auditing mcqs

Which of the following statement best describes the understanding with respect to ownership and custody of working papers prepared by an auditor?

Which of the following statement best describes the understanding with respect to ownership and custody of working papers prepared by an auditor?

Successor auditors may have access to working papers of the predecessor auditors. The approval of client is not required.

The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation

The safe custody of working papers is the responsibility of client, if kept at his premises

The working papers must be retained by an audit firm for a period of 10 years

Which of the following is not true about opinion on financial statements?

Which of the following is not true about opinion on financial statements?

He should examine whether recognised accounting principle have been consistently

His opinion is no guarantee to future viability of business

He is responsible for detection and prevention of frauds and errors in financial statements

The auditor should express an opinion on financial statements.

Which of the following factors would least likely affect the quantity and content of an auditor’s working papers

Which of the following factors would least likely affect the quantity and content of an auditor’s working papers

The content of management representation letter

The possibility of peer review

The nature of auditor’s report

The assessed level of control risk

Which of the following factors is most important in determining the appropriations of audit evidence?

Which of the following factors is most important in determining the appropriations of audit evidence?

The independence of the source of evidence

The reliability of audit evidence and its relevance in meeting the audit objective

The objectivity and integrity of the auditor

The quantity of audit evidence

Which of the following is correct in relation to materiality?

Which of the following is correct in relation to materiality?

A matter is material if its omission or misstatement would reasonably influence the decisions of an addressee of the auditors’ report

A matter is material only if it changes the audit report

A matter is material if the auditor and the directors both decide that further work needs to be done in the area under question

A matter is material only if it affects directors’ emoluments

What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?

What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?

He applies random sampling on data which is inaccurate and inconsistent

The auditor has ascertained that the balance is materially correct when in actual fact it is not

The auditor has rejected an item from sample which was not supported by documentary evidence

The auditor concludes the balance is materially misstated when in actual fact is not

The degree of effectiveness of an internal control system depends on:

The degree of effectiveness of an internal control system depends on:

The implementation of the controls and the correctness of the accounting records

The design of the internal control system and the correctness of the accounting records

The design of the internal control system and the implementation of the controls

The design of the internal controls and the implementation of the control system

The concept of stewardship means that a company’s directors________________?

The concept of stewardship means that a company’s directors________________?

Report suspected fraud and money laundering to the authorities

Safeguard the company’s assets and manage them on behalf of the shareholders

Are responsible for ensuring that the company pays its tax by the due date

Are responsible for ensuring that the company complies with the law

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