200+ Auditing Corporate Governance Solved MCQs

101.

Which of the following statements are true about management audit?

A. The management audit is made compulsory and statutory
B. Management audit cannot be conducted by an independent person
C. No time limit can be fixed for submission of the report under management audit
D. Management audit is a programme of one year
Answer» C. No time limit can be fixed for submission of the report under management audit
102.

Which of the following is (are) true of the EDP auditors?

A. They should have computer expertise
B. They will be replaced by traditional auditors in the near future
C. Currently, there is a very high demand from firms that use personal computers
D. None of the above
Answer» A. They should have computer expertise
103.

Audit software includes

A. Generalized Audit Software
B. Specialized Audit Software
C. Utility Software
D. All of the Above
Answer» D. All of the Above
104.

International auditing standards are issued by the:

A. International Accounting Standards Board
B. Financial Accounting Standards Board
C. International Audit and Assurance Standards Board
D. Auditing Practices Board
Answer» C. International Audit and Assurance Standards Board
105.

Under the Companies Act, 2013 a cost auditor must be a cost accountant having certificate of practice issued by the institute of Cost Accountants of India as per

A. Section 148
B. Section 147
C. Section 150
D. Section 151
Answer» A. Section 148
106.

Management Audit assess the efficiency of management for third parties to commit funds for the business in situation such as –

A. Granting loans or participation in equity
B. Reviving sick units
C. Foreign collaborations
D. All of the above
Answer» D. All of the above
107.

The section which contains provisions regarding compulsory Tax Audit is

A. Section 44AD
B. Section 44BB
C. Section 44AB
D. Section 44AE
Answer» C. Section 44AB
108.

For an assesse carrying on business in India, deductions allowed under Section 33AB includes businesses of

A. Growing and manufacturing of tea
B. Growing and manufacturing of coffee
C. Growing and manufacturing of rubber
D. All of the above
Answer» D. All of the above
109.

Transactions entered in the computer as they occur and processed simultaneously in the processing capabilities of accounting system is

A. Batch processing system
B. Real-time processing system
C. Distributed Data processing
D. None of the above
Answer» B. Real-time processing system
110.

Selecting and printing audit samples, comparing data on separate files, comparing audit data with clients records

A. Functions of Generalized Audit Software
B. Integrated Test Data Approach
C. Test Data Approach
D. All of the above
Answer» A. Functions of Generalized Audit Software
111.

Compliance with standard of Auditing is the responsibility of

A. Management
B. Those charged with governance
C. Auditor
D. Audit committee
Answer» C. Auditor
112.

If the auditor is unable to draw reasonable assurance, he should either withdraw from engagement if permitted by law or disclaim his opinion, is given in which Standard on Auditing.

A. SA500
B. SA200
C. SA705
D. SA700
Answer» B. SA200
113.

The ------- can be removed after the expiry of his term of office,as per the procedures laid down in section 225.

A. BOD
B. Clerk
C. Auditor
D. Shareholders.
Answer» C. Auditor
114.

An appointed auditor may be removed from his office either in accordance with the provisions and as per restrictions imposed by the

A. Companies Act
B. Chartered Accountants Act
C. Both (a) and (b)
D. None of the above.
Answer» C. Both (a) and (b)
115.

Cost audit is the verification of the correctness of cost accounts and adherence to the cost accounting plan. This concept is given by

A. Institute Of Chartered Accountant Of India
B. Institute Of Chartered Accountant Of London
C. Institute Of Cost and Works Accountants of India
D. Institute Of Cost and Works Accountants of London.
Answer» D. Institute Of Cost and Works Accountants of London.
116.

Cost audit helps in settlement of trade disputes. This is the advantage for

A. Government
B. Management
C. Society
D. Shareholders .
Answer» C. Society
117.

The audit of financial records to ascertain the correctness of taxable profits means

A. Tax audit
B. Management audit
C. Profit audit
D. Financial audit .
Answer» A. Tax audit
118.

According to section 44AB,Tax Audit is to be conducted by an

A. Internal auditor
B. Chartered Accountant
C. Accountant
D. None of the above .
Answer» B. Chartered Accountant
119.

Future oriented, independent and systematic evaluation of the activities of all levels of management for the purpose of improving organizational profitability and increasing the attainment of other organizational objectives is known as

A. Cost audit
B. Tax audit
C. Management audit
D. Human resources audit .
Answer» C. Management audit
120.

Objective of management audit are

A. To evaluate the performance by relating inputs with output
B. To obtain efficiency and effectiveness of management
C. Only (b)
D. (a) and (b).
Answer» D. (a) and (b).
121.

The corporate governance structure of a company reflects the individual companies is

A. Cultural and economic system
B. Legal and business system
C. Social and regulatory system
D. All of the above
Answer» D. All of the above
122.

The corporate governance framework consists of explicit and implicit contracts between

A. Company and the stakeholders
B. Management and State government
C. Stakeholders and Management
D. None of the above
Answer» A. Company and the stakeholders
123.

The primary stakeholders are:

A. Customers
B. Suppliers.
C. Shareholders
D. Creditors
Answer» C. Shareholders
124.

The goal of corporate governance and business ethics education is to:

A. Teach students their professional accountability and to uphold their personal Integrity to society
B. Change the way in which ethics is taught to students
C. Create more ethics standards by which corporate professionals must operate
D. Increase the workload for accounting students
Answer» C. Create more ethics standards by which corporate professionals must operate
125.

Good corporate governance helps to minimize:

A. Wastages
B. Corruption
C. Risks and mismanagement
D. All of the above
Answer» D. All of the above
126.

Benefits of Corporate governance:

A. Lowers the capital cost
B. Ensures corporate success and economic growth
C. Gives positive impact on the share price
D. All of the above
Answer» D. All of the above
127.

The framework for establishing good corporate governance and accountability was originally set up by the

A. Nestlé Committee
B. Cadbury Committee
C. Rowntree Committee
D. Thornton Committee
Answer» B. Cadbury Committee
128.

Which of the following is not one the underlying principles of the corporate governance Combined Code of Practice?

A. Accountability
B. Acceptability
C. Openness
D. Integrity
Answer» B. Acceptability
129.

Which of the following is not pillars of corporate Governance

A. Accountability
B. Reliability
C. Fairness
D. Transparency
Answer» B. Reliability
130.

The theory based on the concept of separation of ownership and control.

A. Agency Theory
B. Stewardship Theory
C. Stakeholder Theory
D. None of the above
Answer» A. Agency Theory
131.

There is no conflict of interest between the shareholders and BoD and Managers

A. Agency Theory
B. Stewardship Theory
C. Stakeholder Theory
D. None of the above
Answer» B. Stewardship Theory
132.

The key players of Anglo-Saxon model of Corporate Governance

A. Management, directors and shareholders
B. Banks and shareholders
C. Partner, keiretsu, management and Government
D. Government
Answer» A. Management, directors and shareholders
133.

________is transaction in securities of the company by an insider on the basis of unpublished price sensitive information

A. Insider trading
B. Outsider trading
C. Investor trading
D. None of the above
Answer» A. Insider trading
134.

A person who exposes any kind of information or activity that is deemed illegal, unethical, or not correct within an organisation that is either private or public

A. Whistle blower
B. Legal protector
C. Broker
D. None of the above
Answer» A. Whistle blower
135.

Which of the following is not rating agencies?

A. CRISIL‟s Governance and Value Creation rating
B. CARE‟s Corporate Governance Rating
C. ICRA‟s Corporate Governance Rating
D. ICICI‟s Corporate Governance Rating
Answer» D. ICICI‟s Corporate Governance Rating
136.

Directors service contracts should not exceed three years without shareholder‟s approval

A. Cadbury Report
B. Greenbury Report
C. Hampel Report
D. Smith Report
Answer» A. Cadbury Report
137.

The primary stakeholders are

A. Customers.
B. Suppliers.
C. Shareholders.
D. Creditors
Answer» C. Shareholders.
138.

Which of the following is not a model of corporate governance?

A. American model
B. English model
C. Indian model
D. Japanese model
Answer» B. English model
139.

In which of the following countries German Model of corporate governance is not prevalent

A. Switzerland
B. Austria
C. Poland
D. Netherland
Answer» C. Poland
140.

Which of the following committee is appointed under the initiative of Government of India on corporate governance?

A. Kumar Mangalam Birla Committee
B. Naresh Chandra Committee
C. Narayana Murthy Committee
D. None of the Above
Answer» B. Naresh Chandra Committee
141.

Which of the following is not related to corporate governance reforms in India?

A. Enacting the Companies Act, 2013
B. Setting up of Securities Exchange Board of India
C. Scrapping of the Capital Issues Control Act, 1947
D. Banking Regulation Act, 1949.
Answer» D. Banking Regulation Act, 1949.
142.

Which of the following statement is most appropriate regarding common governance problems in corporate failures

A. Failure of Board of Directors
B. Failure of Internal Control
C. Inadequate Regulatory Mechanisms
D. All of the Above
Answer» D. All of the Above
143.

Which of the following is the major corporate collapses arising out of scam in India

A. Kingfisher Airlines
B. Enron
C. WorldCom
D. Maxwell Communication
Answer» A. Kingfisher Airlines
144.

Corporate governance code in the United Kingdom was set up in 1992 by the

A. Thornton Committee
B. Rowntree Committee
C. Cadbury Committee
D. Nestlé Committee
Answer» C. Cadbury Committee
145.

The four pillars /principles of corporate governance

A. Accountability, fairness, transparency and independence
B. Accountability, agency, transparency and regulatory
C. Regulatory, fairness, independence and transparency
D. Accountability, cooperation, fairness and independence
Answer» A. Accountability, fairness, transparency and independence
146.

Stakeholders in the Stakeholder Theory are divided into primary and secondary stakeholders. Primary stakeholders are –

A. Environmentalists, governments, media
B. Employees, suppliers, customers
C. Both (a) & (b)
D. Only (b)
Answer» D. Only (b)
147.

This committee laid down guidelines to ensure independence of auditors and recommended rotation of auditors.

A. Narayan Murthy Committee set up by SEBI in 2003
B. SEBI‟s Birla Committee chaired by Kumara Manglam Birla in1999
C. Naresh Chandra Committee set up by Department of Company Affairs in 2002
D. Only (a)
Answer» C. Naresh Chandra Committee set up by Department of Company Affairs in 2002
148.

The Companies Act, 2013 provisions relating to independent directors

A. At least two-third of the board of the company shall consist of independent directors
B. No stock options can be made to independent directors
C. Audit committee should have independent directors as members
D. Both (a) & (b)
Answer» D. Both (a) & (b)
149.

Common governance problems of corporate failures in Developed countries are
i. Unethical business practices
ii. Audit failures
iii. Ambitious acquisitions and takeovers
iv. Remuneration structure

A. i, ii, iv
B. ii, iii, iv
C. i, ii, iii
D. i, ii, iii, iv
Answer» C. i, ii, iii
150.

Common governance problems of corporate failures in India are
i. Accounting frauds carried out in collusion with statutory auditors
ii. Insider trading
iii. Fiduciary failure by the board
iv. Disproportionate compensation paid to executive board members and
senior management.

A. i, ii, iii
B. ii, iii, iv
C. i, iii, iv
D. i, ii, iii, iv
Answer» D. i, ii, iii, iv
151.

Which of the following is not a OECD principle

A. The responsibilities of the government and bureaucrats
B. Ensuring the basis for an effective corporate governance framework
C. Disclosure and transparency
D. The equitable treatment of shareholders
Answer» A. The responsibilities of the government and bureaucrats
152.

What does the Sarbanes-Oxley Act of 2002 stipulates?

A. The company should appoint independent financial experts to its audit committee
B. A public account oversight board to be created
C. CEO and CFO sign off the company‟s financial statements
D. All of the above
Answer» D. All of the above
153.

We need to conduct management audit for

A. Taking over and reviving sick units
B. Helps in foreign collaboration
C. (a) and (b)
D. None of the above .
Answer» C. (a) and (b)
154.

EDP audit means when an audit is conducted in a computer information systems (CIS) environment. According to SA-401

A. ASS-29
B. AAS-29
C. ASS-28
D. AAS-28
Answer» A. ASS-29
155.

Corporate governance is the interaction between various participants in shaping company‟s performance. The participants included are

A. Shareholders
B. Board of directors
C. Company‟s management
D. All of the above.
Answer» D. All of the above.
156.

The pillars of corporate governance are

A. Accountability,fairness
B. Fairness, transparency and responsibility
C. Responsibility, transparency only
D. (a) and (b)
Answer» D. (a) and (b)
157.

The regulatory framework of corporate governance in India is three tiered comprising of the

A. MCA, SEBI and Stock Exchanges.(SE)
B. MCA, SEBI and FERA
C. SEBI, FEMA and Stock Exchanges(SE)
D. SCRA, MCA and Chartered Accountant Act.
Answer» A. MCA, SEBI and Stock Exchanges.(SE)
158.

The focus of the reforms in corporate governance in India is on

A. Developing an efficient capital market
B. Promoting shareholders‟ democracy
C. (a) and (b)
D. None of the above.
Answer» C. (a) and (b)
159.

Corporate scams or scandals arise with the disclosure of

A. Misdeeds by trusted executives of large public corporations
B. Misdeeds by trusted executive s of small public corporations
C. (a) and (b)
D. Only (a)
Answer» A. Misdeeds by trusted executives of large public corporations
160.

Satyam computer services Ltd. was founded in 1987 by RamalingaRaju and his brother as aprivate company with just

A. 10 employees
B. 25 employees
C. 20 employees
D. 15 employees.
Answer» C. 20 employees
161.

What is meant by the phrase CSR?

A. Corporate Social Responsibility
B. Company Social Responsibility
C. Corporate Society Responsibility
D. (d)Company Society Responsibility
Answer» A. Corporate Social Responsibility
162.

An organization‟s appropriate tone at the top promoting ethical conduct is an example

A. Ethics sensitivity
B. Ethics incentives
C. Ethical behavior
D. Consequentialist.
Answer» C. Ethical behavior
163.

Which of the following does the term Corporate Social Responsibility relate to?

A. Environment practice
B. Ethical conduct
C. Human rights & employee relation
D. All of the above
Answer» D. All of the above
164.

Which is the element of business ethics?

A. A discipline
B. It is an art & science
C. Good intention
D. All of the above
Answer» D. All of the above
165.

The major aspects of environmental sustainability are:

A. Role of packaging
B. Role of clean energy
C. Role of environmental reporting
D. All of the above
Answer» D. All of the above
166.

Section 135 of the Companies Act 2013 provides that the constitution of CSR committee is mandatory in company having a net worth of

A. Rs 100 crore
B. Rs 500 crore
C. Rs 600 crore
D. Rs 300 crore
Answer» B. Rs 500 crore
167.

The CSR committee must be composed of

A. 3 or more Directors
B. Only 1 director
C. 2 Directors
D. No Director
Answer» A. 3 or more Directors
168.

Which of the following is not a role of the CSR committee?

A. Formulate a CSR Policy indicating the activities as per Schedule VII to the Act
B. Recommend the policy to Board of the Company
C. Does not have outside relationships with other directors
D. Recommend the amount of expenditure on the activities
Answer» C. Does not have outside relationships with other directors
169.

Which of the following CSR provision is not applicable as per sec 135 of the Companies Act 2013?

A. Companies having net worth of rupees 500 hundred crore or more
B. Companies having turnover of rupees 1000 crore or more
C. Companies having net profit of rupees 5 crore or more
D. None of the above
Answer» D. None of the above
170.

The word Philanthropy has been derived from Greek word „Philanthropia‟ which means

A. Love for mankind
B. Love for environment
C. Love for animals
D. None of the above
Answer» A. Love for mankind
171.

Business approach that creates long term value for the company by incorporating economic, environmental and social dimensions into its core business decisions

A. Corporate philanthropy
B. Corporate Sustainability
C. Corporate Social Responsibility
D. None of the above
Answer» B. Corporate Sustainability
172.

The business ethics is also known as

A. Corporate philanthropy
B. Corporate Social Responsibility
C. Corporate Ethics
D. None of the above
Answer» C. Corporate Ethics
173.

Corporate governance is primarily about

A. values
B. rules
C. profits
D. legal framework
Answer» A. values
174.

Which of the following is ingredients of environmental CSR?

A. Elimination of waste and emission
B. Maximizing energy efficiency
C. Minimizing practices that may adversely affect use of natural resources
D. All of the above
Answer» D. All of the above
175.

Which of the following activities can be done by the company to achieve its CSR obligations?

A. Eradicating extreme hunger and poverty
B. Promotion of education
C. Promoting gender equality and empowering women
D. All of the above
Answer» D. All of the above
176.

The functions of the CSR Committee

A. Formulate and recommend to the Board
B. Recommend the amount of the expenditure to be incurred on the activities referred to in clause(a)
C. Monitor the CSR Policy of the company from time to time
D. All of the above
Answer» D. All of the above
177.

Corporate Social Responsibility includes

A. Corporate Sustainability
B. Giving back to host community
C. Building essential social infrastructure
D. All of the above
Answer» D. All of the above
178.

The concept of a triple bottom line encompasses

A. Economic concern
B. Social Concern
C. Environmental concern
D. All of the above
Answer» D. All of the above
179.

Corporate Social Responsibility has been regulated by of the Companies Act, 2013

A. Section 135
B. Section 154
C. Section 134
D. Section 153
Answer» A. Section 135
180.

Which of the following is not related to attributes of corporate philanthropy?

A. It focuses on treating the cause of a problem
B. It is done through a corporation‟s own non-profit entity
C. Human resources to take care of the employees
D. Funding for corporate philanthropy mainly comes from the company‟s contributions
Answer» C. Human resources to take care of the employees
181.

The acronym CSR stands for

A. Corporate Search and Rescue
B. Corporate Social Responsibility
C. Corporate Sensitive Reliability
D. Corporate Social Reality
Answer» B. Corporate Social Responsibility
182.

Corporation are regarded as in the eyes of the law

A. Artificial person
B. Natural person
C. Fictitious person
D. None of the above
Answer» A. Artificial person
183.

Which of the following is not a model of CSR?

A. Shareholder Value Theory
B. Creating Shared Value model
C. Indian model
D. Carroll‟s model
Answer» C. Indian model
184.

The stakeholder view of social responsibility states that organisations must respond to the needs of

A. employees and customers
B. shareholders and owners
C. all interested parties
D. all those who might sue the organisation
Answer» C. all interested parties
185.

Corporate social responsibility provides a wide range of benefits for companies in terms of

A. Increased brand value and reputation
B. Increased attraction and retention of employees
C. Easier availability of finance
D. All of the above
Answer» D. All of the above
186.

The act of a corporate to five gifts/ charitable contributions to communities, universities, etc. that do not necessarily provide any economic benefit but helps in generating goodwill among employees, customers and the local community.

A. Corporate responsibility
B. Corporate philanthropy
C. Business ethics
D. Corporate sustainability
Answer» B. Corporate philanthropy
187.

The three elements of „triple bottom line‟ (TBL) coined by Elkington are
i. Economic sustainability
ii. Social sustainability
iii. Corporate sustainability
iv. Environment sustainability

A. i, ii, iii
B. i, iii, iv
C. i, ii, iv
D. ii, iii, iv
Answer» C. i, ii, iv
188.

which of the following statements are true
i. CSR has its roots in business ethics
ii. CSR and business ethics are conceptually different
iii. CSR and business ethics are synonymous
iv. CSR and business ethics can be used interchangeably

A. i and ii
B. ii and iii
C. i and iv
D. iii and iv
Answer» A. i and ii
189.

Today stakeholders are increasingly demanding that businesses take up environmental stewardship as a part of CSR to reduce carbon footprint of the business through

A. Sustainable packaging
B. Good water management
C. Better waste management including emissions from plants
D. All of the above
Answer» D. All of the above
190.

Section 135 of the Companies Act, 2013 has laid down that all companies incorporated in India having a net worth of INR 500 crore or more, must spend a percentage of the average net profits made during every block of three years. What is the percentage?

A. 5%
B. 3.5%
C. 2%
D. 3%
Answer» C. 2%
191.

The CSR projects/activities outlined in the Schedule VII of the Companies Act, 2013 are
i. Promoting education
ii. Eradicating hunger, poverty & malnutrition
iii. Protection of national heritage, art and culture
iv. Ensuring environmental sustainability

A. Only ii and iii
B. All of the above
C. None of the above
D. i, ii and iv
Answer» B. All of the above
192.

The members of the corporate social responsibility committee will be appointed by

A. Board of directors
B. Shareholders
C. Managing director
D. Chief Executive Officer
Answer» A. Board of directors
193.

The governance flaws of collapsed companies may be happened due to

A. Failure of the Board of Directors
B. Flaws in External Audit
C. Dominating Dishonest CEO
D. All of the above.
Answer» D. All of the above.
194.

-------- refers to a set of prescriptions and practices that provide guidelines with regards to the effective control of a company in the best interest of its shareholders and other stakeholders.

A. EDP
B. Corporate governance code
C. Corporate reforms
D. Auditing Standards
Answer» B. Corporate governance code
195.

A commitment to improve community well –being through discretionary business practices and contributions of corporate resources is called Corporate Social Responsibility. This definition is given by

A. McGuire
B. Mallen Baker
C. Phillip Kohler and Nancy Lee
D. Harvard school.
Answer» A. McGuire
196.

Some common forms of corporate philantrophy are

A. Cash donations
B. In-kind donations
C. Both (a) and (b)
D. None of the above.
Answer» C. Both (a) and (b)
197.

The Triple Bottom line (TBL) which are interlinked are found in

A. Corporate philanthropy
B. Corporate social Responsibility
C. Corporate governance
D. Corporate sustainability.
Answer» D. Corporate sustainability.
198.

-----------is defined as the duty to cover environmental implications of operations, products and facilities of company.

A. Corporate social responsibility
B. Environmental aspect of Corporate Social Responsibility
C. Corporate sustainability
D. Corporate philanthropy.
Answer» B. Environmental aspect of Corporate Social Responsibility
199.

The CSR committee shall

A. Formulate and recommend to the Board of Corporate Social Responsibility which shall indicate the activities to be undertaken by the company
B. Monitor the Crporate Social Responsibility of the company
C. Both (a) and (b)
D. None of the above.
Answer» C. Both (a) and (b)
200.

Giving back to host communities is under the notions of

A. Corporate Social Responsibility
B. Business ethics
C. Management audit
D. Electronic Data Processing
Answer» A. Corporate Social Responsibility
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