11
Which of the following statements is not correct about materiality?
A)
Materiality is a relative concept
B)
Materiality judgments involve both quantitative and qualitative judgments
C)
Auditor's consideration of materiality is influenced by the auditor's perception of the needs of an informed decision maker who will rely on the financial statements
D)
At the planning state, the auditor considers materiality at the financial statement level only
Answer & Solution
Answer: Option
D
12
An auditor conducts a surprise check on the pay day, i.e., the day wages and salaries are paid. The primary purpose of this audit procedure is to
A)
Ensure there are no ghost workers
B)
Ensure the casual workers employed are authorized by the supervisor
C)
Test procedures for distributing paycheques
D)
Obtain an understanding of the internal control system
Answer & Solution
Answer: Option
C
13
The management of a company, to which AS3 is not applicable, does not include statement of cash flows in its annual report. The auditor should express:
A)
Unqualified opinion
B)
Qualified opinion
C)
Adverse opinion
D)
Any of these depending upon materiality and pervasiveness and adequacy of disclosure
Answer & Solution
Answer: Option
A
14
Who is qualified to be a company auditor?
A)
Employee of the company
B)
Body corporate
C)
Person indebted to the company for an amount exceeding Rs. 1,000
D)
Chartered accountant
Answer & Solution
Answer: Option
D
15
Statement I: Safety audit is a risk management tools.Statement II: Management audit is a part of traditional auditing.
A)
Statement I is correct
B)
Statement II is correct
C)
Both statements are correct
D)
Both statements are incorrect
Answer & Solution
Answer: Option
A
16
The audit conducted to check and examine the efficiency and effectiveness of management is called
A)
Management audit
B)
Cost audit
C)
Energy audit
D)
Safety audit
Answer & Solution
Answer: Option
A
17
Which report will be submitted by an auditor, if he is dissatisfied regarding the facts and informations?
A)
Qualified report
B)
Clean report
C)
Management report
D)
Cost report
Answer & Solution
Answer: Option
A
18
When an independent auditor relies on the work of an internal auditor, he should
A)
Examine the scope of the internal auditor's work
B)
Examine the system of supervising review and documentation of the internal auditor's work
C)
Examine the adequacy of the related-audit programme
D)
All of the above
Answer & Solution
Answer: Option
D
19
Consider the following activities and choose the correct sequence of these activities undertaking by auditor:
A)
3, 1 and 2
B)
3, 2 and 1
C)
2, 3 and 1
D)
1, 2 and 3
Answer & Solution
Answer: Option
B
20
The cost auditor gives his report to the
A)
Directors
B)
Shareholders
C)
Managers
D)
Company law board
Answer & Solution
Answer: Option
A
