1. Financial (attest) audit is primarily concerned with expression of audit opinion on a set of financial statements.
Correct : B. TRUE
2. Financial (attest) audit includes:
i Examination and evaluaion of financial records
ii Audit of financial systems and transactions
iii Audit of intenal control and internal audit functions
iv Evaluation of Compliance with applicable statutes and regulations
Correct : D. All of the above
3. Financial (attest) audit includes an evaluation of Compliance with applicable statutes and regulations
Correct : A. TRUE
4. Transaction audit essentially seeks to address the following issues of risks to:
i Regularity
ii Performance
iii Propriety
iv Financial Control
Correct : C. (i), (iii) & (iv) only
5. Transaction audit is linked to a specific assurance on an individual set of financial Statements in a particular year
Correct : B. FALSE
6. Risks of financial irregularity are always material for the purpose of qualifying audit opinion on the finanicial statements
Correct : B. FALSE
7. The following types of financial statements are audited in respect of Union, State and UT Governments
i Finance Accounts
ii Appropriation Accounts
iii Balance Sheet
iv Statements of Expenditure
Correct : A. (i) & (ii) only
8. Financial Audit of Government Companies is conducted by
Correct : C. Chartered Accountants appointed by C&AG
9. The audit of financial statements of Government Companies conducted by the C&AG is called
Correct : B. Supplementary Audit
10. Financial Audit of Autonomous Bodies receiving financial assistance is governed by ______ of CAG's DPC Act 1971
Correct : B. 14 & 15
11. The International Standards of Auditing (ISAs) have been developed by
Correct : A. The International Federation of Accountants
12. The Auditing Standards of the C&AG of India comprise of
i General Standards
ii Field Audit Standards
iii Field Standards
iv Reporting Standards
Correct : C. (i), (iii) & (iv) only
13. Which of these standards regulate the condut of the auditor
Correct : A. General Standards
14. Which of these standards regulate the audit activity of the auditor
Correct : C. Field Standards
15. The Primary objective of a financial audit is to
Correct : D. Express an opinion on the financial statements
16. The general audit objectives are also called
Correct : B. Assertions
17. Which of these is the correct set of general financial audit objectives for income & expenditure account
Correct : A. Completeness, Occurrence, Measurement, Disclosure, Regularity
18. Which of these is the correct set of general financial audit objectives for balance sheet
Correct : A. Completeness , Existence , Valuation , Ownership , Disclosure
19. The legal right to sue and recover an account receivable is the test of
Correct : B. Ownership
20. This financial audit objective directly tests for potential overstatement of assets and liabilities
Correct : A. Existence
21. Insurance relating to the year 2013-14 was paid in 2012-13 in advance. The same was however
booked as expenditure in 2012-13. This does not meet the objective of
Correct : D. Occurrence
22. If some item of revenue expenditure is misclassified as capital expenditure, it can be said that this objective is not met
Correct : B. Disclosure
23. If the monthly accounts of some Treasuries or Public Works Divisions are excluded from the Accounts of a State Government, it affects this objective
Correct : C. Completeness
24. A financial audit is intended to give
Correct : D. None of these
25. Materiality is classified by
Correct : D. All of these
26. The point where the total value of errors in an account becomes unacceptable to audit is called
Correct : B. Materiality level
27. The materiality thresholds depend on the ____ of accounts and their _____.
Correct : A. Basis, Sensitivity
28. For accounts prepared on cash basis, in respect of gross receipts/expenditure, materiality percentage would be
Correct : B. For very sensitive accounts - 1/2 %, sensitive accounts - 1/2% to 2% and non sensitive accounts - 2%
29. Planning materiality may be taken at a lower figure than reporting materiality.
Correct : A. TRUE
30. Which of the following statements is true about Precision
Correct : A. It is a range of error in an account between MLE & materiality
31. AMLE in the context of likely errors is used in this stage of audit
Correct : C. Planning
32. The formula for calculating precision is
Correct : B. (Materiality - AMLE) x Range of error possible
33. There is a direct relationship between materiality level and the level of audit risk
Correct : B. FALSE
34. The three components of Audit Risk as per the risk model are
Correct : C. Inherent Risk, Control Risk, Detection Risk
35. If the desired overall assurance from audit is 95%, the inherent risk is 40% and the control risk is 50%, what would be the desired assurance from substantive tests
Correct : D. 75%
36. what are the audit procedures commonly used to obtain audit assurance?
Correct : D. All of the above
37. Which of the following is not a part of analytical procedures?
Correct : B. Economic Analysis
38. When you are finding out the inventory-turnover ratio, you are doing
Correct : A. Comparison across components
39. This is a technique that creates an equation to reveal how one variable is related to one or more other variables.
Correct : C. Regression analysis
40. Which of the audit procedures is a form of inductive reasoning where the reasonableness of the aggregate results is inferred from the evidence of reliability of the individual details that are tested?
Correct : C. Direct Substantive Testing
41. Which kind of audit sampling is generally used for testing controls?
Correct : A. Attribute Sampling
42. Which method of sampling is expected to produce representative samples?
Correct : C. Random Sampling
43. Which method of sampling is not expected to produce representative samples?
Correct : A. Block Selection
44. A pre-condition for any statistical sampling is the availability of a _______
Correct : B. sampling frame
45. Population is divided into groups, each being fairly homogenous with respect to value and risk
in this kind of sampling
Correct : C. Stratified Sampling
46. Sampling interval is calculated in this kind of sampling
Correct : B. Systematic Sampling
47. This method of sampling is also called probability proportionate to size (PPS) sampling
Correct : D. Monetary Unit Sampling
48. Extrapolation of sampling results to the population is possible in the case of Judgmental Sampling.
Correct : B. FALSE
49. Risk assessment is primarily a part of which of these stages in the audit process?
Correct : A. Planning
50. Reflecting all the transactions relating to the period of the accounts without regard to the actual
date of payment or receipt is also called
Correct : C. Both
51. Which of the following statements are true?
Correct : A. The Union and State Governments follow cash based accounting while Corporations and autonomous bodies mainly follow accrual based accounting
52. In the context of Government Accounts in India, the key feeder systems include:
Correct : D. All of the above
53. In the context of Government Accounts in India, the key feeder systems aslo include State Bank of India or any other public sector bank transacting Government Business on behalf of Reserve Bank of India
Correct : A. TRUE
54. Which of the following statements is false?
Correct : D. Materiality by context is easy to assess at the planning stage
55. Misclassification of revenue expenditure resulting in a saving in a grant when in fact there has been an excess is an example of.
Correct : B. Materiality by context
56. The risks identified from top down review of entities and which may affect a number of
different account areas are called
Correct : A. Entity Risks
57. The process for identifying material risk factors has ____ key stages
Correct : C. Six
58. The three levels of substantive procedures that can be performed in decreasing order of
assurance required are:
Correct : B. Focused, Standard, Minimum
59. The extent of audit procedures and the the level of assurance required are
Correct : A. Directly related
60. The document that presents an analysis of the main audit areas and a summary of the key
planning decisions is called
Correct : D. Audit Planning memorandum
61. Instructions to audit team members on the performance of chosen audit procedures are
contained in the
Correct : C. Detailed Audit Programme
62. These are performed if the audit team identifies a risk that could lead to potential material misstatement and where no reliance can be placed on mitigating controls to address the risk
Correct : A. Focused Subtantive Procedures
63. These are performed if the audit team has not identified risks that could lead to material misstatement and no reliance is planned to be placed on controls.
Correct : B. Standard Substantive Procedures
64. These are Performed if the audit team plans to take assurance from mitigating controls or from
other controls .
Correct : C. Minimum Substantive Procedures
65. Analytical Procedures are unlikely to be used when these are performed.
Correct : A. Focused Subtantive Procedures
66. Which of the following statements is false?
Correct : D. Visual evidence is highly reliable for confirming the ownership of the assets and their value.
67. Which of the following statements is True?
Correct : A. Oral evidence must be considered as the least reliable.
68. Which of the following is False?
Correct : A. A systematic error is one which will only occur in defined circumstances
69. Which of the following is True?
Correct : D. None of these
70. The audit working papers contain
Correct : D. all of the above
71. The acid test for good documentation is
Correct : D. that an experienced auditor with no previous connection with the audit should be able, without difficulty, to ascertain the evidence gathered and understand and support the conclusions reached.
72. Which of these broad characteristics of audit working papers applies particularly to photocpies
Correct : B. Legibility and neatness
73. Working papers should be restricted to matters, which are important, pertinent and useful for
the purpose. Which is the characteristic that we are talking about?
Correct : C. Relevance
74. If the financial statements properly present receipts and payments or give a true and fair view
and have been prepared in accordance with relevant accounting requirements, the auditor
Correct : C. gives an unqualifie
75. A material but not fundamental uncertainty would lead to
Correct : B. qualified opinion
76. A fundamental disagreement would lead to
Correct : B. qualified opinion
77. The primary responsibility for safeguarding the audited entity’s funds and assets and to prevent
frauds or errors lies with its
Correct : C. management
78. Policies, systems and procedures established by Comptroller and Auditor General to maintain a
high standard of audit activity are also called