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. 11 Which of the following is NOT the responsibility of a companys directors
   

   1. Reporting to the shareholders on the accuracy of the accounts

   2. Establishment of internal controls

   3. Keeping proper accounting records

   4. Supplying information and explanations to the auditor

   See Answer

   Added By: Ak Aamir

   Answer

   : Reporting to the shareholders on the accuracy of the accounts

   Explanation

   :
   N/A

2. 12 International auditing standards are issued by the______________
   

   1. International Accounting Standards Board

   2. International Federation of Accountants

   3. International Standards Board

   4. Auditing Practices Board

   See Answer

   Added By: Ak Aamir

   Answer

   : International Federation of Accountants

   Explanation

   :
   N/A

3. 13 Which of the following is not true about opinion on financial statements
   

   1. The auditor should express an opinion on financial statements.

   2. His opinion is no guarantee to future viability of business

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

   4. He should examine whether recognised accounting principle have been consistently

   See Answer

   Added By: Ak Aamir

   Answer

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

   Explanation

   :
   N/A

4. 14 A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of____________
   

   1. Error of omission

   2. Error of commission

   3. Compensating error

   4. Error of principle

   See Answer

   Added By: Ak Aamir

   Answer

   : Error of commission

   Explanation

   :
   N/A

5. 15 When an auditor is proposed for removal from office, which one of the following is he NOT permitted to do
   

   1. Circulate representations to members

   2. Apply to the court to have the proposal removed

   3. Speak at the AGM/EGM where the removal is proposed

   4. Receive notification of the AGM/EGM where the removal is proposed

   See Answer

   Added By: Ak Aamir

   Answer

   : Apply to the court to have the proposal removed

   Explanation

   :
   N/A

6. 16 Which one of the following is NOT a duty of the auditor
   

   1. Duty to report to the companys bankers

   2. Duty to report to the members

   3. Duty to sign the audit report

   4. Duty to report on any violation of law

   See Answer

   Added By: Ak Aamir

   Answer

   : Duty to report to the companys bankers

   Explanation

   :
   N/A

7. 17 Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of the auditor
   

   1. The shareholders in a general meeting

   2. The managing director

   3. The board of directors in a board meeting

   4. The audit committee

   See Answer

   Added By: Ak Aamir

   Answer

   : The shareholders in a general meeting

   Explanation

   :
   N/A

8. 18 The independent auditors primary responsibility is to______________
   

   1. the directors

   2. the companys creditors (payables)

   3. the companys bank

   4. the shareholders

   See Answer

   Added By: Ak Aamir

   Answer

   : the shareholders

   Explanation

   :
   N/A

9. 19 How long is the auditors term of office
   

   1. Until the audit is complete

   2. Until the financial statements are complete

   3. Until the next AGM (Annual General Meeting)

   4. Until the directors remove them

   See Answer

   Added By: Ak Aamir

   Answer

   : Until the next AGM (Annual General Meeting)

   Explanation

   :
   N/A

10. 20 Which of the following is correct in relation to materiality
    

    1. A matter is material only if it changes the audit report

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

    3. A matter is material only if it affects directors emoluments

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

    See Answer

    Added By: Ak Aamir

    Answer

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

    Explanation

    :
    N/A