CA Final Advanced Auditing and Professional Ethics MCQ’s

1. Control activities, whether within IT or manual systems, have various objectives and are applied at various organisational and functional levels. Which of the following is an example of control activities:

2. The auditor’s safeguards the auditor’s ability to form an audit opinion without being
affected by any influences.

3. Direct confirmation procedures are performed during audit of accounts receivable balances to address the following balance sheet assertion

4. The basic assumption underlying the use of analytical procedures is:

5. 17. Which of the following information should a successor auditor obtain during the inquiry of the predecessor auditor before accepting engagement?
i) Information about integrity of management
ii) Disagreement with management concerning auditing procedures
iii) Review of internal control system.
iv) Organisation structure

6. The auditor shall express_________opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements

7. Current period adjustments are those adjustments that are made:

8. CA. D, a chartered accountant in practice availed of a loan against his personal investments from a bank. He issued 2 cheques towards repayment of the said loan as per the instalments due. However, both the cheques were returned back by the bank with the remarks “Insufficient funds”. As per Chartered Accountants Act, 1949, under which clause CA D is liable for misconduct.

9. The measure of the quality of audit evidence about its relevance and reliability in providing support
for the conclusions on which the auditor’s opinion is based is:

10. Which of the following company is not exempted from reporting under CARO, 2016?

11. As an auditor appointed under section 44AB of the Income Tax Act, 1961, under which clause of Form 3CD, you will report for amounts deemed to be profits and gains under section 32AC, 33AB or 33ABA or 33AC

12. When is evidential matter, generally, considered sufficient in case of stock exchange member audit?

13. In an investigation relating to possible misappropriation of cash, the cashier says that every day the cash is counted and is reviewed by the Finance Head. Your specimen review indicates that the daily cash summary was not signed off by of the Finance Head. In this situation you should:

14. Section 144 of the Companies Act, 2013 does not excludes the statutory auditor of the company to render the services of –

15. Which of the following best suits the description – “The susceptibility of an assertion that could be material, either individually or in aggregate, before consideration of any related Internal Controls.”

16. As per CARO, 2016, the auditor is required to report whether the company is required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. If so, whether the registration has been obtained.

17. For a given level of audit risk, the acceptable level of detection risk bears_________relationship to the assessed risks of material misstatement at the assertion level.

18. The scope of the audit of Depositories including reference to the pronouncements of the ICAI, which the auditor adheres to, generally is communicated to the client in the
i) auditor’s report
ii) engagement letter
iii) representation letter

19. As per Clause (i)(c) of Paragraph 3 of the CARO, 2016, the auditor is required to report on :

20. The agreed terms of the audit engagement shall be recorded in an audit engagement letter which shall include the following except-

21. If, as a result of a misstatement resulting from fraud, the auditor encounters exceptional circumstances that bring into question his ability to continue performing the audit, he shall-

22. When does an auditor shall modify the opinion in the auditor’s report?

23. As per SA 550 on Related Parties, existence of which relationship indicate the presence of control or significant influence?

24. LM Ltd. had obtained a Term Loan of rupees 300 lakhs from a bank for the construction of a factory. Since there was a delay in the construction activities, the said funds were temporarily invested in short term deposits. Under which clause of CARO 2016 the auditor is required to report

25. In order to form the opinion, the auditor shall conclude as to whether the auditor has obtained___________about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error.