) A & b

8. In the case of reduction of share capital, the words and reduced, if required by the order of the
tribunal, have been added to the name of the company in the ______
a) Cash flow statement b) Balance sheet
c) Statement of profit or loss d) All of the above

9. Auditor should examine ______ issued to the debtors by the company in the case of sales returns.
a) Debit note b) Credit not c) Statement of account d) None of the above

10. Auditor should examine ______ issued by the debtors to the company for acknowledging the sales returns.
a) Debit note b) Statement of account
c) Credit noted d) None of the above
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11. Auditor should examine ______ issued to the suppliers by the company in the case of purchase returns.
a) Statement of account b) Credit note c) Debit note d) All of the above

12. Auditor needs to examine ______ issued by the supplier to the client for acknowledging the purchase
returns.
a) Credit note b) Statement of account
c) Debit note d) All of the above

13. Auditor has to verify the _______ submitted by the consignee showing sale price of goods sold,
expenses incurred by the consignee and inventory of goods in hand.
a) Consignment sales b) Account sales c) Consignment account d) All of the sales

14. Auditor has to obtain confirmation of the balance in the account of the consignee from the _____.
a) Consignor b) Consignee c) Internal auditor d) None of the above

15. Auditor need to check the compliance of __ in respect of verification of income from investments.
a) AS 13 b) AS 19 c) AS 11 d) AS 9

16. If it is not possible to the auditor to form an opinion regards the nature of repairs, a certificate from the
______ under whose supervision the repairs were carried out.
a) Engineer b) Architect c) Actuary d) Advocate

17. Huge amount of the advertisement expenditure is traded as ________

a) Capital expenditure b) Revenue expenditure
c) Deferred revenue expenditure d) None of the above

18. Auditor has to verify ______ as evidence in regard to sundry expenses in relation to travelling
a) Bills b) Reasonableness c) Registers d) None of the above

19. Directors are not entitled to charge travelling expenses for attending board meetings, unless ____.
a) Articles specifically provide b) Authorized by shareholders
c) A or B d) None of the above.

20. The cost of fixed assets should be appropriately depreciated in accordance with ______ and _____ to
companies act, 2013.
a) AS10, Sch-3 b) AS10, Sch-1 c) AS10, Sch-3 d) None of the above

21. ______ is an asset which does not have a physical identity but which is used by the enterprise for
production or supply of goods or for retails to other or for administrative purpose.
a) Fixed asset b) Current asset c) Tangible asset d) Intangible asset

22. As per ______, internally generated goodwill is not recognized as an asset because it is not an
identifiable resource controlled by the enterprise that can be measured reliably at cost.
a) AS10 b) AS11 c) AS26 d) AS16

23. Goodwill in the case of business is acquired, is computed as ______

a) Net assets taken over - Purchase consideration
b) Purchase consideration - Net assets taken over.
c) Based on previous year profits d) None of the above

24. AS-26 has suggested ___ years as useful life until and unless there is clear evidence that useful life is
longer than _____ year.
a) 10, 10 b) 15,15 c) 20,20 d) None of the above

25. The auditor should examine the inventory records maintained by the management with reference to
the relevant basic document like _______
a) Goods received notes b) Material issue notes
c) Bin cards d) All of the above
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26. Auditor needs to obtain opinion from a technical expert in verification and valuation of _____ if necessary.
a) Raw material b) Work in progress c) Finished good d) None of the above

27. The auditor should examine whether bills discounted with bank have been clearly shown as _______
a) Liability b) Contingent liability c) Provision d) None of the above

28. As per _____, analytical procedure means analysis of financial information through analysis of
relationship among financial and non-financial data.
a) SA 520 b) SA 720 c) SA 620 d) SA 320

29. Examine the compliance with _______ of the act as regards maximum amount of loan that the
company can raise or borrow.
a) sec 180 b) sec 181 c) sec 182 d) sec 183

30. In case the value of the security falls below the amount of the loan outstanding, the auditor should
examine whether the loan is classified as ______
a) Secured (total amount of o/s loan) b) Un secured (total amount of o/s loan)
c) Secured only to the extent of the market value of the security
d) None of the above

31. Transactions of one period would be separated from those in the ensuing period is known as _____
a) Audit trial b) Cut-off arrangement
c) Matching concept d) none of the above

32. Cut-off procedures should adequately follow in case of ________ by the managements.
a) Goods purchased b) Goods sold c) A & B d) None of the above

33. Amounts and other data relating to recorded transactions and events has been recorded appropriately
is______ an assertion.
a) Completeness b) Measurement c) Accuracy d) Valuation

34. Obtain understanding of entity’s process of capturing employees attendance

a) Occurrence b) completeness c) measurement d) None of the above

35. Perform analytical procedures to obtain audit evidence as to over all reasonableness of employee
benefit expense
a) Occurrence b) completeness c) measurement d) None of the above

36. Salaries and wages stays welfare expenses in profit and loss account
a) Occurrence b) completeness
c) Measurement d) presentation and disclosure

8. AUDIT REPORTING (INCLUDING CARO, 2016)

1. The CARO, 2016 is an additional reporting requirement order which has been issued by the central
government in consultation with the ICAI under _______ of the companies act, 2013.
a) Sec 143(1) b) Sec 143(10) c) Sec 143(11) d) Sec 143(12)

2. CARO, 2016 requires the auditor to report on _______ specified matters in his audit report under the
paragraph report on other legal and regulatory requirements.
a) 8 b) 10 c) 12 d) 16

3. CARO,2016 is applicable to a ________

a) Foreign company b) one person company
c) Banking company d) insurance company
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4. _______ Reserve should be considered while checking the applicability of CARO, 2016 to a private
limited company.
a) Capital b) Revenue c) Revaluation d) All of the above

5. The limits for applicability of CARO should not be computed on the basis of ________.
a) Standalone financial statements of holding company
b) Standalone financial statements of subsidiary company
c) Consolidated financial statements of holding & subsidiary companies
d) All of the above

6. In the case of companies having branches, the limits for the purpose of applicability of CARO shall be
computed from the _____.
a) Entire company’s view b) Individual branch wise view
c) Reportable segment wise view d) All of the above

7. Exemption from CARO is given only for _______ if some conditions are satisfied as per CARO, 2016.
a) All private companies b) Private limited companies
c) Private unlimited companies d) None of the above

8. CARO, 2016 consider _______ in relation to directors and interested parties.

a) Loans given by the company b) Loans taken by the company
c) A & B d) None of the above

9. _______ are covered in CARO, 2016

a) Disputed statutory dues b) Undisputed statutory dues
c) A & B d) None of the above

10. Auditor needs to check whether Nidhi Company is maintaining _______ unencumbered term deposits
as specified in Nidhi rules, 2014 to meet out the liability as per CARO, 2016.
a) 20% b) 1% c) 10% d) 5%

11. CARO, 2016 consider whether any fraud ______ the company by its officers or employees.
a) By b) on c) a or b d) none of the above

12. The auditor is mandatorily required to report on CARO, 2016 matters in his audit report when he got
____ remarks.
a) Clean b) Adverse c) A & B d) None of the above

13. _______refers to a financial reporting frame work that requires compliance with the requirements of
the frame work and may provide disclosures beyond those specifically required by the framework.
a) General purpose framework b) Fair presentation framework
c) Compliance framework d) None of the above

14. _______refers to a financial reporting framework that requires compliance with the requirements of the
framework as it is, without any deviation.
a) General purpose framework b) Fair presentation framework
c) Compliance framework d) None of the above

15. The auditor shall express ______ opinion when the auditor concludes that the financial statements are
prepared, in all material respects, in accordance with the applicable financial reporting framework
a) An adverse b) an unmodified c) a qualified d) a disclaimer

16. Director’s responsibility statement shall be included in the ______ section in the audit report.
a) Key audit matters b) Report on other legal and regulatory requirements
c) Responsibilities of management for the financial statements
d) None of the above
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17. Key audit matters are to be selected by the auditor from the matters communicated with_____ by him.
a) His staff b) Management c) TCWG d) Predecessor auditor

18. The auditor’s determination of key audit matters is limited to those matters of most significance in the audit
of the financial statements of the ______, even when comparative financial statements are presented.
a) Current period only b) Previous year only
c) Both current period and previous year d) None of the above

19. Key audit matters paragraph shall be placed immediately after the _______ in the audit report
a) Basis for opinion paragraph and going concern paragraph, if any
b) Basis for opinion paragraph but before the going concern paragraph, if any
c) Going concern paragraph if any and before basis for opinion paragraph
d) None of the above

20. Communicating key audit matters is not a substitute for _______

a) Disclosure in the financial statements b) Expressing modified opinion as per SA705
c) Making disclosures as per SA 570. d) All of the above

21. ________ is a circumstance requires modification to the auditor’s opinion

a) Financial statements are materially misstated b) Inability to obtain audit evidence
c) A & B d) None of the above.

22. Auditor shall express ____ opinion, when the financial statements are materially misstated so that they
are material but not pervasive.
a) qualified b) adverse c) disclaimer d) clear

23. Auditor shall express ______ opinion when the financial statements are materially misstated so that
they are material and pervasive.
a) qualified b) adverse c) disclaimer d) clean

24. Auditor shall express ________ opinion, if he is unable to obtain sufficient appropriate audit evidence
which is material but not pervasive.
a) qualified b) adverse c) disclaimer d) none of these

25. Auditor shall express _____ opinion, if he is unable to obtain sufficient appropriate audit evidence
which is material and pervasive
a) qualified b) adverse c) a disclaimer d) none of these

26. Basis for modified opinion paragraph shall be placed immediately ______
a) Before the opinion paragraph b) After the opinion paragraph
c) a) or b) d) None of the above

27. Auditor has to consider a matter in the emphasis of matter paragraphs in the audit report only if it is
not covered as per _____.
a) SA 705 b) SA 701 c) a & b d) none of the above

28. If the auditor expects to include an emphasis of matter or other matter paragraph in the auditor’s
report, the auditor shall communicate with ______ regarding those expectations and the wording of
this paragraph.
a) TWCG b) Audit committee c) Management d) All of the above

29. Where at any AGM, No Auditor is appointed or re-appointed ,then the existing auditor shall ___
a) Vacate from his office b) Continue in his office
c) Appoint new auditor d) None of the above
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30. The Company shall make an application to the central government for the purpose of removal of
auditor before expiry of term in form _____
a) ATD-1 b) ATD-4 c) ATD-2 d) ATD-3

31. X ltd employee has committed fraud on 10.04.2016. It was noticed during the year by its management on
14.03.2018. for the financial year 2017-18; the auditor has
a) No responsibility as the fraud was taken place in the earlier years
b) No responsibility as he is concerned with current year frauds only.
c) Report to in CARO 2016 d) Report to Shareholder’s in his main audit report

32. Should auditor of company report suspected frauds as per 143(12) of Companies Act, 2013
a) No b) Yes, as it in an estimate only
c) Yes, as it is a fraud anyway
d) Yes, as per 143(12) only estimated fraud can be reported

9. AUDIT IN AN AUTOMATED ENVIRONMENT

1. ______refers to a business environment where the processes, operations, accounting and even
decisions are carried out by using computer systems.
a) Automated environment b) Business environment
c) Complex environment d) none of the above

2. Auditors are also required to identify and assess risks that arise from the use of IT by way of
understanding the entity and it’s environment as per ________
a) SA 315 b) SA 240 c) SA 330 d) SA 450

3. The understanding of a company’s IT environment that is obtained should be documented as per ______.
a) SA 230 b) SA 530 c) SA 330 d) none of the above

4. The combination of processes, tools and techniques that are used to tap vast amounts of electronic
data to obtain meaningful information is called _______
a) Data logs b) Data analytics c) Audit trial d) none of the above

5. Companies can benefit immensely from the use of data analytics in terms of ______
a) Increased profitability b) Better customer service
c) Gaining competitive advantage d) all of the above

6. General IT controls are also called as _______ controls

a) Pervasive controls b) Indirect controls c) Direct controls d) A or B

7. _______ Controls are policies and procedures that relate to many applications and support the
effective functioning of application controls.
a) General IT b) IT dependent c) Internal d) None of the above

8. _______ are ensure that production systems are processed to meet financial reporting objectives
a) Data center and network operations b) Program change
c) Access security
d) Application system acquisition, development and maintenance

9. ______ ensure that access to programs and data is authenticated and authorized to meet financial
reporting objectives.
a) Program change b) Data center and network operations
c) Access security
d) Application system acquisition, development and maintenance.
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10. ______ ensure that systems are developed configured and implemented to meet financial reporting
objectives
a) Access security
b) Application system acquisition, development and maintenance.
c) Programme change d) Data centre and network operations

11. ______ Controls include both automated and manual controls that operate at a business process level.
a) Application b) IT dependent c) general IT d) none of the above

12. _______ Controls are basically manual controls that make use of some form of data or information or
report produced from IT systems and applications.
a) General IT b) Application c) IT dependent d) All of the above

13. _______ is the most efficient audit test but should always be used in combination with any one of
other audit testing methods
a) Re performance b) Inquiry c) Inspection d) Observation

14. _______ method will give the best audit evidence to the auditor
a) Observation b) Inquiry c) Inspection d) Re-performance

15. ______ method will provide the most effective and efficient audit evidence to the auditor
a) Inquiry b) Inspection c) a & b d) Observation

16. ISO Stands for

a) Indian Standards Organization b) International Organization for Standardization
c) Indian Organization for Standardization d) None of the above

17. COSO stands for

a) Committee of Sponsoring Organizations b) Combined Standards of Organization
c) Committee of Standard Organization d) Control of Standard Organization

18. ISAE Stands for

a) Indian Standards for Assurance Engagements
b) International Sponsors for Assurance Engagement
c) International Standards for Assurance Engagement d) None of the above

19. SSAE Stands for

a) Standard Statement for Attest Engagements b) Statement on Standards for Attest Engagements
c) Statement on Standards for Audit Engagements d) Standard Statement for Audit Engagement

20. ITIL Stands for

a) Information Technology Infrastructure Liability b) Information Technology Infrastructure Library
c) Indian Technology Information Library d) Information Technology Infrastructure Lenders

21. DBA stands for

a) Data Base Analyst b) Data Base Availability
c) Data Base Administrator d) Data Base Administration

22. ICFR stands for

a) Internal Controls over Financial Reporting b) Internal Checks on Financial Reporting
c) Internal Control over Fraudulent Reporting d) Internal Check on Fraudulent Reporting

23. FSA Stands for

a) Financial statement analyst b) Financial statement as session
c) Fiscal statement analyst d) fraudulent statement analyst
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24. _________ is returned to the digital content that is stored in electronic form with in computer system.
a) Data b) Database c) Information d) None of the above

25. __________ is a logical sub system with in larger information system where electronic data is stored in
a pre-defined form and retrieved foe use
a) Information technology b) Data base
c) Software d) None of the above

26. A________ is a task (or) activity that is routinely performed by a computer and does not reguine
manual effort
a) Software b) Automation
c) System / computer system d) None of the above

27. CAAT stands for

a) Computer Assisted Audit Techniques b) Computer Aided Audit Techniques
c) Computer Acquired Audit Techniques d) Computer Assisted Accounting Techniques

28. IPE stands for

a) Information Produced by Entity b) Information Programs by Entity
c) Information Provided by Entity d) None of the above

29. XYZ ltd uses an integrated enterprise resource planning system (SAD). It is considered to be _______
complex to audit
a) Less b) More c) Either (a) or (b) d) None of the above

30. The following are non-audit assurance engagements except

a) IT audits b) Data migration audits
c) Third party assurance d) None of the above

31. In order to ensure that production systems are processed to meet financial objectives is the objective of
a) Data centre and network operations b) Program change
c) Access security d) None of the above

32. In order to ensure that modified systems continue to meet financial reporting objectives is the objective of
a) Data centre and network operations b) Program change
c) Access security d) None of the above

33. In order to ensure that access to programs and data is authenticated and authorized to meet financial
reporting objectives is the objective of
a) Data centre and network operations b) Program change
c) Access security d) None of the above

34. The following are the examples of automated applications except

a) Reasonable her check b) Mandatory data field
c) Sequence number check d) None of the above

35. While auditing in automated environment, Inquiry

a) High efficient, Low effective b) Low efficient, High effective
c) High efficient, High effective d) Low efficient, Low effective

36. While auditing in automated environment, Re-performance

a) High efficient, low effective b) Low efficient, high effective
c) High efficient, high effective d) Low efficient, low effective
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37. _________ is electronic data residing in computer systems that is organized in a logical and meaning
manner that is easy to read, understand and analyse.
a) Data base b) Information
c) Data directory / library d) None of the above

38. SOC Stands for

a) Service Organization Controls b) Standards On Controls
c) Security Of Controls d) Storage Of Controls

39. The following are the types of audit tests used in automated environment, except
a) Re Performance b) Inspection c) Inquiry d) Re-calculation

40. The standard that requires auditors to analyse journal entries in an audit is
a) SA 240 b) SA 230 c) SA 315 d) SA 260

41. A type of business application software that provides an integrated platform to automatic multiple inter
related business processes and operations is
a) Enterprise resource planning b) Enterprise resource performance
c) Integrated applications system d) Either (a) or (c)

42. Internal financial controls refer to _________ put is place by companies

a) Guide lines and rules b) Policies and procedures
c) Rules and regulations d) None of the above

43. User training is an activity in automated environment that has relevance in ________ type of general IT
controls.
a) Data centre and network operations b) Program change
c) Access security d) Both (a) or (c)

44. The following are not automated controls, except

a) Configuration b) Application control
c) Program change d) System generated report

45. ____ is referred to the digital content that is stored in electronic form within computer system
a)Data b)Database c) Information d) None of these

46. _________ is a logical subsystem within larger information system where electronic data is stored in a
pre-defined form and retrieved for use.
a) Information technology b) Data Base c) Software d) None of these

47. A____ is a task (or) activity that is routinely performed by a computer system and does not require
manual effort.
a) Software b) Automation / Automated
c) System /Computer system d) None of the above

48. XYZ Ltd. uses an integrated enterprise resource planning system (SAP). It is considered to be ___
complex to audit.
a) Less b) More c) Either (a) or (b) d) None of these

49. The following are non-audit assurance engagements, except

a) IT audits b) Data migration audit c) Third party assurance d) None of these.

50. In order to ensure that production systems are processed to meet financial objectives is the objective of
a) Data center and network operations b) Program change
c) Access security d) None of the above

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51. In order to ensure that modified systems continue to meet financial reporting objectives is the objective of
a) Data center and network operations b) Program change
c) Access security d) None of the above

52. In order to ensure that access to programs and data is authenticated and authorised to meet financial
reporting objectives is the objective of
a) Data center and network operations b) Program change
c) Access security d) None of the above

53. The following are the examples of automated applications except

a) Reasonable check b) Mandatory data check
c) Sequence number check d) None of the above

54. While auditing in automated environment, inquiry

a) High efficient, low effective b) Low efficient, high effective
c) High efficient, high effective d) Low efficient, low effective

55. ___ is electronic data residing in computer systems that is organized in a logical and meaningful
manner that is easy to read, understand and analyse
a) Data base b) Information c) Data directory library d) None of these

56. SOC stands for

a) Service organization controls b) Standards on controls
c) Security of controls d) storage of controls

57. The following are the types of audit tests used in automated environment, except
a) Re performance b) Inspection c) Inquiry d) Re calculation

58. The standard that requires auditors to analyse journal entries in an audit is
a) SA 240 b) SA 230 c) SA 315 d) SA 260

59. A type of business application software that provides an integrated platform to automate multiple
interrelated business processes and operations is
a) Enterprise resource planning b) Enterprise resource performance
c) Integrated application system d) Either (a) or (b)

60. Internal financial controls refer to___ put in place by companies

a) Guide lines and Rules b) Policies and procedures
c) Rules and regulations. d) None of the above.

10. AUDIT OF DIFFERENT TYPES OF ENTITES

1. Auditor should verify the partnership deed to confirm whether it is signed by ______ in relation to audit
of a partnership firm.
a) All partners b) Designated partners
c) Majority number of partners d) None of the above

2. A municipality can be designed as a unit of local self-government in _______ area.

a) An urban b) A semi-urban c) A rural d) All of these
3. For special situations like reduction in property taxes, refund of security deposits, etc, sanction from
the ______ wing is necessary.
a) Executive b) Legislative c) a) & b) d) None of these

4. In case of local body all matters of regular revenue and expenditures are generally delegated to the ______.
a) Legislative wing b) Executive wing c) a) or b) d) a) & b)
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5. Municipal accounting system has been conventionally prepared under the ______ system.
a) Cash b) Accrual c) a) & b) d) a) or b)

6. Local bodies are required to prepare compulsory ______ bank reconciliation as part of their
accounting system.
a) Monthly b) Quarterly c) Half-yearly d) Annually

7. Audit programme of local bodies will cover _______.

a) Regularity audit b) Audit against sanctions
c) Performance audit d) All of the above

8. Auditor should verify with respect to audit of educational institutions, the admission fees collected
should be credited to _______, unless the managing committee has taken a decision to the contrary.
a) Reserves b) Capital fund
c) Income and expenditure account d) None of the above

9. In case of audit of a club, auditor has to verify receipt on account of entrance fees with ______.
a) Member’s application b) Counterfoil issued
c) Minutes of managing committee d) All of the above

10. Auditor should verify in the course of conducting Hotel audit all customers should pay their bills _______.
a) On leaving the hotel b) Within specified dates
c) a or b d) None of the above

11. Auditor should verify the restaurant bills with reference to _____
a) KOT b) BOT c) Guest registers d) None of the above

12. Pilferage is one of the greatest problems in any ______ and it is extremely important to have a proper
internal control to minimize the leakage.
a)hospital b) hotel c) club d) educational institution

13. Auditor in the case of audit of hotel, verify the charge for ______ sales is made from the guest
registers, and tests are to be carried out to ensure that the correct number of guests are charged for
the exact period of stay.
a) Room b) Cash c) Credit d) Cash and credit

14. Auditor should verify the _______ clause of leasing company to see that the goods like capital goods,
consumer durables etc., in respect of which it can undertake such activities.
a) Name b) Object c) Capital d) Situation

15. Hire purchase and leasing companies can undertake activities relating the goods like _____.
a) Capital goods b) Consumer durables c) a & b d) None of these

16. In case the records and documents maintained by an enterprise are incomplete, it would prove to be
______ to the auditor.
a) Adoption sampling b) Great handicap
c) Disagreement with management d) none of the above

17. ________ is a circumstance for incomplete records

a) Single entry b) Records destroyed accidentally
c) Records seized by authorities d) All of the above

18. LLP is not required to get its accounts audited if its _______ in a financial year
a) Turnover does not exceed RS.40,00,000 b) Contribution does not exceed RS.25,00,000
c) a or b d) a) & b)
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19. Every LLP would be required to file annual return in form 11 with ROC within ______ days of closer of
financial year
a) 30 b) 45 c) 60 d) 90

20. LLP should appoint the subsequent auditor at least ______ days prior to the end of each financial
year(other than the first financial year)
a) 30 b) 45 c) 60 d) 90

21. Registration of NGO is

a) Prescribed in societies registration Act, 1860 b) prescribed in Indian Trust Act,1882
c) Both (a) and (b) d) None of the above

22. An NGO has been created as trust, Registration becomes mandatory must complied w.r.t provisions of
sec.17(1) of registration Act,1908 with sec.123 of transfer of property Act,1882 when
a) Trust relates to movable property worth more than one hundred rupees.
b) Trust related to immovable property worth more than one hundred rupees.
c) Trust relates to movable property worth more than one thousand rupees.
d) Trust relates to immovable property worth more than one lakh rupees.

23. NGO’S are allowed to maintain accounts on

a) Cash basis b) Accrual basis
c) Either accrual or cash basis d) Both cash basis and accrual basis

24. Incorporation documents of LLP are available for inspection to

a) Registrar b) Partner c) Designated partner d) Any person

25. NGO’s registered under section 8 of companies shall maintain their books of accounts under
a) Cash basis b) accrual basis
c) Either cash basis or accrual basis d) None of these

26. “RACHANA” an NGO is registered Sec. 8 of the Companies Act, 2013.The auditors of RACHANA
shall be appointed by
a) Management b) The shareholders / members
c) The central government d) CAG

27. Statement of account and solvency, annual return of LLP are available for inspection to
a) Registrar b) Any partner c) Designated partner d) Any person

28. Fees for inspection of an LLP is

a) Rs.50 b) Rs.10 c) Rs.20 d) Rs.200

29. Certified copy (or) extract of any document u/s 36 shall be at ___per page
a) Rs.1 b) Rs.2 c) Rs.3 d) Rs.5

30. The provisions of LLP Act allows an LLP to file annual return belatedly without prosecution up to___
a) 300 days b) 1 year c) 30days d) 6 months

31. The first auditor of an LLP shall be appointed

a) Within 30 days of its incorporation b) Within 30 days prior to the end of financial year
c) At any time before end of first financial year. d) Earlier of (b) or (c)

32. The subsequent auditors of LLP shall be appointed by

a) Designated partner b) All partners in meeting
c) ROC d) None of the above
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33. Every LLP shall file annual return with
a) ROC b)MCA C)Regional Directorate d)either (a) or (b)]

34. Every LLP has to file annual return __

a) Within 60 days of closure of financial year b) Within 60 days of beginning of financial year
c) Within 30 days of closure of financial year d) Within 30 days of beginning of financial year

35. Every LLP is required to submit statement of account and solvency in__
a) Form 11 b) Form 8 c) Either (a) or (b) d) Both form 11 & Form 8

36. Form 8 has to be filed by LLP within___

a) 30days from closure of financial years
b) 30 days from end of 6 months of financial year
c) 60 days from end of 6 months of financial year.
d) 60 days from closure of financial year

37. The following are matters to be considered before starting audit of partnership firm, except
a) Confirming that letter of appointment is signed by partner duly authorized
b) The amount of capital that shall be contributed by each partnership
c) Borrowing capacity of the partnership
d) Limitations and restrictions that have been agreed upon the partners.

38. Every LLP would be required to file annual return in

a) Form 8 b)Form 1 c)Form 6 d) Form 11
11. AUDIT OF CO-OPERATIVE SOCIETIES
1. ______is a voluntary association stared with the aim of service of its members.
a) Partnership firm b) HUF c) Company d) Co-operative society

2. The philosophy of the formation of _______ is ‘’all for each and each for all”.
a) Co-operative society b) LLP c) Bank d) HUF

3. The society is at liberty to maintain such additional records like _______

a) Daily cash sales summary register b) Assets and liabilities
c) All sales and purchases of goods d) All of the above

4. The maximum amount of shareholding that a single member can hold is ______ in a co-operative society
a) 20% of total number of shares b) shares value Rs.1000
c) a or b, whichever is higher d) a or b whichever is lower

5. A Co-operative society may invest its funds in the ______

a) Central or state co-operative bank
b) Securities specified in sec 20 of the Indian trust act,1882
c) Other moneys permitted by the central or state government
d) All of the above

6. Every Co-operative society shall transfer ______ of the profits to reserve fund, before distribution as
dividends or bonus to members
a) 20% b) 25% c) 10% d) 15%

7. A Co-operative society may, with the sanction of the registrar, contribute an amount not exceeding ______
of the net profits remaining after the compulsory transfer to the reserve fund for any charitable purpose.
a) 20% b) 15% c) 10% d) 25%
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8. ______ is eligible for appointment as an auditor of a co- operative society.
a) CA having cop b) CA having cop or not
c) CMA having cop d) CMA having cop or not

9. Co-operative societies are required to classify their overdue debts as________.

a) Up to 6 months and more than 6 months. b) Up to 5 years and more than 5 years
c) 6months to 5 years and more than 5 years. d) None of the above

10. In case of co-operative societies overdue interest is interest accrued or accruing in accounts, the
amount of which the ______ is overdue.
a) Principal and interest b) Interest c) Principal d) None of these

11. Co-operative societies should ______ overdue interest in interest outstanding and accrued due while
calculating profit.
a) Include b) Exclude c) a or b d) None of these

12. _______ is the criteria for the assessment of performance of a co-operative society.
a) Profits b) Benefits to members
c) Overdue debts d) All of the above

13. Auditor has to verify whether the client followed or following the principle of propriety in the _____ audit
a) Government b) Co- operative society
c) a & b d) None of the above

14. If the management of the society is not satisfied about the award of audit class, it can make an appeal
to the ______.
a) Auditor b) Registrar c) Audit and registrar d) None of these

15. The co-operative society auditor should not finalize his audit report without discussion with the _______
a) Registrar b) Managing committee
c) Members d) All of the above

16. _______ is eligible for appointment as an auditor of a multi-state co-operative society

a) CA holding COP
b) Person holding a government diploma in co-operatives accounts
c) A & B d) None of the above

17. ________ will appoint the auditor of a co-operative society

a) Members b) Managing committee
c) Registrar d) None of the above

18. A person who is indebted to the multi-state co-operative society for an amount exceeding --------- is
disqualified for appointment as an auditor
a) Rs.1000 b) Rs.10,000 c) Rs.1,00,000 d) Rs.5,00,000

19. The board of a multi-state cooperative society should appoint the first auditor within ______of the date
of registration of such society
a) 1 month b) 2 months c) 3 months d) None of these

20. ________ will appoint the subsequent auditor of a multi-state co-operative society.
a) Registrar b) Members c) Board d) CG

21. _______ will appoint the special auditor for a multi- state co-operative society.
a) CG b) registrar c) members d) board

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22. The expenses of and incidental to, any special audit (including the remuneration of the special auditor)
shall be determined by the________ which determination shall be final and paid by the ___________.
a) Members, multi-state co-operative society b) Board, multi-state co-operative society
c) CG, multistage co-operative society d) Special auditors, multi-state co-operative society

23. The special auditor shall make the report to the _______.
a) CG b) BOD c) members d) registrar

24. The central government may at any time by order direct that a special audit of the multi- state co-
operative society’s accounts shall be conducted and appoint _______ to conduct the special audit.
a) Chartered accountant b) Multi - state co-operative society auditor himself
c) A or B d) None of the above

25. Central registrar has the power to make an inquiry under ______ of multi-state co-operative societies
act, 2002.
a) Sec 78 b) Sec 79 c) Sec 73(2) d) Sec 73(3)

26. Central registrar has the power to make an inspection under ________ of multi-state co-operative
Societies Act, 2002.
a) Sec 73(2) b) Sec 73(3) c) Sec 78 d) Sec 79

27. As per section 17 of the cooperative societies Act,1912, Accounts of registered Societies shall be audited
a) Atleast once in every 6 months b) Atleast once in every year
c) Atleast once in every quarter d) Atleast once in 3 years

28. An Auditor of a cooperative society is appointed by

a) Management b) members c) registrar d) None of the above

29. Audit fee for cooperative society will be fixed by

a) Management b) members c) Registrar d) None of the above

30. As per Sec.33 of cooperative societies Act,1912,society can be declared dividend or bonus to its members.
a) True b) False

31. As per Sec.34, a Registered cooperative society contribute to charitable purpose not exceeding
a) 10% of net profits remaining before compulsory transfer to reserve fund.
b) 10% of net profits remaining after compulsory transfer to reserve fund.
c) 10% of gross collections of society from its members.
d) Lower of10% of gross amount of reserve fund (or) 10% of NP after compulsory transfer to reserve fund

32. The management of Rax society, registered under Sec.2 of Cooperative societies Act, 1912 wishes to
give loan to Axe society which is other than its members. The management has
a) To obtain approval of its members b) No approval is required
c) Special sanction from registrar is required d) None of the above

33. As per Sec.32 of cooperative societies Act,1912,a Society may invest its funds in one or more of the
following, except
a) In a central (or) state cooperative Bank
b) In the shares, Securities, Bonds (or) debentures of any other society with unlimited liability
c) In any of the Securities specified in sec.20 of Indian trusts Act, 1882.
d) In any other moneys permitted by central (or) state government.

34. In the Principal provision relating to investments of funds of a cooperative society, Investment of
reserve of fund outside business is
a) Governed by central Act b) Governed by respective state Act
c) Not mentioned d) Either (a) or (b)
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35. As per Sec.33 of co-operative societies Act,____ of profits to be transferred to reserve fund, before
distribution of dividends (or) bonus to members
a)10% b) 25% c) Prescribed percentage d) 40%

12. AUDIT OF BANKS

1. _______ is a financial institution that accepts deposits from the public and creates credit
a) hire purchase company b) bank c) leasing company d) all of the above

2. ______ sector is the backbone of any economy as it is essential for sustainable socio- economic
growth and financial stability in the economy
a) Agriculture b) Manufacturing c) Banking d) Mining

3. The functioning of banking industry in India is regulated by the ______ which acts as the central bank
of our country
a) Central bank of India b) Reserve bank of India
c) State bank of India d) All of the above

4. _______ is the bank of all banks in India as it provides the loan to banks/bankers, accept the deposit
of banks, and rediscount the bills of banks
a) Reserve bank of India b) State bank of India c) Indian bank d) union bank of India

5. As per section 35 of banking regulation act,1949 RBI has the power to inspect ________
a) Nationalized bank b) Any bank c) SBI d) a & c

6. No bank _______ without obtaining license from RBI

a) Can commence the banking business b) Open new branches
c) a) & b) d) None of the above

7. RBI has issued guidelines for fit and proper criteria for _______ of banks.
a) Directors b) Employees c) Customers d) All of the above

8. Every banking company is required to prepare a balance sheet and a profit and loss account in the
forms set out in the ________ schedule to the banking regulation act, 1949
a) First b) Second c) Third d) none of the above

9. Form A in the third schedule of the banking regulation act,1949 contains the form of ______
a) Balance sheet b) Profit and loss account
c) Cash law statement d) None of the above

10. Form B in the third schedule of the banking regulation act,1949 contains form of _______
a) Balance sheet b) Profit and loss account
c) cash flow statement d) none of the above

11. _______ is one which does not disclose any problems and which does not carry more than normal risk
attached to the business.
a) Standard asset b) Sub-standard asset c) Doubt full asset d) Loss asset

12. A_______ asset would be one, which has remained NPA for a period less than or equal to 12 months.
a) Standard b) Sub-standard c) Doubtful d) Loss

13. An asset would be classified as ______if it has remained in the sub-standard category for a period of
more than 12 months.
a) Standard asset b) Doubtful asset c) Loss asset d) none of the above
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14. If the advance is not repaid even after it remains sub-standard asset for more than 3 years, it may be
identified as irrecoverable by internal/ external audit and it would be called _____
a) Doubtful asset b) Standard asset c) Loss asset d) none of the above

15. As per RBI prudential norms, banks are required to provide provision of _______ on all its standard
advances whether secured or unsecured
a) 0.6% b) 0.4% c) 6% d) 4%

16. Income from NPA’s is recognized on _____ basis

a) Receipt b) Accrual c) a or b d) none of the above

17. An account should be treated as out of order if the outstanding balance remains continuously in
excess of the _______
a) Sanctioned limit b) Drawing power c) a or b d) none of the above

18. If the realizable value of the security is less than 50% of the value assessed by the bank or accepted
by RBI at the time of last inspection, then such advance is treated as _______
a) Doubtful asset b) Loss asset c) Substandard asset d) Standard asset

19. If the realizable value of the security, as assessed by the bank/ approved valuers/RBI is less than 10%
of the outstanding in the borrower accounts, then such advance is treated as _________
a) Doubtful asset b) Loss asset c) Standard asset d) Sub-standard asset

20. Advances against _______ need not be treated as NPA’s provided adequate margin is available in the
accounts
a) Term deposits b) NSC c) KVP/ IVP d) All of these

21. Long form audit report is applicable for the audit of _______
a) public sector banks b) private sector banks c) foreign banks d) All of these

22. The policy of income recognition should be based on

a) Record of Recovery b) Type of loan c) Nature of Advance d) Both (a) and (c)

23. Income from Non-performing assets (NPA) is not booked as income

a) When it is actually received b) accrual basis
c) Cash basis d) either (a) or (c)

24. From A of third schedule to banking regulation Act,1949 contains

a) Form of Balance sheet b) Form of profit and loss account
c) Form of bank financial statements d) All of the above

25. Form B of third schedule to BRA,1949 contains

a) Form of Balance sheet b) Form of profit and loss account
c) Form of bank financial statements d) All of the above

26. Auditor of a banking company is appointed at

a) AGM b) Board meeting c) By central government d) CAG

27. The auditors of Nationalized bank are appointed by

a) Members at AGM b) Bank through its BOD
c) Central government d) CAG

28. The auditors of state Bank Of India are appointed by

a) Members at AGM b) SBI in its BOD
c) CAG after Consulting CG d) CG after consulting CAG
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29. The remuneration of auditors of nationalized bank and State bank of India is fixed by
a) Bank concerned b) Reserve bank of India
c) Central Government d) CAG after consulting RBI

30. LFAR has to be submitted every year by

a) 30th April b) 31st May c) 30th June d) 30th September

31. An advance may be classified as large advance ,if the yearend balance is excess of ____ (or) ___ of
aggregate year end advance whichever is____, as a general rule
a) 5 crores, 5%, high b) 2 crores, 5%, less c) 2 crores, 5%, high d) 5 crores, 5%, less

32. In case of agricultural advances affected by natural calamities, relief measures can be taken by
a) Bank itself b) RBI c) Central government d) State government

33. The stock audit should be carried out by the bank for all accounts with _______ of more than 5 crores.
a) Non- funded b) Funded c) funded and Non- funded d) Outstanding.

34. The operations of each advance account should be review atleast

a) Once in quarter b) Once a year c) Once in half year d) On periodic basis

35. Drawing power register should be updated

a) Every day b) Every week c) Every month d) Once in every quarter

13. GOVERNMENT AUDIT

1. ________ is covered in the context to government expenditure audit
a) Audit against rules and orders b) Propriety audit
c) Performance audit d) All of the above

2. In the ________, the auditor aims to bring out cases of improper, avoidable and in fructuous expenditure
even through the expenditure has been incurred in conformity with the existing rules and regulations
a) Performance audit b) Propriety audit
c) Audit of sanctions d) Audit against rules and orders

3. ________ aims at ascertaining the expenditure has been incurred for the purpose for which it is
sanctioned.
a) Audit against provision of funds b) Audit of sanctions
c) Propriety audit d) Performance audit

4. Regularity audit is also known as _______

a) Propriety audit b) Audit against provision of funds
c) Audit against rules & orders d) None of the above

5. The objective of ______ is to ensure that various programmers, schemes and projects where large financial
expenditure has been incurred are being run economically and are yielding results expected of them.
a) Performance audit b) Propriety audit
c) Audit against rules and orders d) Audit against provision of funds

6. ______ is a component of performance audit

a) Efficiency audit b) Economy audit c) Effectiveness audit d) All of the above

7. ______ is an appraisal of the performance of programmers, schemes, projects with reference to the
overall targeted objectives.
a) Efficiency audit b) Economy audit c) Effectiveness audit d) All of the above
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8. ______ looks into whether the various schemes/ projects are executed and their operations conducted
economically.
a) Efficiency audit b) Economy audit c) Effectiveness audit d) All of the above

9. ______ looks into whether the entity has acquired the financial, human and physical resources in an
economical manner, and whether the sanctioning and spending authorities have observed economy.
a) Efficiency audit b) Economy audit c) Effectiveness audit d) All of the above

10. ________ aims to ensure that there is no leakage of revenue which should legally come to the government.
a) Audit of government receipts b) Audit of government stores and inventories
c) Audit of government expenditure d) All of the above

11. ______ ensure that purchases of stores and inventories are property sanctioned, made economical
and in accordable with the rules for purchase laid down by the competent authority.
a) Audit of sanctions b) Audit of stores and inventories
c) Economy audit d) none of the above

12. Audit of the accounts of stores and inventories has been developed as a part of _______.
a) Audit of government receipts b) Propriety audit
c) Audit of government expenditure d) none of the above

13. _______ are relating to the government which are engaged in commercial activities.
a) Departmental enterprises b) Statutory corporations
c) Government companies d) All of the above

14. ______ will audit the account of a Government Company.

a) Chartered accountant b) CAG c) Cost accountant d) Company secretary

15. The CAG shall be responsible for compiling the accounts of the _______.
a) Union b) Each state c) Each union territory d) All of the above

16. The account of Central Government / Union Government prepared by CAG should be submitted to the
_______.
a) Prime minister of India b) President of India c) Public account office d) none of the above

17. The CAG need not verify government grants given to ______.
a) Foreign state b) International organization
c) A & B d) None of the above

18. Article ________ states that C&AG shall perform such duties and exercise such powers in relation to
the accounts of the union and of the states and other authorities under law made by parliament.
a) 149 b) 150 c) 151 d) 148

19. Article ________ of constitution provides that the accounts of the union and of the state’s shall be kept
in such form as ___________ may on advise of C&AG prescribed.
a) 149 & Government b) 150 & Government c) 149 & President d) 150 & President

20. The C&AG’s salary is equal to the salary of ________________.

a) President b) Judge of Supreme Court
c) Prime Minister d) as decided by president upon the recommendation of PM

21. The C&AG is appointed by _________________.

a) President b) Govt. of India
c) GOI on recommendation of PM d) Parliament

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22. ______________ Control is exercised before spending and after the expenditure is actually incurred.
a) Parliamentary b) Legislative c) Judiciary d) Either a) (or) b)

23. Article ______ requires that the reports of the C&AG relating to the accounts of the Union/State shall
be submitted to prescribe authority.
a) 149 b) 150 c) 151 d) 152

24. C&AG has to submit the report relating to accounts of union government to _____________.
a) President b) Parliament c) Legislative Council d) Prime Minister

25. C&AG has to submit the report relating to accounts of state government to
a) President b) Governor of State c) Legislative Council d) Both b) & c)

14. INTERNAL AUDIT AND COST AUDIT

1. ______is an independent, objective function which aims to provide assurance and consulting activity
to add value and improve an organizations operations.
a) Statutory audit b) Internal audit c) Cost audit d) Tax audit

2. _______ can be appointed as an internal auditor of a company.

a) CA engaged in practice or not b) CMA engaged in practice or not
c) Other professional decided by board d) All of the above

3. Internal auditor ________ be an employee of the company.

a) Should not b) Should c) May or may not d) May

4. The objective and scope of internal audit are determined by the ______ after consultation with the
_______.
a) Audit committee/ board, statutory auditor b) Audit committee/ board, internal auditor
c) Management, statutory auditor d) None of the above

5. Sec 138 of the companies act, 2013 dealt with the concept of the _______.
a) Cost audit b) Statutory audit c) Internal audit d) None of these

6. Internal audit is applicable for ______

a) All the companies b) Companies specified as per sec 138
c) Companies specified as per sec 148 d) None of the above

7. The appointment and fixing of remuneration of an internal auditor are made by _______
a) Management b) Shareholders c) Statutory auditor d) All of these

8. If the external auditor does not plan to use internal auditors to provide direct assistance then _______
a) SA 610 wills applicable b) SA 610 not applicable
c) SA 600 wills applicable d) SA 600 not applicable

9. The external auditor shall not use the work of the IAF, if _______
a) No competence of IAF b) No objectivity of IAF
c) No systematic and disciplined approach in IAF d) All of the above

10. _______are not required to maintain cost records

a) Micro enterprises b) Small enterprises c) Both a) & b) d) None of these

11. Companies engaged in the production of goods or providing services are required to maintain cost
records if their overall turnover from all its products and services of RS _____ during the immediately
preceding financial year
a) 35 CR or more b) 25 CR or more c) 50 CR or more d) 100 CR or more
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12. Companies are required to maintain the cost records in the form ________
a) CAR-1 b) CRA-2 c) CAR-3 d) none of the above

13. Companies whose revenue from exports, in foreign exchange _____ of its total revenue, cost audit is
not applicable.
a) Exceeds 50% b) Exceeds 75% c) Exceeds 65% d) Exceeds 85%

14. _______ can be appointed as a cost auditor.

a) Chartered accountant in practice b) Cost accountant in practice
c) a) or b) d) None of the above

15. Cost auditor will be appointed by _______.

a) Shareholders b) Audit committee c) Board of directors d) CG

16. The company shall file a notice with the central government regarding the matter of appointment of
cost auditor in the form _______
a) CRA-1 b) CRA-2 c) CRA-3 d) none of the above

17. Any casual vacancy in the office of a cost auditor shall be filled by the ______.
a) Central government b) Shareholders c) Board of directors d) Audit committee

18. The cost auditor may be removed from his office before the expiry of his term, ______ after giving a
reasonable opportunity of being heard to him.
a) With the CG approval b) Through a board of resolution
c) a & b d) None of the above

19. The board of directors shall appoint the cost auditor within _______ of the commencement of every
financial year.
a) 80 days b) 100 days c) 30 days d) none of the above

20. The cost auditor shall submit the cost audit report along with his reservations or qualifications, if any,
in form _______ to the BOD within a period of 180 days from the closure of the financial year.
a) CRA-1 b) CRA-2 c) CRA-3 d) CRA-4

21. The function of ________ is an integral part of the system of internal control
a) Statutory auditor b) Cost auditor c) internal auditor d) Tax auditor

22. Statutory auditor’s responsibility towards ______ and the internal auditor’s responsibility towards ________.
a) Government, shareholders b) Government, management
c) Shareholders, management d) none of the above

23. Cost Audit is covered u/s____ of companies Act, 1956.

a) 150 b) 149 c) 148 d) 147

24. Cost Audit u/s 148 are in

a) Companies (Cost accounts and audit) Rules, 2014
b) Companies (Cost Records and audit) Rules, 2014
c) Companies (Cost reports and audit) Rules, 2014
d) Companies (Cost records and accounts) Rules, 2014

25. Which rule of companies (Cost records and Audit) Rules, 2014 provides the class of companies to
include cost records in their books of accounts?
a) Rule 3 b) Rule 4 c) Rule 5 d) Rule 6

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26. X ltd, a company has a overall turnover of Rs.75 crores during the financial year 2017-18, There is no
product turnover of regulated and non-regulated sectors. X ltd has (with regard to maintenance of sectors.
a) Companies (Cost accounts and audit) Rules, 2014
b) Companies (Cost Records and audit) Rules, 2014
c) Companies (Cost reports and audit) Rules, 2014
d) Companies (Cost records and accounts) Rules, 2014

27. Internal audit applicability to company is contained in _______ of companies Act, 2013
a) 138 b) 148 c) 128 d) 118

28. Class of companies for applicability of internal audit is contained in rule of companies (accounts) rules,
2014.
a) 10 b) 11 c) 12 d) 13

29. X ltd a public company is having a paid up share capital of Rs. 5 crores, loans from directors and
related parties of Rs.120 crores. Total turnover of company is Rs. 180 crores internal audit is
a) Applicable b) Not applicable c) can’t say d) None of the above

30. M/s. A ltd has borrowed an amount of RS 150 crores an on 04.01.2014 than bank the o/s balance as
on 31.03.2018 in Rs.102 crores. 31/03/2019 is 80 crores for the FY 2018-2019, the internal audit is
a) Applicable b) Not applicable c) Can’t say d) None of the above

31. A (small company/ one person company) has borrowed an amount of Rs.120 crores from a national
bank. The internal audit is ________ to (OPC/ SC)
a) Applicable b) Not applicable c) Can’t say d) None of the above

32. Cost audit is covered u/s ______ of Companies Act, 2013.

a) 150 b) 149 c) 148 d) 147

33. Class of companies for cost audit u/s 148 are in

a) Companies (Cost accounts and audit) Rules, 2014
b) Companies (Cost records and audit) Rules, 2014
c) Companies (Cost reports and audit) Rules, 2014
d) Companies (Cost records and accounts) Rules, 2014

34. Which rule of companies (cost records and audit) Rules, 2014 provides the class of companies to
include cost records in their books of accounts?
a) Rule 3 b) Rule 5 c) Rule 4 d) Rule 6

35. Foreign Company is defined u/s _____ of Companies Act, 2013.

a) 2(42) b) 2 (52) c) 2(32) d) 2 (62)

36. X Ltd, is a class of Company for which cost records are to be maintained. The branch of X Ltd, located
in Bihar SEZ has to
a) Maintain cost accounting records.
b) Need not maintain as SEZ are exempt from maintaining costing records\
c) Either (a) or (b) d) None of the above.

37. Cost Accounting records of every company shall be maintain in FORM no:
a) CRA-1 b) CRA-2 c) CRA-3 d) CRA-4

38. Which rule of Companies (Cost Records and Audit) Rules, 2014 deal with applicability of COA audit?
a) Rule 3 b) Rule 4 c) Rule 5 d) Rule 6

39. The COA auditor of the company has to be appointed by

a) Shareholders b) Managing Director c) Board Of Director d) Any of the above.
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40. Appointment of COA auditor has to be done within
a) 180 days of closure of every financial year. b) 90 days of closure of every financial year.
c) 180 days of beginning of every financial year. d) 90 days of beginning of every financial year.

41. Written consent has to be obtained from COA auditor

a) After appointment b) Before Appointment
c) After submission of acceptance. d) None of the above.

42. FORM that has to be used for appointment of COA auditor is

a) CRA-1 b) CRA-2 c) CRA-3 d) CRA-4

43. FORM CRA-2 has to be filed

a) Manually b) Electronically
c) Manually (or) electronically d) manually and electronically.

44. FORM CRA-2 has to be filed within

a) 30 days of meeting in which appointment of auditor is made.
b) 30 days after 180 days of commencement of financial year.
c) Later of (a) or (b) d) Earlier of (a) or (b)

45. The cost auditor appointed shall hold the office till
a) Till he submits the cost audit report. b) 180 days from closure of financial year.
c) Later of (a) or (b) d) Earlier of (a) or (b)

46. The cost auditor can be removed from his office before the expiry of his term, through
a) Special resolution of share holders b) Ordinary Resolution of share holders
c) Resolution of Board of Directors d) either (a) or (b).

47. Any casual vacancy in the office of the cost auditors due to resignation, shall be
a) BOD b) shareholders c) Central Government d) Any of the above.

48. Within ______ days of vacancy

a) 15 b) 30 c) 45 d) 60

49. The cost auditor(new) appointed by BOD in place of cost auditor (old) shall be intimate to
a) CG b) ROC c) BOD d) Share Holders.

50. With in ______ days of appointment of cost auditor

a) 15 b) 30 c) 45 d) 60

51. X Ltd, a listed company has 6 directors. They wish to appoint Ram & Co, cost accountants as cost
auditors. You are required to state whether audit committee is required to select the auditors
a) Yes b) No c) Can’t Say d) None of the above.

52. The remuneration of COA auditor of a listed company shall be considered and approved by
a) BOD b) MD c) Share Holders d) Audit Committee

53. The remuneration of COA auditor of a listed company shall be recommended by

a) BOD b) MD c) Share Holders d) Audit Committee

54. The Cost audit report shall be submitted by cost auditor to

a) BOD b) Share Holders c) Central Government d) All of the above.

55. The form for submission of cost audit report to BOD is

a) CRA-1 b) CRA-2 c) CRA-3 d) CRA-4
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56. The company shall within _______ days from the date of receipt of a copy of COA audit report, it has
to furnish to Central Government is
a) 15 b) 30 c) 45 d) 60

57. The form for intimation of Cost Audit Report by company to Central Government is
a) CRA-1 b) CRA-2 c) CRA-3 d) CRA-4

58. CRA-4 has to be filed in _______Formal

a) Manual b) XML c) Specific d) XBRL

59. TEH Ltd. in its board meeting on 14.05.2018 appointed R & Co. associates as their cost auditors. It
has to be filed in form no.
a) CRA - 1 b) CRA - 2 c) CRA - 3 d) CRA - 4

60. CRA-1 has to be filed by

a) 30 days from end of [180 days from date of beginning of financial year]
b) Next 30 days
c) Next 30 days but before time period under d) none of the above

61. Maximum number of cost audit assignments that can be acceptable by Cost Auditor is
a) 20 companies b) 60 companies c) 45 companies d) None of these

62. Can a banking company be considered under the ceiling company audits
a) Yes b) No c) can’t say d) None of these

63. Including Government company all appointments of auditors shall be intimated to ROC within 15 days
from the date of appointment by the
a) Company b) CAG c) no intimation is required d) None of these

64. The company X Ltd. was incorporated on 14.02.2016. The boards of directors have appointed the
auditors of X Ltd. on 16.03.2016. Is the appointment valid?
a) Yes b) No c) Either (a) or (b) d) None of these

65. The cost auditor appointed u/s 148 of the company Act, 2013 should give list of proceedings against
him/them, pending with respect to professional matters as disclosed in certificate to be
a) True and fair b) True and correct c) correct and fair d) True fair and correct

66. The cost auditor shall finish list of proceedings _________ with respect to professional matters
a) Pending and concluded b) pending but not concluded
c) Concluded but not pending d) None of the above

67. X ltd a listed company has to appoint cost auditors the cost auditors shall be selected on the basis of
eligibility, qualification and experience by
a) Board of Directors b) Audit committee
c) Shareholders d) None of the above

68. The requirement for cost audit under companies Act, 2013 is not applicable to the following, except
a) Whose revenue from exports, in foreign exchange, does not exceed 75% of its revenue
b) Which is operating from Special Economic Zone
c) Which is engaged in generation of electricity for captive consumption through captive generation plant
d) All of the above

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15. STANDARDS ON AUDITING

1. Non - Compliance does not include ________ misconduct by those charged with governance,
management or employees of the entity.
a) Personal b) Professional c) a & b d) None of above

2. Non - Compliance refers to acts of omission or commission by the entity, which is ______ contrary to
the prevailing laws or regulations.
a) Intentional b) Unintentional c) a & b d) None of the above

3. The auditor is ___________ for preventing non compliance with all laws and regulations of an entity.
a) Responsible b) Not responsible c) Punishable d) None of these

4. ________ is not the indicator of non-compliance of laws and regulations by management.

a) Payment of fines / penalties b) Unusual payments in cash
c) Adverse media comment d) None of the above

5. The auditor shall obtain sufficient appropriate audit evidence regarding compliance with the provisions
of those laws and regulations generally recognized to have a __________ on the financial statements.
a) Direct effect b) Indirect effect c) a & b d) None of these

6. Auditor should communicate the matter of non-compliance of laws and regulations by management __.
a) To TCWG b) In the auditor’s report
c) To regulatory and enforcement authorities d) All of the above

7. The audit of the financial statements does not relieve _______ of their responsibilities
a) Management b) Those charged with governance
c) a or b d) None of the above

8. In the case of _________, auditor shall communicate with TCWG, a statement that the engagement
team and others in the firm have complied with relevant ethical requirements regarding independence
a) Listed entities b) Unlisted public companies
c) a & b d) None of the above

9. The auditor shall communicate in ______ on a timely basis with those charged with governance
regarding significant findings from the audit.
a) Oral b) Writing c) a & b d) None of these

10. ________ Procedures comprise tests of details and substantive analytical procedures.
a) Risk assessment b) Compliance c) Substantive d) None of these

11. _____ Procedures alone cannot provide sufficient appropriate audit evidence at the assertion level.
a) Substantive b) cut off c) Risk assessment d) None of these

12. The auditor shall test controls for the ________

a) Particular time b) Throughout the period
c) a or b d) None of the above

13. The auditor shall communicate material weakness in internal control identified during the audit on a
timely basis to __________
a) Management at an appropriate level b) TCWG
c) a & b d) None of the above

14. In case of ______, user auditor should not refer the usage of service auditor’s report in his audit report.
a) Unmodified opinion b) Modified opinion c) a or b d) None of the above

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15. In case of __________, user auditor may refer the usage of service auditor’s report in his audit report.
a) Unmodified opinion b) Modified opinion c) a & b d) None of the above

16. ______ is the difference between the amounts, classification, presentation, or disclosure of a reported
financial statement item and the amount, classification, presentation or disclosure that is required as
per applicable financial reporting framework.
a) Misstatement b) error
c) Fraud d) uncorrected misstatements

17. The auditor shall design and perform audit procedures in order to identify litigation and claims like
review of _________
a) Minutes of directors b) Legal expense accounts
c) Correspondence between the entity and its external legal counsel
d) All of the above

18. Initial audit engagement is an engagement in which ___________

a) The financial statements for the prior period were not audited.
b) The financial statements for the prior period were audited by a predecessor auditor
c) a or b d) None of the above

19. If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening balances,
the auditor shall express a qualified opinion or a disclaimer opinion, as appropriate, in accordance with
_______.
a) SA 510 b) SA 705 c) SA 700 d) SA 500

20. _________ means evaluations of financial information through analysis of plausible relationships
among both financial and non-financial data.
a) Substantive procedures b) Analytical procedures
c) Compliance procedures d) Risk assessment procedures

21. Analytical procedures also include consideration of relationships among the elements of _______
a) Financial information b) Non - Financial information
c) Financial information and Non - Financial information d) All of the above

22. ___________ is not the example for an accounting estimate.

a) Depreciation b) Warranty obligations
c) Allowance for doubtful accounts d) None of the above

23. Arm’s length transaction is conducted on such terms and conditions as between a willing buyer and
willing seller who are ________
a) related b) Unrelated c) a) or b) d) None of these

24. If auditor identified significant related party transactions outside the entity’s normal course of business,
then he shall __________
a) Check the business rationale
b) Check the terms are consistent with management explanations
c) Verify proper authorization d) All of the above

25. Subsequent events are the events which are occurring between the date of the financial statements
and the date of the ________ and facts that become known to the auditor after the date of the
auditor’s report.
a) Board report b) Auditor’s report c) a or b d) None of the above

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26. The auditor is required to consider all subsequent events while discharging his duties and determine
whether those shall have to be ________
a) Adjusted b) Disclosed c) a or b d) None of the above

27. __________ deals with going concern

a) SA 560 b) SA 570 c) SA 550 d) SA 200

28. __________ is not the financial indicator that may cast doubt about going concern assumption.
a) Arrears or discontinuance of dividends b) Adverse key financial ratios
c) Negative operating cash flows d) None of the above

29. If going concern assumption being questionable and management explanation is found to be
inadequate, then auditor has to give _______ report.
a) Qualified b) Adverse c) Unmodified d) None of these

30. _________ is a written statement by management provided to the auditor to confirm certain matters or
to support other audit evidence.
a) Letter of weakness b) Engagement letter
c) Written representation d) None of the above

31. Written representation is given by the ________ to __________

a) Auditor, Management b) Management, Auditor
c) Predecessor auditor, Successor auditor d) None of the above

32. If the principal auditor has not been able to perform sufficient additional procedures regarding the
financial information of the component audited by the other auditor, then the principal auditor should
express ________ opinion.
a) A qualified b) A disclaimer c) a or b d) An advance

33. The principal auditor is _______ in respect of the work entrusted to the other auditors
a) Responsible b) Not responsible c) a or b d) None of these

34. ___________ is an individual or organisation possessing expertise in a field other than accounting or
auditing, whose work in that field is used by the auditor in obtaining sufficient appropriate audit
evidence.
a) Auditor’s expert b) Management’s expert
c) a or b d) None of the above

35. ___________ is an individual or organisation possessing expertise in a field other than accounting or
auditing, whose work in that field is used by the entity to assist the entity in preparing the financial
statements
a) Auditor’s expert b) Management’s expert
c) a or b d) None of the above

36. The auditor shall __________ to the work of an auditor’s expert in an auditor’s report containing an
unmodified opinion.
a) refer b) not refer c) a or b d) None of the above

37. If the prior period financial statements were not audited, the auditor shall state in ______ in the
auditor’s report that the corresponding figures are unedited.
a) Other matter paragraph b) Emphasis of matter paragraph
c) a & b d) None of the above

38. _________ is that other information which is unrelated to matters appearing in the audited financial
statements that is incorrectly stated or presented.
a) Misstatement of fact b) Inconsistency c) a or b d) None of these
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39. The standard that requires auditors to analyse journal entries in an audit is
a) SA 260 b) SA 230 c) SA 315 d) SA 240

40. A written statement by management provided to the auditor to confirm certain matters is___
a) Confirmations b) written representations
c) Playable representations d) Both (a) &(b)

41. An entity that uses a service organization and whose financial statements are being audited is
a) user b) User auditor c) User entity d) None of these

42. An auditor who audits and reports on financial statements of user entity is__
a) Auditor b) User auditor
c) May be auditor or User entity d) None of the above

43. Misstatements that the auditor has accumulated during the audit and have been corrected is
a) Uncorrected mis-statement b) Corrected mis-statement
c) Both (a) & (b) d) None of the above

44. A service organization used by another service organization to perform some of the services provided
to the user entities that are part of those user entities information systems relevant to financial
reporting is ____.
a) Service organization b) Service level agreement
c) Sub service organization d) All of the above

45. A third party organization that provides services to the user entity that are part of those entity’s
information systems relevant to financial reporting is ___.
a) Service organization b) Sub service organization
c) Service level agreement d) All of the above

46. Other information does not encompass the following, except

a) Information contained in the analyst briefings b) Information contained in entity’s website
c) A person release (or) transactional memorandum d) Planned capital expenditure

47. Material inconsistencies identified in other information obtained subsequent to the date of auditor’s
report, the auditor has
a) No responsibility on other information. b) To report in Audit report
c) To take necessary action to rectify such material inconsistencies
d) Both (b) & (c)

48. The records of initial accounting entries and supporting records in referred to as
a) Financial Records b) Accounting Records
c) Books and Records d) None of the above

49. _______ alone ordinarily does not provide sufficient audit evidence of material misstatements at the
accession level, nor of the operating effectiveness of controls as per SA 500.
a) Inspection b) Observation c) Inquiry d) None of these

50. The reliability of audit evidence is influenced by _______ and _______

a) Source and Nature b) Nature and Timing
c) Nature and Size d) Nature, timing and extent of audit procedures

51. Inspection involves examining records (or) documents that are _________.
a) Internal b) External
c) Internal (or) external d) Internal and external

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52. Inspection involves examining records or documents in ___________.
a) Paper form b) Electronic media (or) other media
c) Physical examination of asset d) Any of the above

53. Recalculation consists of checking the___ of documents (or) records.

a) Calculation of with existing records. b) Mathematical accuracy
c) Calculations made by the entity through an expert. d) None of the above

54. Re calculation may be performed

a) Manually b) Electronically
c) Manually by checking electronically generated records
d) Manually (or) electronically

55. Re performance involves the auditors____ of procedures (or) controls

a) Independent performance b) Independent execution
c) Independent processing d) All of the above

56. Analytical procedures consist of evaluation of financial information made by study of___ relationships
among both financial and Non-financial data.
a) Direct b) Indirect c) Direct (or) Indirect d) Plausible

57. Inspection of documents related to collection of receivables after the period end may provide audit
evidence regarding existence and valuation, but not
a) Other assertions b) Cut off procedures c) Occurrence d) Both (b) and (c)

58. Obtaining audit evidence regarding particular assertion is ___ for obtaining audit evidence regarding
another assertion.
a) Sufficient b) Not a sufficient c) Substitute d) Not sufficient

59. Quality measure of audit evidence is

a) Sufficiency of Audit evidence b) Appropriateness of Audit evidence
c) Sufficient appropriate Audit evidence d) None of the above

60. Quantity measure of audit evidence is

a) Sufficiency of Audit evidence b) Appropriateness of Audit evidence
c) Sufficient appropriate Audit evidence d) None of the above

61. One or more folders or other storage media in physical or electronic form containing the records that
comprise the audit documentation for specific engagement is
a) Audit working papers b) Audit folders
c) Audit files d) Audit notebook

62. The risk that the auditor expresses in appropriate audit opinion when financial statements are
materially misstated
a) Inherent risk b) Audit risk c) Detection risk d) Control risk

63. The amount ,or range of amounts, respectively derived from audit evidence for use in evaluating
management’s point estimate is
a) Management’s range b) Auditor’s range c) either (a) or (b) d) Both (a) and (b)

64. A risk resulting significant conditions, events that could adversely affect the entity’s ability to achieve
its objectives is
a) Audit risk b) Business risk
c) Both (a) and (b) d) Management / entity’s risk

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65. The amounts and disclosures included in the financial statements in respect of one or more prior
period in accordance with applicable financial reporting framework is
a) Comparative information b) Comparative financial statements
c) Either (a) or (b) d) Both (a) and (b)

66. An engagement in which accounting expertise as opposed to auditing expertise is used to collect,
classify and summaries financial information is
a) Review engagement b) Compilation engagement
c) Audit engagement d) Evidence collection engagement

67. An entity or business activity for which group (or) component management prepares financial
information that should be included in group financial statements is
a) An item b) component c) Element d) None of these

68. An auditor who, at the request of group engagement team performs work on financial information
related to a component for group audit is
a) Group auditor b) Component auditor c) Consolidated auditor d) None of these

69. The policies and procedures that help to ensure that management directives are carried out is
a) Control systems b) Control activities c) Control environment d) All of these

70. The risk that a material misstatement that could occur will not be prevented, or detected or corrected
an a timely basis by related internal controls is
a) Detection risk b) Control risk c) Inherent risk d) Audit risk

71. The date of the end of the latest period covered by financial statement is
a) 31st march b) End of each period
c) Date of financial statements d) All of the above

72. The documentation for a specific engagement is assembled in an engagement file called
a) Audit documentation b) Engagement documentation
c) Audit evidence d) None of the above

73. The current auditor can place reliance on the closing balances contained in the financial statements
for the preceeding period, except during ___ for current period the possibility of misstatement in
opening balances is ____.
a) Planning an audit, indicated b) Performance of audit procedures, indicated
c) Performance of audit procedures, not indicated d) Planning an audit procedures, not indicated

74. The records of initial accounting entries and supporting records are referred to as
a) Journals b) Ledgers c) Financial Records d) Accounting Records.

75. An approximation of monetary amount in the absence of precise means of measurement is

a) Accounting Estimate b) Estimate c) Audit estimates d) None of these

76. Amounts and other data relating to recorded transactions and events have been recorded
approximately is
a) Assertion b) Accuracy Assertion
c) Auditors Assertion d) None of the above

77. A document issued by the entity, ordinarily on annual basis, which includes financial statements
together with auditor’s report there on is
a) Audit Report b) Annual report
c) Annual Financial Information d) None of the above.

78. A misstatement or deviation that is demonstrably not representative of misstatements or deviations in

a population is
a) Sample Risk b) Non- Sample Risk c) Anomaly d) None of the above
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79. The measure of quality of audit evidence is
a) Sufficiency of Audit Evidence. b) Appropriation of Audit Evidence.
c) Sufficient appropriate audit evidence. d) None of the above.

80. Representation made by management, used by auditors to consider various potential misstatements
that may occur is
a) Written Representation. b) Assertions.
c) Managements Letters. d) None of the above.

81. Analyzing identified risk of; to conclude on their significance is

a) Assertions b) Evaluation c) Assessed Risk d) Un Assessed Risk

82. The risk that practitioner expresses an inappropriate conclusion when subject matter information is
a) Significant Risk. b) Assurance Engagement Risk.
c) Audit Risk d) Sampling Risk.

83. The record of audit procedures performed , relevant audit evidence, and conclusions reached is
a) Audit Evidence. b) Audit Documentation.
c) Audit Note Book. d) None of the above.

84. All personnel performing the engagement, including any experts contracted by the firm with that
engagement with reference to SA 620 is
a) Engagement Team b) Engagement Expert
c) Engagement partner d) All of the above.

85. A response that indicates difference between information requested to be confirmed, or contained in
entity’s records, and the information provided by confirming party is
a) Misstatement b) Exception c) Error d) None of the above

86. An individual who has practical audit experience, and reasonable understanding of audit processes is
a) An auditor b) An Experienced Auditor
c) An Engagement partner d) An expert Auditor.

87. Structured Representation of historical financial information is

a) Financial Statements b) Source statements
c) Either (a) or (b) d) Both (a) or (b)

88. Events or conditions that indicate an incentive or pressure to commit fraud or provide an opportunity to
commit fraud is
a) Opportunity b) Fraud risk Factors c) Reasons for frauds d) All of the above

89. A firm or entity that belongs to a network is

a) Network Entity b) Network Firm c) Either (a) or (b) d) Both (a) and (b)

90. The entire set of data from which sample is selected and about which auditor wishes to draw conclusion is
a) Information b) Population c) sample Data d) Sample

91. Personnel is
a) Partners b) Staff c) Either (a) or (b) d) Both (a) and (b)

92. __________________involves intentional misstatements, including omissions of amounts or

disclosures in financial statements to deceive the financial statement users
a) Fraud risk factors b) Fraud
c) Fraudulent financial reporting d) All of the above

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93. ______ describes the roles of persons with responsibility for overseeing the strategic direction of the
entity and obligations related to accountability of the entity
a) Management b) Those charged with governance
c) Governance d) All of the above.

94. In context of SA 250; Acts of omission or commission by the entity, either intentional or unintentional,
which are contrary to the prevailing laws or regulations is
a) Compliance b) Error or Fraud
c) Mistake, either due to fraud or error d) Non- Compliance.

95. A request that the confirming party respond directly to the auditor indicating whether the confirming
party assess or disagrees with the information in request, or providing the request information is
a) External Confirmation b) Negative Confirmation request
c) Positive Confirmation Request d) Either (a) or (b) or (c)

96. In relation to quality control appraising the quality of work performed and conclusion reached by others is
a) Peer examination b) Review
c) To be accepted by main auditor d) Both (a) and (b)

97. Advantages of audit of financial statements include all, except

a) It safeguards the financial interest of persons who are associated with management of entity
b) It acts as moral check on employees
c) It helps in detection of wastages and losses
d) Government may require audited and certified statement

98. IAASB stands for

a) Indian Accounting and Auditing Standards Board
b) International Auditing and Assurance standards Board
c) Indian Auditing and Assurance Standards Board
d) International Accounting and Auditing Standards Board.

99. IFAC stands for

a) Indian Federation of Accountants. b) International Federation of Accountants
c) Indian Federation of Auditors d) International Federation of Auditors

100. The date of auditor’s report is

a) The date of signing the auditor’s report b) The date of conclusion of audit
c) The date of issue of auditor’s report
d) The date on which financial and report was issued to intended users

101. The date of financial statements means

a) The date of approval of financial statements by competent authorities
b) The date of end of latest period covered by financial statements
c) The date on which financial statements were signed by board of directors
d) The date if completion of process of preparation of financial statements

102. The date of auditor’s report and the date the auditor’s report is provided to the entity may be different
because of
a) Administrative issues b) auditors mistake
c) Management mistake d) any of the above

103. In case of government entities, the date of financial statements are issued is
a) The date of presentation to company/ govt entity b) The date presented to legislature
c) Later of (a) or (b) d) Earlier of (a) or (b)
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104. The auditor’s report cannot be earlier than
a) Date of approval of financial statements b) Date of financial statements
c) Date on which auditor has obtained sufficient appropriate audit evidence
d) Earlier of above

105. Subsequent events means

a) Events occurring between date of financial statements and the date of auditor’s report
b) Facts that become known to the auditor after the date of auditor’s report
c) (a) or (b) d) (a) and (b)

106. If the management amends the financial statements the auditors shall ______; facts which become
known to auditor after the financial statements have been issued.
a) Discuss with management
b) Inquire how management wants to amend the FS
c) Carryout audit procedures necessary in circumstance on amendment
d) Cancel the earlier audit report which was issued

107. In case where a new audit report is provided by auditor because of revision in financial statements by
entity, the auditor shall state the fact in __________ paragraph of audit report
a) Basis for opinion b) Emphasis of matter
c) Other legal requirements d) Key audit matters

108. Written representation means

a) Written statements by management providing to confirm certain matters
b) Written statement by TCWG/mgmt to provide new audit evidence
c) Written statements included in financial statements
d) All the above

109. If management does not provide one or more requested written representation the auditors shall first
a) Discuss the matter with management b) Modify the opinion
c) Withdraw from management
d) Conduct additional audit by suitably amending the audit programme

110. The auditor concludes that there is sufficient doubt about the integrity of management such that written
representations are not reliable the auditor shall ______________.
a) Issue adverse opinion b) Issue in modified opinion
c) Issue disclaimer of opinion d) Issue qualified opinion

111. Authorised capital in defined u/s ___________ of companies act, 2013.

a) 2 (7) b) 2 (8) c) 2 (9) d) 2 (10)

112. Stamp duty of the company has to be paid on

a) Authorized capital b) issued and subscribed capital
c) Called up and paid up capital d) all the above

113. Issued capital is defined us _________ of companies act.

a) 2 (5) b) 2 (50) c) 2 (75) d) 2 (25)

114. There is no change in share capital of the company. The auditor of the company.
a) Has to do no audit with regard to share capital
b) Has to obtain written confirmation from company secretary that there were no changes to entity’s
capital structure during the year
c) Has to obtain reasonable assurance by performing substantive audit procedures on share capital
d) Both (b) and (c)
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115. The company has raised the share capital of the company from 10L to 50L. This has to be verified by
auditor by copies of form _____.
a) SH - 4 b) SH - 7 c) SH - 9 d) SH - 14

116. For increase in paid up capital, which form has to be filled with ROC?
a) PAS - 2 b) PAS - 3 c) PAS - 4 d) PAS - 6

117. In case of foreign direct investment by non resident additional form to be filled with
a) RBI b) CG c) CBI d) Both a) & b)

118. In case of FDI, form to be filled is

a) FCGPR b) FCNPR c) FCNRI d) FCHRI

119. Securities premium is dealt in section ___________ of CA, 2013

a) 51 b) 53 c) 52 d) 50

120. _________ represent profits that are available for distribution to share holders held for the time being
or any one or more purpose.
a) Capital reserves b) revenue reserves c) P/L A/c debit B/s d) Both (b) and (c)

121. “For foreign current loans, agree the closing exchange rate (s) used and test the translation
calculation” in the audit procedure used for which as session?
a) Completeness b) Presentation & Disclosure
c) Measurement d) Valuation

122. Shares held in the company held by each share holder more than ________ shares be disclosed.
a) 5% b) 10% c) 15% d) 20%

123. For issue of sweat equity shares the company has to authorize by ________ resolution.
a) Ordinary b) special c) adhoc d) No

124. Amounts set aside to meet specific/identified liabilities (or) diminution in recoverable value of asset is
a) Provision b) reserve c) deficit d) accumulated depreciation

125. Amounts appropriated out of profits, held for Equalising the dividends of the company from one period
to another is
a) Provision for dividends b) surplus c) Reserve d) Both (a) and (b)

126. Audit sampling is discussed in

a) SA 520 b) SA 530 c) SA 540 d) SA 550

127. Sample items are selected in a way that each sampling unit has a known probability of being selected is
a) Random sampling b) Statistical sampling
c) Non-statistical sampling d) None of the above
128. The objective of auditor when using audit sampling is
a) To express opinion on financial statements b) To draw conclusions
c) To provide a reasonable basis for the auditor to draw conclusions about the population from which
sample is selected
d) To provide absolute basis for the auditor to draw conclusions about the population from which
sample is selected

129. The following are the characteristics of population except

a) Reasonableness b) appropriateness c) completeness d) reliability

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130. The facts that should be considered for deciding upon the extent of checking on a sampling plan,
include all of the following except
a) Size of the organization under audit b) tolerable error range
c) Degree of desired confidence d) size of the sample under audit

131. All of the given below are the advantages of statistical sampling except
a) The sampling size increase in proportion to universe
b) The sample selection is more objective and there by more defensible
c) It provides means for deriving calculated risk
d) None of the above

132. When a mis statement has been established as an anomaly, it may be _______ when projecting
misstatements to the population
a) Included b) excluded c) either (a) or (b) d) none of the above

133. __________ is defined as the process of inspecting, cleaning, transforming and modeling data with
the goal of highlighting useful information, suggesting conclusions and supporting decision making.
a) Data analytics b) data dialing c) data mining d) data infrastructure

134. The auditor’s responsibilities relating to fraud in an audit of financial statement is _________
a) SA 220 b) SA 230 c) SA 250 d) SA 240

16. MISCELLANEOUS TOPICS

1. The object of ________ is to find out in detail the facts in respect of a particular area
a) an audit b) an investigation c) vouching d) none of the above

2. The scope of an investigation is made by the _______

a) Shareholders/ management b) Management/ audit committee
c) Management / CG d) CG/ shareholders

3. ______ looks for conclusive evidence

a) Investigator b) Auditor c) a or b d) None of the above

4. ______ errors will not affect the agreement of trial balance

a) Error of principle b) Compensating error
c) Error of duplication d) All of the above

5. _______is an important consideration for an auditor to evaluate whether the financial statements
reflect a true or fair or not
a) Materiality b) Audit planning c) Written representation d) None of the above

6. _______ on materiality in planning and performing an audit requires that an auditor should consider
materiality and its relationship with audit risk while conducting an audit
a) SA 300 b) SA 315 c) SA 320 d) SA 330

7. Fraudulent financial reporting is committed by _____

a) Management b) Employees c) Auditor d) Internal auditor

8. If an auditor of a company contravenes any of the provisions of section 139, section 143, section 144
or section 145, the auditor shall be unfishable with fine of_______
a) 25,000 to 5,00,000 b) 50,000 to 5,00,000
c) 10,000 to 1,00,000 d) 25,000 to 5,00,000

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9. The turnover of the company R Ltd, is 1550crores.As per schedule-3 requirements, The figures in
financial statements may be rounded off to
a) Nearest thousand b) Nearest hundred
c) Nearest lakh
d) Either of (a) or (b) or (c) but should be consistent to the entity and previous year.
10. _______ is or are the user(s) of financial statements
a) Shareholders b) Government c) Research scholars d) All of the above
11. All companies shall disclose corresponding amounts(comparatives) for immediately preceeding
reporting period except for
a) First financial statements b) Small company/ One Person Company
c) Private company with prescribed d) None of the above
12. Schedule-3 prescribes ___ requirements
a) Minimum b) maximum c) few d) exhaustive
13. An asset shall be classified as current when satisfies the following
a) It is held primary for the purpose of trading
b) It is expected to be realised within 12 months after reporting date
c) Either a) or b) d) Both a) and b)\
14. Where the normal operating cycle cannot be identified, it is assumed to be duration of___
a)12 months b)few months c) 2 months d) 6 months

15. The following has to be disclosed w.r.t share capital

a) Forfeited shares b) Calls unpaid
c) Shares in the company held by each shareholder holding more than 5 percent shares specifying the
number of shares held
d) None of the above

16. Under long term borrowings, Borrowings shall be classified in to

a) Long term, short term
b) Bonds/ debentures, Term loans, Deferred payment liabilities, Deposits etc.
c) Loan and Advances from related parties d) Secured and unsecured

17. X ltd was granted a loan for 100 lakhs during the F.Y: 2018-19. It was guaranteed by the following
i) Directors: 45 lakhs
ii) Others: 55 lakhs as per schedule-3 requirements, these shall be
a) Disclosed in notes to accounts b) Disclosed in financial statements
c) Disclosed in (a) and (b) d) Disclosed in (a) or (b)

18. The following shall be disclosed in financial statements except

a) Amount of Borrowings b) Rate of interest on borrowings
c) Terms of repayment of term loans d) None of the above

19. Aggregate amount of trade receivables outstanding for period exceeding___ from the date they are
due for payment shall be disclosed separately.
a) 6 months b) 12 months c) 3 months d) None of these

20. Financial cost shall be classified as

i) Interest expense ii) other borrowing cost
iii) Applicable net gain / loss on foreign currency transaction and translation
iv) Others
a) (i), (ii), (iii) only b) (i), (ii) only c) (i), (ii),(iv) only d) (i), (ii), (iii),(iv)\
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21. Any item of income (or) expenditure which exceeds 1% of revenue from operations (or) 1, 00,000
whichever is___ shall be disclosed.
a) Lower b) higher c) Higher (or) Lower d) None of the above

22. Residual value of the asset shall not be more than ___ of the original cost of asset, as per schedule-3
to companies Act,2013
a) 5% b) 10% c) 7.5% d) 2.5%

23. Nations Ltd, could not conduct annual general meeting within ____ days, the company has to file AOC-4.
a) 15 days b) 30 days c) 45 days d) 60 days

24. Possibility of fraud may occur due to discrepancy in accounting records including the following except
a) Last minute adjustments that signification affect the financial results
b) Tips or complaints to the auditor about alleged fraud
c) Large number of credit entries and other adjustments made to accounts receivable rewards
d) Un supported or unauthorized balances or transactions

25. Possibility of fraud may occur due to conflicting or missing evidence including the following except
a) Transactions that are not recorded in complete or timely manner or improperly rewarded as to
amount accounting period classification or entity policy.
b) Large numbers of credit entries and other adjustments made to accounts receivable account
c) Significant unexplained items on reconciliations d) Documents that appear to have been altered

26. Possibility of fraud may occur due to un usual relationship between auditor and management including
a) Missing documents
b) Tips or complaints to the auditor about allocated fraud
c) An unwillingness to address identified deficiencies in internal control on a timely basis
d) To alliance of violations of the entity’s code of ethics

27. Fraud risk factors relating to mis management arising from fradualant financial reporting by incentives
includes all except
a) Known (or) anticipated future employee lay offs
b) High degree of competition or profitability by declining margins
c) High vulnerability to rapid changes
d) Operating losses making the threat of bankruptcy fore closure or hostile takeover imminent.

THE END

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KEY FOR ALL CHAPTERS

1. INTRODUCTION TO AUDIT
1. C 2. D 3. D 4. C 5. B
6. C 7. B 8. C 9. C 10. D
11. D 12. D 13. A 14. A 15. B
16. C 17. D 18. A 19. D 20. D
21. D 22. B 23. D 24. D 25. B
26. D 27. B 28. B 29. D 30. A
31. B 32. B 33. C 34. C 35. D
36. B 37. D 38. B 39. A 40. A
41. B 42. A 43. D 44. D 45. C
46. A 47. B 48. A 49. A 50. D
51. A 52. B 53. D 54. D 55. B
56. B 57. C 58. D 59. A 60. D
61. B 62. A 63. B 64. D 65. D
66. A 67. D 68. D 69. C 70. A
71. A 72. D 73. A 74. C 75. D
76. A 77. A 78. B 79. A 80. D
81. A 82. D 83. B 84. A 85. B
86. A 87. B 88. C 89. B 90. A
91. A 92. B 93. D 94. D 95. A
96. B 97. C 98. D 99. B 100. B
101. B 102. D

2. AGREEING TO AN AUDIT
1. D 2. B 3. B 4. B 5. C
6. B 7. A 8. D 9. B 10. C
11. B 12. D 13. C 14. A 15. D
16. A

3. APPOINTMENT OF AUDITOR AND ALLIED ASPECTS

1. A 2. B 3. A 4. A 5. C
6. A 7. C 8. D 9. B 10. C
11. D 12. A 13. A 14. B 15. D
16. A 17. B 18. A 19. B 20. D
21. B 22. A 23. B 24. A 25. C
26. D 27. A 28. A 29. C 30. C
31. A 32. B 33. A 34. B 35. A
36. B 37. C 38. C 39. D 40. B
41. B 42. A 43. B 44. B 45. D
46. B 47. C 48. C 49. B 50. A

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51. B 52. B 53. C 54. A 55. A

56. C 57. C 58. B 59. D 60. C
61. D 62. D 63. D 64. C 65. A
66. A 67. A 68. D 69. D 70. B
71. B 72. A 73. B 74. A 75. A
76. D 77. A 78. C 79. A 80. A
81. D 82. B 83. C 84. B 85. C
86. B 87. C 88. B 89. B 90. C
91. B 92. C 93. D 94. B 95. C
96. D 97. B 98. A 99. A 100. A
101. B 102. A 103. B 104. B 105. B
106. A 107. B 108. A 109. A 110. D
111. D 112. C 113. A 114. B 115. C
116. A 117. B 118. C 119. A 120. C
121. B 122. C 123. C,C 124. A 125. A
126. B 127. C 128. B 129. A 130. A
131. D 132. B 133. D 134. B 135. D
136. A 137. D 138. C 139. A 140. C
141. B 142. C 143. D 144. B 145. A
146. B 147. B 148. B 149. A 150. A
151. B

4. RISK ASSESSMENT AND INTERNAL CONTROL

1. C 2. B 3. C 4. D 5. B
6. A 7. A 8. C 9. C 10. D
11. D 12. D 13. A 14. B 15. B
16. C 17. B 18. A 19. D 20. A
21. D 22. D 23. B 24. A 25. D
26. A 27. B 28. C 29. A 30. A
31. B 32. C 33. C 34. B 35. B
36. A 37. B 38. D 39. B 40. C
41. C 42. B 43. C 44. A

5. PLANNING AN AUDIT
1. C 2. B 3. B 4. A 5. B
6. B 7. A 8. B 9. B 10. C
11. B 12. A 13. B 14. A 15. B
16. C 17. B 18. B 19. A 20. D
21. A 22. A 23. C 24. C 25. B
26. A 27. B 28. D 29. B 30. B
31. B

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6. PERFORMING AN AUDIT
1. A 2. D 3. D 4. A 5. B
6. A 7. A 8. B 9. C 10. B
11. A 12. D 13. C 14. B 15. A
16. D 17. B 18. D 19. B 20. A
21. B 22. B 23. C 24. D 25. C
26. C 27. D 28. B 29. D 30. D
31. C 32. B 33. A 34. C 35. B
36. C 37. A 38. D 39. A 40. A
41. D 42. B 43. C 44. B

7. AUDIT OF ITEMS OF FINANCIAL STATEMENTS

1. B 2. A 3. A 4. C 5. C
6. B 7. D 8. B 9. B 10. A
11. C 12. A 13. B 14. B 15. D
16. A 17. B 18. B 19. C 20. C
21. D 22. C 23. B 24. A 25. D
26. B 27. B 28. A 29. A 30. C
31. B 32. C 33. B 34. B 35. B
36. D

8. AUDIT REPORTING (INCLUDING CARO, 2016)

1. C 2. D 3. A 4. D 5. C
6. A 7. B 8. A 9. C 10. C
11. C 12. C 13. B 14. C 15. B
16. C 17. C 18. A 19. A 20. D
21. C 22. A 23. B 24. A 25. C
26. B 27. B 28. A 29. B 30. C
31. C 32. A

9. AUDIT IN AN AUTOMATED ENVIRONMENT

1. A 2. A 3. A 4. B 5. D
6. D 7. A 8. A 9. C 10. B
11. A 12. C 13. B 14. D 15. C
16. A 17. A 18. C 19. B 20. C
21. C 22. A 23. B 24. A 25. B
26. B 27. A 28. A 29. B 30. D
31. A 32. B 33. C 34. D 35. A
36. B 37. B 38. A 39. D 40. A
41. B 42. B 43. B 44. A 45. A
46. B 47. B 48. D 49. D 50. A
51. B 52. C 53. A 54. A 55. B
56. A 57. D 58. A 59. A 60. B

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10. AUDIT OF DIFFERENT TYPES OF ENTITES

1. A 2. A 3. B 4. B 5. A
6. A 7. D 8. B 9. D 10. C
11. A 12. B 13. A 14. B 15. C
16. B 17. D 18. C 19. C 20. A
21. D 22. B 23. C 24. D 25. B
26. B 27. D 28. A 29. D 30. A
31. C 32. A 33. A 34. A 35. B
36. D 37. A 38. D

11. AUDIT OF CO-OPERATIVE SOCIETIES

1. D 2. A 3. A 4. D 5. D
6. B 7. C 8. A 9. C 10. C
11. B 12. B 13. C 14. B 15. B
16. A 17. C 18. A 19. A 20. B
21. A 22. C 23. A 24. C 25. A
26. D 27. B 28. C 29. C 30. A
31. B 32. C 33. B 34. C 35. A

12. AUDIT OF BANKS

1. B 2. C 3. B 4. A 5. B
6. C 7. A 8. C 9. A 10. B
11. A 12. B 13. B 14. C 15. B
16. A 17. C 18. A 19. B 20. D
21. D 22. A 23. B 24. A 25. B
26. A 27. B 28. C 29. B 30. C
31. B 32. A 33. B 34. B 35. C

13. GOVERNMENT AUDIT

1. D 2. B 3. A 4. C 5. A
6. D 7. C 8. A 9. B 10. A
11. B 12. C 13. D 14. A 15. D
16. B 17. C 18. A 19. D 20. B
21. A 22. D 23. C 24. A 25. B

14. INTERNAL AUDIT AND COST AUDIT

1. B 2. D 3. C 4. B 5. C
6. B 7. A 8. B 9. D 10. D
11. A 12. A 13. B 14. B 15. C
16. B 17. C 18. B 19. D 20. D
21. C 22. C 23. C 24. B 25. A
26. B 27. A 28. B 29. B 30. A
31. A 32. C 33. B 34. A 35. A

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36. A 37. A 38. B 39. C 40. C

41. B 42. B 43. B 44. D 45. D
46. C 47. A 48. B 49. A 50. B
51. A 52. A 53. D 54. A 55. C
56. B 57. D 58. D 59. A 60. B
61. A 62. A 63. A 64. B 65. B
66. B 67. B 68. A

15. STANDARDS ON AUDITING

1. A 2. C 3. B 4. D 5. A
6. D 7. C 8. A 9. B 10. C
11. A 12. C 13. C 14. A 15. B
16. A 17. D 18. C 19. B 20. B
21. D 22. D 23. B 24. D 25. B
26. C 27. B 28. D 29. A 30. C
31. B 32. C 33. B 34. A 35. B
36. B 37. A 38. A 39. D 40. B
41. B 42. B 43. B 44. C 45. A
46. D 47. C 48. B 49. C 50. A
51. C 52. D 53. B 54. D 55. B
56. D 57. B 58. B 59. B 60. A
61. C 62. B 63. B 64. B 65. A
66. B 67. B 68. C 69. B 70. B
71. C 72. B 73. B 74. D 75. A
76. B 77. B 78. C 79. B 80. B
81. A 82. B 83. B 84. A 85. B
86. B 87. A 88. B 89. B 90. B
91. D 92. C 93. C 94. D 95. C
96. B 97. A 98. B 99. B 100. A
101. B 102. A 103. B 104. C 105. D
106. C 107. B 108. A 109. A 110. C
111. B 112. A 113. B 114. B 115. B
116. B 117. A 118. A 119. C 120. B
121. D 122. A 123. B 124. A 125. C
126. B 127. B 128. C 129. A 130. D
131. A 132. B 133. A 134. D

16. MISCELLANEOUS TOPICS

1. B 2. C 3. A 4. D 5. A
6. C 7. A 8. A 9. C 10. D
11. A 12. A 13. D 14. A 15. D
16. D 17. B 18. B 19. A 20. A
21. B 22. A 23. B 24. C 25. A
26. C 27. A

THE END
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