QMCQAudit Statements
10 marks hard
Which of the following is correct?
(A) Only Statement I is true
(B) Only Statement II is true
(C) Both statements I and II are true
(D) Both statements I and II are false
QOR-aBank Audit and Agricultural Advances
4 marks medium
Explain the categories of Agricultural Advances in case of Banks and related NPA norms.
QOR-bHospital Audit
8 marks hard
You have been appointed auditor of Mrs. BLK Hospital. Discuss important points that would secure your attention in the audit.
Q1Audit - Fraud vs Error
0 marks easy
Misstatements in the financial statements can arise from either fraud or error. The distinguishing factor is that:
(A) Fraud raises a material misstatement in the financial statements.
(B) Fraud is an intentional act.
(C) Fraud is easier to detect than error.
(D) Fraud can be committed by only the management. Those charged with governance, and the employees.
Q1Auditor's judgment and material misstatement
2 marks easy
Case: SAM & Company audit of Heath Limited with Engagement Partner CA A and team of 6 members conducting audit covering discussion of material misstatement and auditor's judgment on the financial statements.
Based on the above information, answer the following questions:
(i) Financial statements are prepared as per the auditor's judgement.
(ii) If so confirmed, irrelevant or immaterial represent a substantial proportion of the financial statements, or
(iii) In relation to disclosure, the fundamental to users' understanding of the financial statements.
Which of the following is correct?
(a) (i) (ii)
(b) (ii) (iii)
Q1Audit procedures - testing of controls
1 marks easy
In designing and performing test of controls, the auditor shall perform other audit procedures in conjunction with inquiry to obtain audit evidence about the operating effectiveness of the controls, including:
(i) How the controls were applied
(ii) The consistency with which they were applied
(iii) By whom or by what means they were applied
Which of the following is correct?
(a) (i) and (ii)
(b) (i) and (iii)
(c) (i), (ii) and (iii)
(d) (ii) and (iii)
Q1Audit Evidence and Procedures
9 marks hard
Examine with reasons (in short) whether the following statements are correct or incorrect. (Attempt any 7 out of 8)
Q2Audit - Fraud Suppression Techniques
0 marks easy
Which of the following is a technique of suppressing an unauthorized cheque?
(A) Writing down asset values in entirety, selling them subsequently and misappropriating the proceeds.
(B) Adjusting unauthorized & fictitious credits, allowances, discounts etc. to customer accounts and misappropriating the sundry debtors from them.
(C) Withholding a portion of the daily collections made by reducing these credit including them or taking them in any other manner.
Q2Unmodified opinion and equivalent phrases in auditor's repor
2 marks easy
When obtaining an unmodified opinion on financial statements, SAM & Company used the following phrase:
"In our opinion, the accompanying financial statements give a true and fair view of [...]"
Which is the other phrase which is regarded as being equivalent to the above phrase and statement by SAM & Company?
(a) In our opinion, the accompanying financial statements give a true and fair view of [...] in accordance with the applicable financial reporting framework.
(b) In our opinion, the accompanying financial statements present a true and correct view of [...] in accordance with the applicable financial reporting framework.
(c) In our opinion, the accompanying financial statements present a true view of [...] in accordance with the applicable financial reporting framework.
(d) In our opinion, the accompanying financial statements give a complete and fair view of [...] in accordance with the applicable financial reporting framework.
Q2Going concern - audit indicators
1 marks easy
Which of the following is not an example of an event or condition that may cast significant doubt on the going concern:
(a) Negative operating cash flows
(b) Adverse key financial ratios
(c) Inability to pay creations on due date
(d) Current year profit loss to loss after providing depreciation
Q3Audit - Fraud Reporting Requirements
0 marks easy
Case: XYZ & Company audit of construction business with fraud investigation
To whom should XYZ & Company report the fraud committed in Honest Limited?
(A) Report to send only to the Audit Committee, as the case may be, immediately but not obligated to do so unless the fraud has not exceeded 1 crore.
(B) Report the matter either to the Audit Committee, as the case may be, immediately but not obliged to report to the Audit Committee at the end of the Audit year when the accounts of the company are finalized and on receipt of such reply of observation, the auditor shall forward his report and the reply of observation if the Board of the Audit Committee along with his reply within thirty days from the date of receipt of such reply or observations.
(C) Report the matter either to the Board we've the amount thereof not more than 1 crore.
Q3Basis for Opinion section in auditor's report
2 marks easy
Which of the following statements is not included in the section with the heading "Basis for Opinion" in the Auditor's Report?
(a) Audit was conducted in accordance with the Accounting Standards
(b) The auditor obtained sufficient appropriate audit evidence regarding to comply with SA requirements suitable to conduct the audit in accordance with these requirements.
(c) Basis which the auditors obtained below a basis for the audit's opinion.
(d) The auditor has obtained required evidence.
Q3Analysis techniques - going concern
1 marks easy
Information about the going concern analysing account fluctuations by comparing current year to prior year implies analysing account fluctuations by comparing current year to prior year
(a) Trend analysis
(b) Trend analysis
(c) Ratio analysis
(d) Structural modelling
(e) Account fluctuations analysis
Q3Sampling Risk and Materiality
8 marks hard
Briefly explain the concept mentioned about whether a sampling and non-sampling risk exists, in respect to the audit. Explain the materiality considerations in the context.
Q4Audit - Fraud Disclosure in Board's Report
0 marks easy
Case: XYZ & Company audit of construction business with fraud investigation
The company has failed to rectify the fraud detected which would now be required to disclose in the Board's Report details of each of the fraud reported to the Audit Committee by the Board given during the year. Which of the following details is not required to be disclosed in the Board's Report?
(A) Name of the person involved
(B) Nature of fraud or suspected fraud
(C) Approximately amount involved
(D) Remedial action taken
Q4Auditor's report paragraphs for significant matters
2 marks easy
A statement on Internal Control over Financial Reporting was issued by XYZ Health Limited with referred to a matter which was appropriately disclosed in the financial statements that, in the auditor's judgment, was of such importance that it was fundamental to users' understanding of the financial statements. What is this?
(a) Other Matters
(b) Emphasis of Matters
(c) Key Audit Matters
(d) Auditor's Responsibilities for the Audit of the Financial Statements
Q4Audit engagement letter - content requirements
1 marks easy
The agreed terms of the audit engagement shall be recorded in an audit engagement letter or other suitable form of written engagement and shall include:
(i) The responsibilities of the auditor for preparing the financial statements;
(ii) The responsibilities of the auditor;
(iii) The responsibilities of management;
(iv) Identification of the applicable financial reporting framework for the preparation of the financial statements; and
(v) Reference to the expected form and content of any reports to be issued by the auditor and a statement that there may be circumstances in which a report may differ from its expected form and content
Which of the following is correct?
(a) (i), (ii), (v)
(b) (i), (iii), (v)
(c) (ii), (iii), (iv)
(d) (i), (ii), (iii), (iv)
Q4Audit Sampling and Share Transactions
6 marks medium
Discuss audit procedures and substantive testing
Q5Audit - Auditor's Report Order 2020
0 marks easy
For reporting under clause (vi) of paragraph 3 of Companies (Auditor's Report) Order 2020, which of the following points the auditor may consider?
(A) Fraud by the company or on the company by its officers, employees or third parties to be reported.
(B) Only suspected fraud shall not be included here and not the company.
(C) Principles of materiality outlined in Standards on Auditing
(D) The auditor's withdrawal from the engagement and the costs of the withdrawal.
Q5Prior period financial statements and corresponding figures
2 marks easy
CA A explained the circumstances to Mr. R in which, when the corresponding figures are presented, the financial statements of prior period or corresponding figures. Which of the following is correct?
(i) If the auditor obtains audit evidence that a material misstatement exists in the prior period financial statements on an auditor-qualified opinion has been previously issued.
(ii) If the auditor's report on the prior period, as previously issued, included a qualified opinion, it the modification in the current opinion has been auditor resolution is needed.
(iii) Prior Period Financial Statements are audited by another auditor.
(iv) Prior Period Financial Statements not audited.
Q5Audit assertions - receivables
1 marks easy
Obtaining trade receivables ageing report and analysis and identification of the ps/full debts is performed during audit of accounts receivable balances to address the following balance sheet assertion-
(a) Rights and obligations
(b) Existence
(c) Completeness
Q5Asset Audit and CARO 2020
12 marks very hard
Audit procedures for assets and substantive testing
Q6NPA classification - credit accounts
1 marks easy
The auditors should Credit and accounts as NPL if _____ amount due, as mentioned in the agreement, is not paid fully within _____ days from next statement date.
(a) Total: 90
(b) Half: 30
(c) Minimum: 30
(d) Minimum: 60
Q6Internal Controls and Government Audit
16 marks very hard
Audit procedures and internal controls
Q7Fraud detection - receivables audit
1 marks easy
The auditor finds out there is something unusual about the balances outstanding in the receivable and the auditor is required to look at how the management explained such unusual balances. The auditor has identified a particular debit balance on a receivable but there might be a misstatement of cash and the detection of the misstatement is being prevented by crediting the amount received subsequently to the account of customer not in
What is the kind of fraud the auditor has found in the above case?
(a) Cash theft
(b) Cash skimming
(c) Defalcation of cash by offsetting cash payment
(d) Embezzlement of receivables
Q8Securities - types of pledging
1 marks easy
A Ltd. has been assigned a Cash Credit limit of INR 20 lacs as against its Book Debts furnished as securities. Which of the following will apply?
(a) Pledge
(b) Mortgage
(c) Assignment
(d) Set-off
(e) Hypothecation
Q9Audit risk - inherent limitations
1 marks easy
Consider the following implications of audit, there is a risk that some material misstatements of the financial statements will not be detected, even though the audit is properly planned and performed in accordance with the SAs.
(a) Inherent, unavoidable
(b) Inherent, complete
(c) Inherent, not avoidable
(d) Regulatory, control
Q10Assertions - definition and characteristics
1 marks easy
Consider the following statements pertaining to nature and meaning of "assertions" -
Statement I—Assertions are representations by the management which are present in financial statements.
Statement II—The assertions have to be necessarily explicit.