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Accounting, Banking and Finance MCQs

Auditing

Quiz # 2, MCQs

NOTE: Attempt all Questions to see the Result at the bottom of this page.

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1)

Which one of the following persons is responsible for the preparation of Audit engagement later?
- A) Auditor
- B) Client
- C) Company registrar
- D) Company secretary
Right Answer is the option "A"

2)

Who is responsible for designing and preparing the financial statements?
- A) Auditor
- B) Management
- C) Accountant
- D) Company secretary
Right Answer is the option "B"

3)

Which one of the following is the method of assessing the internal control system of an entity?
- A) Audit procedures
- B) Audit evidence
- C) Compliance audit
- D) Technical analysis
Right Answer is the option "A"

4)

The purpose of engagement letter includes the following EXCEPT:
- A) To defines the auditor responsibilities clearly
- B) To minimize misunderstandings between the client and auditors
- C) To educate the client
- D) To help the auditor in preparing audit report
Right Answer is the option "D"

5)

A manufacturing company wants to hire external auditors who examine the activities operations procedures and processes of each department of the company. The company follows the local and international laws rules ad regulations and also has set standards for the efficiency and effectiveness. The company shall have to provide the access of all kind of operational information that will be required to the auditors as audit evidences. Considering the above situation select the most suitable type of audit which the company should opt?
- A) Compliance audit
- B) Operational audit
- C) Technology audit
- D) Financial audit
Right Answer is the option "B"

6)

Which one of the following is considered as the formal opinion or disclaimer thereof issued by an independent auditor as a result of audit or evaluation performed on a legal entity?
- A) Financial report
- B) Financial statement
- C) Director report
- D) Auditor's report
Right Answer is the option "D"

7)

Which of the following statements is true?
- A) The auditing profession is unregulated
- B) The auditing profession is regulated only by its own professional body
- C) Outside bodies sometimes become involved in the regulation of the audit profession
- D) The auditing profession is regulated only by the government
Right Answer is the option "C"

8)

Which one of the following primary assertions is satisfied when an auditor ensures that there are no unrecorded assets liabilities transactions or events or undisclosed items in the client financial records?
- A) Valuation
- B) Completeness
- C) Existence
- D) Rights and obligations
Right Answer is the option "B"

9)

Internal control is primarily established within a company to do which of the following?
- A) To prevent fraud in the company affairs
- B) To provide reasonable assurance that the company's objectives will be achieved
- C) To catch all errors that may occur in the company
- D) To aid in the effective auditing of the company
Right Answer is the option "B"

10)

Where the auditor relies more on the system of internal control the circumstance warrant:
- A) He spends more time on audit
- B) Effectiveness of the audit is affected
- C) Efficiency of the audit is affected
- D) Reliability of the results of the tests is affected
Right Answer is the option "B"