Auditing General Knowledge Quiz | Auditing General Knowledge Objective Type Questions & Answers

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Questions
21 Audit in depth is synonymous for____________?
A Complete audit
B Completed audit
C Final audit
D Detailed audit

Answer: Detailed audit
22 Concurrent audit is a part of____________?
A Internal check system
B Continuous audit
C Internal audit system
D None of these

Answer: Internal audit system
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23 Audit of banks is an example of_____________?
A Concurrent audit
B Balance sheet audit
C Statutory audit
D All of the above

Answer: All of the above
24 The scope of internal audit is decided by the___________?
A Shareholders
B Management
C Government
D Law

Answer: Management
25 Internal audit is undertaken:
A By independent auditor
B Statutorily appointed auditor
C By a person appointed by the management
D By a government auditor

Answer: By a person appointed by the management
26 Which of the following statements is not true?
A Management fraud is more difficult to detect than employee fraud
B Internal control system reduces the possibility of occurrence of employee fraud and management fraud
C The auditor’s responsibility for detection and prevention of errors and frauds is similar.
D All statements are correct.

Answer: Internal control system reduces the possibility of occurrence of employee fraud and management fraud
27 Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example of____________?
A Error of principle
B Error of commission
C Error of omission
D Error of duplication

Answer: Error of principle
28 Lapping is also known as___________?
A Teeming and lading
B Looping
C Embezzlement
D Hacking

Answer: Teeming and lading
29 According to ISA 315, which of the following is NOT a control activity?
A Performance reviews
B Physical controls
C Organizational structure
D Segregation of duties

Answer: Organizational structure
30 According to ISA 315, which of the following is NOT an element of the control environment?
A Participation of management
B Information processing
C Commitment to competence
D Human resource policies and practices

Answer: Information processing
31 The degree of effectiveness of an internal control system depends on:
A The design of the internal control system and the implementation of the controls
B The design of the internal controls and the implementation of the control system
C The implementation of the controls and the correctness of the accounting records
D The design of the internal control system and the correctness of the accounting records

Answer: The design of the internal control system and the implementation of the controls
32 Which of the following is normally the most reliable source of audit evidence?
A Internal audit
B Suppliers’ statements
C Board minutes
D Analytical review

Answer: Suppliers’ statements
33 According to ISA 500, the strength of audit evidence is determined by which two qualities?
A Appropriateness & competence
B Sufficiency & appropriateness
C Reliability & extensiveness
D Objectivity & independence

Answer: Sufficiency & appropriateness
34 Which of the following are you unlikely to see in the current file of auditors’ working papers?
A Memorandum & articles of association
B Audit planning memorandum
C Summary of unadjusted errors
D Details of the work done on the inventory count

Answer: Memorandum & articles of association
35 Which of the following is NOT an accepted method of selection in sampling?
A Systematic selection
B Pervasive selection
C Random selection
D Haphazard selection

Answer: Pervasive selection
36 Which of the following describes sampling risk?
A The risk of the auditor carrying out a test the wrong way round
B The risk of reliance on unsuitable audit evidence
C The risk that the sample does not reflect the population
D The risk of the auditor reaching the wrong conclusions from testing

Answer: The risk that the sample does not reflect the population
37 At the planning stage you would NOT consider____________?
A the timing of the audit
B whether corrections from the inventory count have been implemented
C last year’s audit
D the potential use of internal audit

Answer: whether corrections from the inventory count have been implemented
38 Which of the following should NOT be considered at the planning stage?
A The timing of the audit
B Analytical review
C Last year’s written representation letter
D Obtaining written representations

Answer: Obtaining written representations
39 Audit risk is composed of 3 factors. Which of the following is NOT one of those factors?
A Compliance risk
B Detection risk
C Control risk
D Inherent risk

Answer: Compliance risk
40 Which one of the following is NOT considered to be part of planning?
A Background i.e. industry
B Previous year’s audit i.e. any qualifications in the report
C Considering the work to be done by the client staff e.g. internal audit
D Considering whether the financial statements show a true and fair view

Answer: Considering whether the financial statements show a true and fair view

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