hitechpathshala

Q. 1

Which of the following statement is appropriately suited to preparation of audit documentation?

(a) Audit documentation has to be prepared simultaneously as audit progresses.

(b) Audit documentation has to be prepared 60 days after date of audit report.

(c) Audit documentation has to be prepared when information is required by regulator.

(d) Audit documentation has to be prepared 60 days after completion of audit work.

Q. 2

Audit documentation is owned by: -

(a) Client

(b) Auditor

(c) Team member responsible for documentation

(d) Regulator

Q. 3

Which of the following is least likely to be included in audit documentation of a company engaged in manufacturing and export ofgoods?

(a) Previous years audited financial statements

(b) Projected cash flow statement for next twelve months provided by management in support of going concern assumption

(c) Statements showing dispatch of overseas consignments in accordance with delivery schedules of overseas buyers

(d) Statement showing verification of ageing of trade receivables as on date of balance sheet

Q. 4

Which of the following is false in relation to audit documentation when an external auditor relies upon work of internal auditor?

Evaluation of objectivity and competence of internal auditor has to be documented.

Nature of work used and reason for relying upon work used forms part of documentation.

Documentation on whether quality control is exercised in internal audit work forms part of audit documentation.

Documentation on what specific recommendations were given by internal auditor for risk assessment to external auditor forms part of audit documentation.

Q. 5

Which of the following is not one of functions of internal auditor of an organization?

Performing assurance activities

Performing consulting activities to improve governance of organization

Performing risk management activities

Expressing independent opinion on financial statements of organization

Q. 6

An auditor finds during course of an audit that the entity has entered into many related party transactions. Which of the following statements is true?

The risk that management may override controls in respect of related party transactions is lower.

The risk that management may override controls in respect of related party transactions is higher.

There is no effect on the risk that management may override controls in respect of related party transactions.

Risk of overriding of controls by management has no relationship at all with related party transactions.

Q. 7

Which of the following is not an objective of a company’s policies for ensuring “internal financial controls”?

Efficient conduct of business

Safeguarding of assets

Prevention and detection of frauds and errors

Assessing audit risk

Q. 8

Which of the following is not an advantage of statistical sampling?

Sample size does not increase in proportion to size of area tested.

Sample selection is more objective.

It provides a means of deriving a calculated risk and corresponding precision.

In case of verifying compliance with specific legal requirements, it is suitable.

Q. 9

A company auditor receives external confirmation from an entity to whom company has sold goods. The said amount is properly classified in financial statements of company. Which of the following statements is not true in this regard?

It shows that said trade receivable exists.

It shows that said trade receivable is properly valued.

It shows that company has a right to said trade receivable.

It shows that amount of said trade receivable has been recorded in proper account.

AUDIT 6TH

Marks: 9