AUDITING

(I) Choose the most appropriate one from given four alternatives
1. Which of the following is not an audit risk?
(A) Inherent Risk
(B) Detection Risk
(C) Control Risk
(D) Omission Risk

2. Dividend cannot be paid out of

(A) current year's profit after providing depreciation
(B) undistributed profits for any previous financial year or years after providing for
depreciation
(C) profit on revaluation of any fixed assets
(D) money provided by the Central Government or a State Government

3. Permanent Audit File does not contain

(A) a record of study and evaluation of internal control system
(B) significant audit observations of earlier years
(C) copies of management letters
(D) analysis of significant ratios and trends

4. Audit Procedures to obtain audit evidences include

(A) Compliance Procedure
(B) Substantive Procedure
(C) Both (A) and (B)
(D) Neither (A) nor (B)

5. A Cost Auditor submits his report to

(A) Board of Directors
(B) Government
(C) Shareholders
(D) Statutory Auditor

6. The first Auditor of a Company shall be appointed by the Board of Directors within
(A) 30 days from the date of registration
(B) 90 days from the date of registration
(C) 30 days from the date of first AGM
(D) 1 year from the date of registration

7. The is also expected to provide the resources needed and select

staff members to accompany the auditors.
(A) Auditor
(B) Client
(C) Internal auditor
(D) Auditee

8. Each of the three parties involved in an audit plays a role that

contributes to its success.
(A) the client, the auditor, and the auditee
(B) the client, the auditor, and the auditee
(C) the client, the moderator, and the auditee
(D) the client, the auditor, and the auditee

The Institute of Cost Accountants of India 20

 9. SA 230 stands for .
(A) Quality control for an audit of financial Statements
(B) Agreeing the terms of Audit engagements
(C) Audit Documentation
(D) Responsibility of Joint Auditor

10. Permanent Audit file contains .

(A) Copies of management letters
(B) Audit Programme
(C) Analysis of transaction and balances
(D) Analysis of significant ratios and trends

11. Secretarial Audit is covered under Section of Companies Act, 2013.

(A) Section 204
(B) Section 148
(C) Section 139
(D) None of the above

12. The purpose of internal audit is to protect the

(A) Assets
(B) Audit staff
(C) Accountant
(D) Management

13. Proving the truth means vouching of .

(A) Payment
(B) Expenses
(C) Assets
(D) Liabilities

14. Form for maintenance of Cost Records by the Company is .

(A) CRA-1
(B) CRA-2
(C) CRA-3
(D) CRA-4

15. The meetings of Audit committee should be in a year.

(A) 4
(B) 5
(C) 3
(D) 2

16. An audit report is the product of audit.

(A) Main
(B) Final
(C) Semi final
(D) None of the above

17. Authorization for Government Audit.

(A) BOD
(B) Audit committee
(C) CAG
(D) None of the above

18. Final Audit is known as .

(A) Tax Audit

The Institute of Cost Accountants of India 21

 (B) Internal Audit
(C) Annual Audit
(D) All of the above

19. Maximum term of Individual Auditor

(A) 1 term of 5 years
(B) 2 term of 5 years
(C) 3 term of 5 years
(D) None of the above

20. SA 300 stands for .

(A) Responsibility of Joint Auditor
(B) Overall planning of audit
(C) Audit Planning
(D) None of the above

21. Audit is conducted to draw overall opinion on .

(A) Financial Statement
(B) Cost Statement
(C) Income Statement
(D) None of the above.

22. An auditor is required to retain the books of accounts for how long?
(A) 1 yrs
(B) 5 yrs
(C) 7 yrs
(D) None of the above

23. SA-700 stands for .

(A) Audit Planning
(B) Joint Auditor
(C) Forming an opinion and reporting on Financial Statement
(D) None of the above

24. An auditor should submit a Disclaimer of Opinion when

(A) he is satisfied with the truth and fairness of financial statements
(B) he has certain reservations as to the presentation of truth and fairness in financial
statements
(C) some material information is not available
(D) the effect of any disagreement with the management is not so material

25. In case of a company other than a Government Company, any casual vacancy in
the post of auditor is to be filled by the
(A) Board of Directors
(B) Managing Director
(C) Comptroller and Auditor General (CAG)
(D) Shareholders

26. An Audit Committee should have a minimum of number of directors.

(A) 4
(B) 3
(C) 5
(D) 6

27. SA 530 stands for

(A) Audit Documentation

The Institute of Cost Accountants of India 22

 (B) Audit Sampling
(C) Responsibility of Joint Auditor
(D) Agreeing the terms of Audit Engagements

28. Unpaid dividend standing at the credit of Unpaid Dividend A/C should be transferred
to Investor Education and Protection Fund after years of its remaining unpaid.
(A) six
(B) eight
(C) seven
(D) five

29. Which of the following services cannot be rendered by an auditor as per Companies
Act 2013?
(A) Vouching
(B) Verification of assets and liabilities
(C) Issuing certificates on relevant matters
(D) Providing investment advisory services

30. Various types of quality audits are;

(A) Product
(B) Process
(C) Management (system)
(D) Registration (certification)
(e) All of above

31. When the auditor is an employee of the organization being audited (auditee), the
audit is classified as a Quality audit.
(A) Internal
(B) External
(C) Compliance
(D) Both A & B

32. The most comprehensive type of audit is the system audit, which examines
suitability and effectiveness of the system as a whole.
(A) Quantity
(B) Quality
(C) Preliminary
(D) Sequential

33. Audit is a fact-finding process that compares actual results with

(A) Specified standards and plans
(B) Expected results
(C) Premature results
(D) Preliminary results

34. CAAT stands for-

(A) Cornwall Air Ambulance Trust
(B) Children Air Ambulance Trust
(C) Center for alternatives to Animal Testing
(D) Computer Assisted Auditing Technique

35. Chartered Accountants have to retain the working papers for-

(A) 2 yrs
(B) 3 yrs
(C) 5 yrs
(D) 7 yrs

The Institute of Cost Accountants of India 23

 36. SA 210 stands for-
(A) Quality control for an audit of financial Statements
(B) Agreeing the terms of Audit engagements.
(C) Audit Documentation
(D) Responsibility of Joint Auditor

37. Current Audit file contains-

(A) AOA and MOA of the company
(B) Analysis of significant ratios and trends
(C) Notes regarding significant accounting policies
(D) Audit programme

38. Objective of an Audit is to formulate an overall opinion on

(A) Cost Statement
(B) Financial Statement
(C) Books of Accounts
(D) None of these

39. The purpose of Internal audit is to detect the error in the;

(A) Accounting records
(B) Employees records
(C) Cash records
(D) Bank records

40. The purpose of internal audit is to determine liabilities of;

(A) Employer
(B) Employees
(C) Accountant
(D) External auditor

41. The assets protection is possible through

(A) Internal Audit
(B) Internal Control
(C) Internal Check
(D) None of the above

42. The function of internal audit is meant for-

(A) Dearth of Staff
(B) Dearth of time
(C) Dearth of time and funds
(D) Dearth of funds

43. Review of internal control system is very important for the auditor as the effectives of
internal control system will determine the extent of checking to be done by the:
(A) Management
(B) Auditor
(C) Accountant
(D) None of the above

44. Check list contains the instruction to be followed by the –

(A) Internal Auditor
(B) External Auditor
(C) Audit Assistants
(D) Employee of the organization

The Institute of Cost Accountants of India 24

 45. Appointment of auditor for government company is done by
(A) BOD
(B) Audit committee
(C) Managing Director
(D)CAG

46. While conducting audit of financial statement auditor need to comply with
(A) Cost Audit Standards
(B) Secretarial standards
(C) Auditing Standards
(D) None of the above

47. Cost Audit can be done by the-

(A) Employee of the organization
(B) Cost Auditor
(C) Secretarial Auditor
(D) None of the above

48. Secretarial Audit can be done by-

(A) Employee of the organization
(B) Cost Auditor
(C) Secretarial Auditor
(D) None of the above

49. Secretarial Audit is applicable to the public sector company having the turnover of-
(A) 100 crore
(B) 200 crore
(C) 250 crore
(D) 300 crore

50. Form for Secretarial Audit Report is-

(A) MR-2
(B) MR-3
(C) MR-4
(D) MR-5

51. The shall act as the secretary of the Audit Committee.

(A) Employee
(B) Auditor
(C) Company Secretary
(D) Chairman

52. A nomination and remuneration committee should have directors.

(A) 3
(B) 2
(C) 1
(D) 4

53. Statutory Auditor is appointed by the shareholder in the

(A) General Meeting
(B) Statutory Meeting
(C) EGM
(D) Board Meeting

The Institute of Cost Accountants of India 25

 54. Statutory Auditor can be removed by the
(A) Shareholders
(B) Audit committee
(C) BOD
(D) None of the above

55. If the Debentures are issued as collateral security either to Banks or Creditors the
Auditor needs to ensure that such issue is approved by
(A) Shareholders
(B) Board of Directors
(C) Debenture Trustee
(D) Audit Committee

56. As per SQC 1, Audit working papers should be retained for a period of
(A) 2 years
(B) 5 years
(C) 7 years
(D) 10 years

57. Internal Auditor is appointed by

(A) Audit Committee
(B) Shareholders in General Meeting
(C) Extraordinary General Meeting
(D) Board of Directors

58. Cost Audit Report is submitted to Board of Directors in Form No.

(A) CRA-1
(B) CRA-2
(C) CRA-3
(D) CRA-4

59. Audit of debenture is covered under section

(A) 70
(B) 71
(C) 72
(D) 73

60. An individual auditor who has completed his term shall not be eligible for
reappointment as auditor in the same company for
(A) Next 3 Years
(B) Next 5 Years
(C) Next 7 Years
(D) Next 8 Years

61. Secretarial Audit is applicable to the Public Company having the paid-up share
capital of Rs. .
(A) 50 crore
(B) 75 crore
(C) 100 crore
(D) 200 crore

62. Internal Control Questionnaire contains the questions which need to be followed by
the .
(A) Employer of the organisation
(B) Employee of the organisation
(C) Auditor of the entity
(D) Banker to the organisation

The Institute of Cost Accountants of India 26

 63. Declaration of dividend is covered under section of the Companies Act,
2013.
(A) 122
(B) 123
(C) 124
(D) 125

64. Section 146 of the Companies Act, 2013 deals with

(A) Auditor not to render certain services
(B) Auditor to sign Audit Reports
(C) Auditor to attend general meeting
(D) Punishment for contravention

65. Which of the following is not included in the Current Audit File?
(A) Memorandum and Articles of Association
(B) Current year’s audit programme
(C) Internal Control Questionnaire
(D) Copies of budget

66. Which of the following is not external audit evidence?

(A) Quotations
(B) Confirmation from debtors
(C) Goods Received Note
(D) Confirmation from bankers

67. Cost Auditor is appointed by

(A) Audit Committee
(B) Board of Directors
(C) Board of Directors on recommendation from Audit Committee
(D) None of the above

68. Remuneration of Auditors is covered under the following section of Companies Act,
2013:
(A) Section 142
(B) Section 148
(C) Section 139
(D) Section 143

The Institute of Cost Accountants of India 27