hitechpathshala

Q. 1

Audit evidence includes

information contained in the accounting records underlying the financial statements

both information contained in the accounting records underlying the financial statements and other information.

other information.

information contained in the accounting records underlying the financial statements or other information.

Q. 2

The auditor shall design and perform audit procedures in order to identify litigation and claims involving the entity which may give rise to a risk of material misstatement, including:

Inquiry of management and, where applicable, others within the entity, including in-house legal counsel

Reviewing minutes of meetings of those charged with governance and correspondence between the entity and its external legal counsel.

Reviewing legal expense accounts.

All of the above

Q. 3

Audit evidence is necessary to support the auditor’s opinion and report. It is_____in nature and is primarily obtained from audit procedures performed during the course of the audit.

cumulative

regressive

selective

objective

Q. 4

Which of the following is not a Specific Evaluations by the Auditor:

The financial statements adequately disclose the significant accounting policies selected and applied;

The accounting policies selected and applied are consistent with the applicable financial reporting framework and are appropriate;

The accounting estimates made by management are reasonable;

The sufficient appropriate audit evidence has been obtained;

Q. 5

In relation to completed engagements, procedures designed to provide evidence of compliance by engagement teams with the firm’s quality control policies and procedures is known as:

Monitoring

Inspection

Subsequent Audit procedures

Compliance procedures

Q. 6

Mr. H and his team members in detail checked and evaluated the books of accounts and relevant documents of WT Limited. This is an example of which audit procedure:

Inspection.

Re-performance.

Recalculation.

Observation.

Q. 7

Statement 1: Audit procedures consist of Risk Assessments Procedures and other procedures. Statement 2: Substantive procedures consist of test of details and analytical procedures

Only Statement 1 is correct

Only Statement 2 is correct

Both 1 & 2 are correct

Both 1 & 2 are incorrect

Q. 8

CA X, auditor of Green Shoots Private Ltd. is going through financial statements of the company. On perusing notes to accounts, he finds ageing of trade payables reflecting in accordance with requirements of Schedule III of Companies Act, 2013. He wants to be sure that ageing of trade payables forming part of notes of accounts is proper and carries out ageing independently to confirm its veracity. Identify audit procedure(s) being performed by CA X.

Analytical procedures

Recalculation

Re-performance

Observation

Q. 9

CA M is internal auditor of Crayon Products Limited. Which of the following is not TRUE about scope of internal audit?

Internal audit is an independent assurance activity.

Internal audit helps in improving internal control of the company.

Internal audit cannot review non-financial activities of company.

Internal audit can review compliance of company with various laws and regulations

Q. 10

The relationship between tolerable error and sample size is

Inverse

Direct

Close

There is no relationship.

Q. 11

In the case of tests of details

the projected misstatement plus anomalous misstatement, if any, is the auditor’s best estimate of misstatement in the population.

the projected misstatement is the auditor’s best estimate of misstatement in the population.

the anomalous misstatement is the auditor’s best estimate of misstatement in the population.

the projected misstatement plus anomalous misstatement, if any, cannot be the auditor’s best estimate of misstatement in the population.

Q. 12

___________ in which the auditor selects the sample without following a structured technique

Haphazard selection,

Monetary Unit Sampling

Block Sampling

Structured Sampling

Q. 13

A request that the confirming party respond directly to the auditor only if the confirming party disagrees with the information provided in the request is-

Positive confirmation request

Non-response

Exception

Negative confirmation request

Q. 14

A failure of the confirming party to respond, or fully respond, to a positive confirmation request, or a confirmation request returned undelivered is called-

Negative confirmation request

Non-response

Exception

Positive confirmation request

Q. 15

Which of the following is correct:

As per the Standard on Auditing (SA) 520 “Analytical Procedure” ‘the term “analytical procedures” means evaluations of financial information through analysis of financial data.

As per the Standard on Auditing (SA) 520 “Analytical Procedure” ‘the term “analytical procedures” means evaluations of financial information through analysis of non-financial data.

As per the Standard on Auditing (SA) 520 “Analytical Procedure” ‘the term “analytical procedures” means evaluations of financial information through analysis of plausible relationships among both financial and non-financial data.

As per the Standard on Auditing (SA) 520 “Analytical Procedure” ‘the term “analytical procedures” means evaluations of financial information through ratio analysis.

Q. 16

Which of the following is not an analytical procedure?

Tracing of purchases recurred in the purchase book to purchase invoices.

Comparing aggregate wages paid to number of employees

Comparing the actual costs with standard costs

All of them are analytical procedures

Q. 17

Which of the following is correct:

Different types of analytical procedures provide different levels of assurance.

Different types of analytical procedures provide similar levels of assurance.

Similar type of analytical procedures provide different levels of assurance.

All are correct

Q. 18

_____________ implies analysing account fluctuations by comparing current year to prior year information and, also, to information derived over several years.

Trend analysis

Ratio analysis

Structural modelling

Account fluctuations analysis

Q. 19

Statement I: As per the Standard on Auditing (SA) 520 “Analytical Procedures”, the term “analytical procedures” means evaluations of financial information through analysis of plausible relationships among financial data. Statement II: Analytical procedures also encompass such investigation as is necessary of identified fluctuations or relationships that are inconsistent with other relevant information or that differ from expected values by a significant amount.

Only Statement I is correct

Only Statement II is correct

Both statements are correct

Both Statements are incorrect

Q. 20

Auditor Compares Gross Profit Ratio with that of Previous year and it is discovered that there has been a fall in the ratio. This is an example of:

Analytical Procedure

Test of Controls

Walk Through Test

Audit Sampling

CH- 4 AUDIT EVIDENCE

Marks: 20