Auditing MCQ Questions and Solutions with Explanations | Commerce

Routine checking refers to the process of verifying the regular or recurring transactions that take place in the normal course of business.

It involves examining routine accounting records such as cash receipts, payments, purchases, sales, and journal entries to ensure that all entries are correctly recorded, casted, and posted in the ledger.

The main objective of routine checking is to detect clerical errors, omissions, and frauds of a simple nature that may occur during day-to-day recording of transactions.

It does not include critical examination or detailed investigation of accounts; rather, it focuses on checking routine items for accuracy and correctness.

Option A (Daily checking of transactions) is too narrow because routine checking is not limited to daily verification only.

Option B (Internal inspection system) refers to internal audit procedures, which are broader in scope.

Option C (Provisional check of accounts) does not correctly describe the systematic nature of routine checking.

Therefore, the correct meaning of routine checking is checking routine items.

Hence, the correct answer is Option D: Checking routine items.

Under the Companies Act, 1956, the removal of an auditor before the expiry of his term was covered under Section 224(7).

According to this section, an auditor could be removed before the completion of his tenure only with the prior approval of the Central Government and after passing a special resolution in the general meeting of the company.

This was introduced to protect the independence of auditors and prevent arbitrary removal by company management.

Under the Companies Act, 2013, the relevant provision is Section 140.

As per Section 140(1), an auditor appointed under Section 139 may be removed from his office before the expiry of his term only by passing a special resolution in a general meeting and obtaining the previous approval of the Central Government.

Therefore:
- In the 1956 Act → Removal of auditor = Section 224(7)

- In the 2013 Act → Removal of auditor = Section 140