A
Auditing means:
A. Preparing financial statements
B. Independent examination of financial statements
C. Maintaining accounts
D. Collecting taxes
B. Independent examination of financial statements
Which is a secondary objective of an audit?
A. Expressing audit opinion
B. Detection of fraud and errors
C. Maintaining books
D. Preparing trial balance
Answer: B. Detection of fraud and errors
Which principle requires honesty in professional work?
A. Confidentiality
B. Integrity
C. Objectivity
D. Competence
Answer: B. Integrity
Which of the following is NOT normally included in an engagement letter?
A. Objective of audit
B. Responsibilities of auditor
C. Audit fee (if agreed)
D. Future profit guarantee
Answer: D. Future profit guarantee
Which type of audit risk cannot be directly controlled by the auditor?
A. Detection Risk
B. Inherent Risk
C. Sampling Risk
D. Non-sampling Risk
Answer: B. Inherent Risk
Assurance means:
A. Guaranteeing profits
B. Increasing confidence of users in information
C. Detecting all frauds
D. Preparing budgets
Answer: B. Increasing confidence of users in information
Which audit is compulsory under law?
A. Internal Audit
B. Financial Audit
C. Statutory Audit
D. Management Audit
Answer: C. Statutory Audit
An auditor should avoid bias while performing duties. This relates to:
A. Integrity
B. Confidentiality
C. Objectivity
D. Independence
Answer: C. Objectivity
Audit planning helps in:
A. Reducing audit effectiveness
B. Performing audit efficiently
C. Eliminating audit risk
D. Preparing financial statements
Answer: B. Performing audit efficiently
Which risk arises due to failure of internal controls?
A. Detection Risk
B. Control Risk
C. Inherent Risk
D. Business Risk
Answer: B. Control Risk
The origin of auditing in India is often associated with:
A. Manusmriti
B. Arthashastra
C. Ramayana
D. Mahabharata
B. Arthashastra
Internal audit is generally conducted by:
A. Government officials
B. Company's internal auditors
C. Shareholders
D. Creditors
Answer: B. Company's internal auditors
Sharing client information without permission violates:
A. Integrity
B. Confidentiality
C. Competence
D. Objectivity
Answer: B. Confidentiality
Which comes first?
A. Audit Programme
B. Audit Plan
C. Overall Audit Strategy
D. Audit Report
Answer: C. Overall Audit Strategy
Detection risk can be reduced by:
A. Ignoring evidence
B. Performing more effective audit procedures
C. Reducing audit staff
D. Eliminating internal controls
Answer: B. Performing more effective audit procedures
Who wrote the Arthashastra?
A. Kalidasa
B. Chanakya (Kautilya)
C. Valmiki
D. Panini
B. Chanakya (Kautilya)
Which body issues Standards on Auditing (SAs) in India?
A. RBI
B. ICAI
C. SEBI
D. MCA
Answer: B. ICAI
Keeping professional knowledge updated relates to:
A. Integrity
B. Professional competence and due care
C. Confidentiality
D. Objectivity
Answer: B. Professional competence and due care
The detailed list of audit procedures is called:
A. Audit Strategy
B. Audit Programme
C. Audit Opinion
D. Audit Evidence
Answer: B. Audit Programme
Risk of Material Misstatement (RMM) consists of:
A. Inherent Risk + Control Risk
B. Detection Risk + Control Risk
C. Audit Risk + Detection Risk
D. Materiality + Audit Risk
Answer: A. Inherent Risk + Control Risk
The primary objective of an audit is to:
A. Detect every fraud
B. Express an opinion on financial statements
C. Calculate tax liability
D. Prepare financial statements
B. Express an opinion on financial statements
AASB stands for:
A. Accounting Assurance Standards Board
B. Auditing and Assurance Standards Board
C. Audit Assessment Standards Board
D. Assurance Accounting Standards Bureau
Answer: B. Auditing and Assurance Standards Board
Which document defines the scope and terms of the audit?
A. Audit Report
B. Engagement Letter
C. Trial Balance
D. Balance Sheet
Answer: B. Engagement Letter
Materiality refers to:
A. Size or nature of misstatement affecting users' decisions
B. Number of vouchers
C. Audit duration
D. Audit fees
Answer: A. Size or nature of misstatement affecting users' decisions
Which component is NOT part of the COSO Internal Control Framework?
A. Control Environment
B. Risk Assessment
C. Monitoring Activities
D. Profit Maximization
Answer: D. Profit Maximization