Auditing MCQs with Answers

This is Auditing MCQs section with detailed explanations for preparation of screening tests, interviews for government jobs. In this section candidate will learn MCQs on variety of topics from the subject.

1. 141 Which of the following statements is INCORRECT
   

   1. An auditor may serve on the board of directors of an audit client.

   2. An auditor who is an immediate family member of the director of an audit client must not be assigned to the audit team.

   3. Purchasing goods from an audit client on normal commercial terms does not create a threat to the auditors independence.

   4. An auditor who was recently a director of an audit client must not be assigned to the audit team for that client.

   See Answer

   Added By: Ak Aamir

   Answer

   : An auditor may serve on the board of directors of an audit client.

   Explanation

   :
   N/A

2. 142 An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to his or her independence. The threat would be a___________
   

   1. Self-interest threat

   2. Self-review threat

   3. Advocacy threat

   4. Familiarity threat

   See Answer

   Added By: Ak Aamir

   Answer

   : Self-interest threat

   Explanation

   :
   N/A

3. 143 Which of the following are fundamental ethical principles for professional accountants 1 Competence 2 Compliance 3 Integrity 4 Objectivity
   

   1. 1, 2 and 3 only

   2. 1, 3 and 4 only

   3. 2, 3 and 4 only

   4. 1, 2 and 4 only

   See Answer

   Added By: Ak Aamir

   Answer

   : 1, 3 and 4 only

   Explanation

   :
   N/A

4. 144 Which one of the following may auditors NOT perform for their client
   

   1. Taking management decisions

   2. Preparation of accounting records

   3. Preparing tax computations

   4. Advising on weaknesses in the internal control systems

   See Answer

   Added By: Ak Aamir

   Answer

   : Taking management decisions

   Explanation

   :
   N/A

5. 145 You have been proposed as auditor of a company. What is the first step that you should take
   

   1. Obtain the clients permission to communicate with the existing auditor

   2. Obtain the existing auditors working papers

   3. Obtain a copy of the companys most recent board minutes

   4. Obtain a copy of the existing auditors letter of engagement

   See Answer

   Added By: Ak Aamir

   Answer

   : Obtain the clients permission to communicate with the existing auditor

   Explanation

   :
   N/A