Auditing MCQs

Option A: Error of principle

Option B: Error of commission

Option C: Error of omission

Option D: Error of duplication

Correct Answer: Error of principle ✔

Option A: Teeming and lading

Option B: Looping

Option C: Embezzlement

Option D: Hacking

Correct Answer: Teeming and lading ✔

Option A: Performance reviews

Option B: Physical controls

Option C: Organizational structure

Option D: Segregation of duties

Correct Answer: Organizational structure ✔

Option A: Participation of management

Option B: Information processing

Option C: Commitment to competence

Option D: Human resource policies and practices

Correct Answer: Information processing ✔

Option A: The design of the internal control system and the implementation of the controls

Option B: The design of the internal controls and the implementation of the control system

Option C: The implementation of the controls and the correctness of the accounting records

Option D: The design of the internal control system and the correctness of the accounting records

Correct Answer: The design of the internal control system and the implementation of the controls ✔

Option A: Internal audit

Option B: Suppliers’ statements

Option C: Board minutes

Option D: Analytical review

Correct Answer: Suppliers’ statements ✔

Option A: Appropriateness & competence

Option B: Sufficiency & appropriateness

Option C: Reliability & extensiveness

Option D: Objectivity & independence

Correct Answer: B. Sufficiency & appropriateness ✔

Option A: Memorandum & articles of association

Option B: Audit planning memorandum

Option C: Summary of unadjusted errors

Option D: Details of the work done on the inventory count

Correct Answer: A. Memorandum & articles of association ✔

Option A: Systematic selection

Option B: Pervasive selection

Option C: Random selection

Option D: Haphazard selection

Correct Answer: Pervasive selection ✔

Option A: The risk of the auditor carrying out a test the wrong way round

Option B: The risk of reliance on unsuitable audit evidence

Option C: The risk that the sample does not reflect the population

Option D: The risk of the auditor reaching the wrong conclusions from testing

Correct Answer: The risk that the sample does not reflect the population ✔

Option A: the timing of the audit

Option B: whether corrections from the inventory count have been implemented

Option C: last year’s audit

Option D: the potential use of internal audit

Correct Answer: whether corrections from the inventory count have been implemented ✔

Option A: The timing of the audit

Option B: Analytical review

Option C: Last year’s written representation letter

Option D: Obtaining written representations

Correct Answer: Obtaining written representations ✔

Option A: Compliance risk

Option B: Detection risk

Option C: Control risk

Option D: Inherent risk

Correct Answer: Compliance risk ✔

Option A: Background i.e. industry

Option B: Previous year’s audit i.e. any qualifications in the report

Option C: Considering the work to be done by the client staff e.g. internal audit

Option D: Considering whether the financial statements show a true and fair view

Correct Answer: Considering whether the financial statements show a true and fair view ✔

Option A: A matter is material only if it changes the audit report

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

Option C: A matter is material only if it affects directors’ emoluments

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

Correct Answer: D. A matter is material if its omission or misstatement would reasonably influence the decisions of an addressee of the auditors’ report ✔

Option A: Until the audit is complete

Option B: Until the financial statements are complete

Option C: Until the next AGM (Annual General Meeting)

Option D: Until the directors remove them

Correct Answer: Until the next AGM (Annual General Meeting) ✔

Option A: the directors

Option B: the company’s creditors (payables)

Option C: the company’s bank

Option D: the shareholders

Correct Answer: the shareholders ✔

Option A: The shareholders in a general meeting

Option B: The managing director

Option C: The board of directors in a board meeting

Option D: The audit committee

Correct Answer: The shareholders in a general meeting ✔

Option A: Duty to report to the company’s bankers

Option B: Duty to report to the members

Option C: Duty to sign the audit report

Option D: Duty to report on any violation of law

Correct Answer: Duty to report to the company’s bankers ✔

Option A: Circulate representations to members

Option B: Apply to the court to have the proposal removed

Option C: Speak at the AGM/EGM where the removal is proposed

Option D: Receive notification of the AGM/EGM where the removal is proposed

Correct Answer: Apply to the court to have the proposal removed ✔

Option A: Error of omission

Option B: Error of commission

Option C: Compensating error

Option D: Error of principle

Correct Answer: Error of commission ✔

Option A: The auditor should express an opinion on financial statements.

Option B: His opinion is no guarantee to future viability of business

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

Option D: He should examine whether recognised accounting principle have been consistently

Correct Answer: He is responsible for detection and prevention of frauds and errors in financial statements ✔

Option A: International Accounting Standards Board

Option B: International Federation of Accountants

Option C: International Standards Board

Option D: Auditing Practices Board

Correct Answer: International Federation of Accountants ✔

Option A: Reporting to the shareholders on the accuracy of the accounts

Option B: Establishment of internal controls

Option C: Keeping proper accounting records

Option D: Supplying information and explanations to the auditor

Correct Answer: Reporting to the shareholders on the accuracy of the accounts ✔

Option A: Because they are easier to audit

Option B: Because it reduces the audit time

Option C: Because the risk to the accounts of their being incorrectly stated is greater

Option D: Because the directors have asked for it

Correct Answer: Because the risk to the accounts of their being incorrectly stated is greater ✔

Option A: Are responsible for ensuring that the company complies with the law

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

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

Option D: Report suspected fraud and money laundering to the authorities

Correct Answer: Safeguard the company’s assets and manage them on behalf of the shareholders ✔

Option A: Protect the interests of the minority shareholders

Option B: Detect and prevent errors and fraud

Option C: Assess the effectiveness of the company’s performance

Option D: Attest to the credibility of the company’s accounts

Correct Answer: Attest to the credibility of the company’s accounts ✔

Option A: Embezzlement

Option B: Misappropriation

Option C: Lapping

Option D: None of these

Correct Answer: Lapping ✔

Option A: Small scale business

Option B: Partnership firms

Option C: Joint stock Companies

Option D: Proprietary Concerns

Correct Answer: Joint stock Companies ✔

Option A: Auditing

Option B: Testing

Option C: Vouching

Option D: Verification

Correct Answer: Vouching ✔

Option A: Blood haunt

Option B: Watch dog

Option C: May both according to situation

Option D: None of these

Correct Answer: Watch dog ✔

Option A: Expression of opinion

Option B: Detection and Prevention of fraud and error

Option C: Both (A) and (B)

Option D: Depends on the type of audit.

Correct Answer: Depends on the type of audit. ✔

Option A: To inspect

Option B: To examine

Option C: To hear

Option D: To investigate

Correct Answer: To hear ✔

Option A: Auditing

Option B: Vouching

Option C: Verification

Option D: Checking

Correct Answer: Auditing ✔