Auditing Mcqs – (Management Sciences) MCQs Latest For FPSC, PPSC, NTS, KPPSC, SPSC & Other Tests
“ Auditing Mcqs “. Tab this page to check “Latest Auditing MCQs” for the preparation of competitive mcqs, FPSC mcqs, PPSC mcqs, SPSC mcqs, KPPSC mcqs, AJKPSC mcqs, BPSC mcqs, NTS mcqs, PTS mcqs, OTS mcqs, Atomic Energy mcqs, Pak Army mcqs, Pak Navy mcqs, CTS mcqs, ETEA mcqs and others. The most occurred mcqs of Auditing in past papers. Past papers of Auditing mcqs. Past papers of Auditing MCQs. Auditing Mcqs are the necessary part of any competitive / job related exams. The Auditing mcqs having specific numbers in any written test. It is therefore everyone have to learn / remember the related Auditing mcqs. The Important series of Auditing Mcqs are given below:
____________ is a systematic examination of the books and records or a business?
A. Auditing
B. Verification
C. Vouching
D. Checking
The term ‘Audit’ is derived from a Latin word “audire” which means___________?
A. To examine
B. To inspect
C. To hear
D. To investigate
The main object of an audit is _____________?
A. Detection and Prevention of fraud and error
B. Expression of opinion
C. Both (A) and (B)
D. Depends on the type of audit.
An auditor is like a_______________?
A. May both according to situation
B. Watch dog
C. Blood haunt
D. None of these
Process of verifying the documentary evidences of transactions are known as___________?
A. Testing
B. Auditing
C. Vouching
D. Verification
Auditing is compulsory for____________?
A. Partnership firms
B. Small scale business
C. Joint stock Companies
D. Proprietary Concerns
Concealment of shortage by delaying the recording of cash receipts is known as_____________?
A. Misappropriation
B. Embezzlement
C. Lapping
D. None of these
The fundamental objective of the audit of a company is to_____________?
A. Detect and prevent errors and fraud
B. Protect the interests of the minority shareholders
C. Assess the effectiveness of the company’s performance
D. Attest to the credibility of the company’s accounts
The concept of stewardship means that a company’s directors________________?
A. Are responsible for ensuring that the company pays its tax by the due date
B. Are responsible for ensuring that the company complies with the law
C. Safeguard the company’s assets and manage them on behalf of the shareholders
D. Report suspected fraud and money laundering to the authorities
Why do auditors concentrate their efforts on material items in accounts?
A. Because it reduces the audit time
B. Because they are easier to audit
C. Because the risk to the accounts of their being incorrectly stated is greater
D. Because the directors have asked for it
Which of the following is NOT the responsibility of a company’s directors?
A. Reporting to the shareholders on the accuracy of the accounts
B. Keeping proper accounting records
C. Establishment of internal controls
D. Supplying information and explanations to the auditor
International auditing standards are issued by the______________?
A. International Standards Board
B. International Federation of Accountants
C. International Accounting Standards Board
D. Auditing Practices Board
Which of the following is not true about opinion on financial statements?
A. The auditor should express an opinion on financial statements.
B. He should examine whether recognised accounting principle have been consistently
C. He is responsible for detection and prevention of frauds and errors in financial statements
D. His opinion is no guarantee to future viability of business
A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of____________?
A. Compensating error
B. Error of commission
C. Error of omission
D. Error of principle
When an auditor is proposed for removal from office, which one of the following is he NOT permitted to do?
A. Speak at the AGM/EGM where the removal is proposed
B. Apply to the court to have the proposal removed
C. Circulate representations to members
D. Receive notification of the AGM/EGM where the removal is proposed
Which one of the following is NOT a duty of the auditor?
A. Duty to report to the company’s bankers
B. Duty to sign the audit report
C. Duty to report to the members
D. Duty to report on any violation of law
Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of the auditor?
A. The shareholders in a general meeting
B. The audit committee
C. The board of directors in a board meeting
D. The managing director
The independent auditor’s primary responsibility is to______________?
A. the company’s bank
B. the company’s creditors (payables)
C. the directors
D. the shareholders
How long is the auditor’s term of office?
A. Until the financial statements are complete
B. Until the audit is complete
C. Until the next AGM (Annual General Meeting)
D. Until the directors remove them
Which of the following is correct in relation to materiality?
A. A matter is material only if it changes the audit report
B. A matter is material only if it affects directors’ emoluments
C. A matter is material if the auditor and the directors both decide that further work needs to be done in the area under question
D. A matter is material if its omission or misstatement would reasonably influence the decisions of an addressee of the auditors’ report
Which one of the following is NOT considered to be part of planning?
A. Previous year’s audit i.e. any qualifications in the report
B. Background i.e. industry
C. Considering the work to be done by the client staff e.g. internal audit
D. Considering whether the financial statements show a true and fair view
Audit risk is composed of 3 factors. Which of the following is NOT one of those factors?
A. Compliance risk
B. Control risk
C. Detection risk
D. Inherent risk
Which of the following should NOT be considered at the planning stage?
A. Analytical review
B. The timing of the audit
C. Last year’s written representation letter
D. Obtaining written representations
At the planning stage you would NOT consider____________?
A. last year’s audit
B. whether corrections from the inventory count have been implemented
C. the timing of the audit
D. the potential use of internal audit
Which of the following describes sampling risk?
A. The risk of reliance on unsuitable audit evidence
B. The risk of the auditor carrying out a test the wrong way round
C. The risk that the sample does not reflect the population
D. The risk of the auditor reaching the wrong conclusions from testing
Which of the following is NOT an accepted method of selection in sampling?
A. Random selection
B. Pervasive selection
C. Systematic selection
D. Haphazard selection
Which of the following are you unlikely to see in the current file of auditors’ working papers?
A. Memorandum & articles of association
B. Summary of unadjusted errors
C. Audit planning memorandum
D. Details of the work done on the inventory count
According to ISA 500, the strength of audit evidence is determined by which two qualities?
A. Reliability & extensiveness
B. Sufficiency & appropriateness
C. Appropriateness & competence
D. Objectivity & independence
Which of the following is normally the most reliable source of audit evidence?
A. Board minutes
B. Suppliers’ statements
C. Internal audit
D. Analytical review
The degree of effectiveness of an internal control system depends on:
A. The design of the internal control system and the implementation of the controls
B. The design of the internal control system and the correctness of the accounting records
C. The implementation of the controls and the correctness of the accounting records
D. The design of the internal controls and the implementation of the control system
According to ISA 315, which of the following is NOT an element of the control environment?
A. Commitment to competence
B. Information processing
C. Participation of management
D. Human resource policies and practices
According to ISA 315, which of the following is NOT a control activity?
A. Physical controls
B. Performance reviews
C. Organizational structure
D. Segregation of duties
Lapping is also known as___________?
A. Teeming and lading
B. Embezzlement
C. Looping
D. Hacking
Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example of____________?
A. Error of principle
B. Error of omission
C. Error of commission
D. Error of duplication
Which of the following statements is not true?
A. The auditor’s responsibility for detection and prevention of errors and frauds is similar.
B. Internal control system reduces the possibility of occurrence of employee fraud and management fraud
C. Management fraud is more difficult to detect than employee fraud
D. All statements are correct.
Internal audit is undertaken:
A. Statutorily appointed auditor
B. By independent auditor
C. By a person appointed by the management
D. By a government auditor
The scope of internal audit is decided by the___________?
A. Government
B. Management
C. Shareholders
D. Law
Audit of banks is an example of_____________?
A. Balance sheet audit
B. Statutory audit
C. Concurrent audit
D. All of the above
Concurrent audit is a part of____________?
A. Continuous audit
B. Internal check system
C. Internal audit system
D. None of these
Audit in depth is synonymous for____________?
A. Completed audit
B. Complete audit
C. Final audit
D. Detailed audit
Institute of Chartered Accountants of Pakistan was established in____________?
A. 1956
B. 1949
C. 1961
D. 1972
Which of the following statements is not true about continuous audit?
A. It may be carried out on daily basis
B. It is conducted at regular interval
C. It is needed when the organization has a good internal control system
D. It is expensive
Internal check is carried on by___________?
A. Internal auditor
B. Staff specially appointed for the purpose
C. Supervisor of the staff
D. Members of the staff
Errors of Omission are_____________?
A. Technical errors
B. Compensating errors
C. Errors of principle
D. None of the above
Window dressing implies_______________?
A. Checking of Wastages
B. Curtailment of expenses
C. Under valuation of assets
D. Over Valuation of assets
Test Checking refers to___________?
A. Checking of all transactions recorded
B. Checking of selected number of transactions
C. Examination of adjusting and closing entries
D. Testing of accounts and records
Which of the following statements is not correct about materiality?
A. Materiality is a relative concept
B. Auditor’s consideration of materiality is influenced by the auditor’s perception of the needs of an informed decision maker who will rely on the financial statements
C. Materiality judgments involve both quantitative and qualitative judgments
D. At the planning state, the auditor considers materiality at the financial statement level only
______the audit risks_______the materiality and_________the audit effort.
A. Lower, Higher, Lower
B. Higher, Lower, Lower
C. Lower, Lower, Higher
D. Lower, Higher, Higher
When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the___________?
A. Estimates of the total likely misstatement cannot be made
B. Estimates of the total likely misstatement is less than materiality level
C. Estimate of the total likely misstatement is more than materially level
D. Amount of known misstatement is documented in working papers
In determining the level of materiality for an audit, what should not be considered?
A. Prior year’s financial statements
B. The auditor’s remuneration
C. Adjusted interim financial statements
D. Prior year’s errors
Analytical procedures issued in the planning stage of an audit, generally
A. Directs attention to potential risk areas
B. Helps to determine the nature, timing and extent of other audit procedures
C. Indicates important aspects of business
D. All of the above
Which of the following statements is most closely associated with analytical procedure applied at substantive stage?
A. It helps to identify possible oversights
B. It helps to discover material misstatements in the financial statements
C. It helps to study relationship among balance sheet accounts
D. It helps to accumulate evidence supporting the validity of a specific account balance
Verification refers to_________?
A. Examining the physical existence and valuation of assets.
B. Examination of vouchers related to assets.
C. Examining the journal and ledger
D. None of the above.
Stock should be valued at_________?
A. Market price
B. Cost
C. Cost or Market price whichever is lower.
D. Cost less depreciation.
Floating assets are valued at____________?
A. Market price
B. cost
C. Cost or market price whichever is lower
D. Cost less depreciation
Goods sold on the basis of ‘sales or return ‘ should:
A. Be included in the stock
B. Not be checked by auditor
C. Not be included in the stock
D. None of the above
Of the following, which is the least persuasive type of audit evidence?
A. Computations made by the auditor
B. Documents obtained by auditor from third parties directly.
C. Carbon copies of sales invoices inspected by the auditor
D. Bank statements obtained from the client
Which of the following statements is, generally, correct about the reliability of audit evidence?
A. Evidence obtained from outside sources routed through the client
B. Effective internal control system provides reliable audit evidence
C. To be reliable, evidence should conclusive rather than persuasive
D. All are correct.
In an audit of financial statements, substantive tests are audit procedures that __________?
A. Are designed to discover significant subsequent events
B. May be eliminated for an account balance under certain conditions
C. Will increase proportionately when the auditor decreases the assessed level of control risk
D. May be test of transactions, test of balance and analytical procedures
The nature, timing and extent of substantive procedures is related to assessed level of control risk
A. Disproportionately
B. Randomly
C. Directly
D. Inversely
Which of the following factors is most important in determining the appropriations of audit evidence?
A. The reliability of audit evidence and its relevance in meeting the audit objective
B. The quantity of audit evidence
C. The objectivity and integrity of the auditor
D. The independence of the source of evidence
When is evidential matter, generally, considered sufficient?
A. When it is objective and relevant
B. When it is enough to provide a basis for giving reasonable assurance regarding truthfulness
C. When it constitutes entire population
D. When auditor collects and evaluates it independently
Which of the following is not corroborative evidence?
A. Confirmations from debtors
B. Minutes of meetings
C. Information gathered by auditor through observation
D. Worksheet supporting consolidated financial statements
What would most appropriately describe the risk of incorrect rejection in terms of substantive testing?
A. The auditor has rejected an item for sample which was material
B. The auditor concludes that the balance is materially misstated when in actual fact it not
C. The auditor concludes balance is materially correct when in actual fact it is not
D. None of the above
Which of the following affects audit effectiveness?
A. Risk of incorrect acceptance
B. Risk of incorrect rejection
C. Risk of over reliance
D. Both A and C
What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?
A. The auditor has ascertained that the balance is materially correct when in actual fact it is not
B. The auditor has rejected an item from sample which was not supported by documentary evidence
C. The auditor concludes the balance is materially misstated when in actual fact is not
D. He applies random sampling on data which is inaccurate and inconsistent
Audit programme is prepared by____________?
A. The client
B. The auditor
C. The audit assistants
D. The auditor and his audit assistants
The working papers which auditor prepares for financial statements audit are___________?
A. Owned by the client
B. Evidence for audit conclusions
C. Owned by the auditor
D. Retained in auditor’s office until a change in auditors
The quantity of audit working papers complied on engagement would most be affected by__________?
A. Auditor’s qualification
B. Auditor’s experience and professional judgment
C. Management’s integrity
D. Control risk
Which of the following best describes the primary purpose of audit programme preparation?
A. To assess audit risk
B. To comply with GAAP appropriate evidence
C. To gather sufficient
D. To detect errors or fraud