80+ Financial Attest Audit Manual Solved MCQs

1.

Financial (attest) audit is primarily concerned with expression of audit opinion on a set of financial statements.

A. FALSE
B. TRUE
C. none
D. all
Answer» 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

A. (i) only
B. (i) & (ii) only
C. (i) to (iii) only
D. All of the above
Answer» D. All of the above
3.

Financial (attest) audit includes an evaluation of Compliance with applicable statutes and regulations

A. TRUE
B. FALSE
C. none
D. all
Answer» A. TRUE
4.

Transaction audit essentially seeks to address the following issues of risks to:
i Regularity
ii Performance
iii Propriety
iv Financial Control

A. All of the above
B. (i), (ii) & (iii) only
C. (i), (iii) & (iv) only
D. (i), (ii) & (iv) only
Answer» 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

A. TRUE
B. FALSE
C. none
D. all
Answer» B. FALSE
6.

Risks of financial irregularity are always material for the purpose of qualifying audit opinion on the finanicial statements

A. TRUE
B. FALSE
C. none
D. all
Answer» 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

A. (i) & (ii) only
B. (i) to (iii) only
C. (i) & (iii) only
D. All of the above
Answer» A. (i) & (ii) only
8.

Financial Audit of Government Companies is conducted by

A. Chartered Accountants appointed by the companies
B. Chartered Accountants appointed by Ministry of Company Affairs
C. Chartered Accountants appointed by C&AG
D. C&AG
Answer» C. Chartered Accountants appointed by C&AG
9.

The audit of financial statements of Government Companies conducted by the C&AG is called

A. Financial Audit
B. Supplementary Audit
C. Attest Audit
D. Compliance Audit
Answer» B. Supplementary Audit
10.

Financial Audit of Autonomous Bodies receiving financial assistance is governed by ______ of CAG's DPC Act 1971

A. 13 & 14
B. 14 & 15
C. 13 & 15
D. 16
Answer» B. 14 & 15
11.

The International Standards of Auditing (ISAs) have been developed by

A. The International Federation of Accountants
B. The International Auditing Practices Committee
C. The Internationa Auditing & Accounting Standards Board
D. The INTOSAI
Answer» 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

A. (i) to (iii) only
B. (i) & (ii) only
C. (i), (iii) & (iv) only
D. All of the above
Answer» C. (i), (iii) & (iv) only
13.

Which of these standards regulate the condut of the auditor

A. General Standards
B. Field Audit Standards
C. Field Standards
D. Reporting Standards
Answer» A. General Standards
14.

Which of these standards regulate the audit activity of the auditor

A. General Standards
B. Field Audit Standards
C. Field Standards
D. Reporting Standards
Answer» C. Field Standards
15.

The Primary objective of a financial audit is to

A. Examine the accounts and records
B. Srutinize financial statements
C. Point out overstatements and understatements of account balances
D. Express an opinion on the financial statements
Answer» D. Express an opinion on the financial statements
16.

The general audit objectives are also called

A. Opinions
B. Assertions
C. Criteria
D. None of these
Answer» B. Assertions
17.

Which of these is the correct set of general financial audit objectives for income & expenditure account

A. Completeness, Occurrence, Measurement, Disclosure, Regularity
B. Completeness, Occurrence, Measurement, Disclosure, Existence
C. Completeness, Occurrence, Existence, Disclosure, Regularity
D. Completeness, Ownership, Measurement, Disclosure, Regularity
Answer» A. Completeness, Occurrence, Measurement, Disclosure, Regularity
18.

Which of these is the correct set of general financial audit objectives for balance sheet

A. Completeness , Existence , Valuation , Ownership , Disclosure
B. Completeness , Existence , Measurement , Ownership , Disclosure
C. Completeness , Occurence , Valuation , Ownership , Disclosure
D. Completeness , Regularity , Valuation , Ownership , Disclosure
Answer» A. Completeness , Existence , Valuation , Ownership , Disclosure
19.

The legal right to sue and recover an account receivable is the test of

A. Existence
B. Ownership
C. Completeness
D. None of these
Answer» B. Ownership
20.

This financial audit objective directly tests for potential overstatement of assets and liabilities

A. Existence
B. Ownership
C. Completeness
D. None of these
Answer» 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

A. Existence
B. Ownership
C. Completeness
D. Occurrence
Answer» D. Occurrence
22.

If some item of revenue expenditure is misclassified as capital expenditure, it can be said that this objective is not met

A. Existence
B. Disclosure
C. Completeness
D. Occurrence
Answer» 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

A. Existence
B. Disclosure
C. Completeness
D. Occurrence
Answer» C. Completeness
24.

A financial audit is intended to give

A. Qualified Assurance
B. Absolute Assurance
C. Positive Assurance
D. None of these
Answer» D. None of these
25.

Materiality is classified by

A. Context
B. Nature
C. Value
D. All of these
Answer» D. All of these
26.

The point where the total value of errors in an account becomes unacceptable to audit is called

A. Unacceptable level
B. Materiality level
C. Qualifiable Level
D. None of these
Answer» B. Materiality level
27.

The materiality thresholds depend on the ____ of accounts and their _____.

A. Basis, Sensitivity
B. Sensitivity, relativity
C. Basis, accountablity
D. Basis, Value
Answer» A. Basis, Sensitivity
28.

For accounts prepared on cash basis, in respect of gross receipts/expenditure, materiality percentage would be

A. For very sensitive accounts - 1 %, sensitive accounts - 1% to 2% and non sensitive accounts - 5%
B. For very sensitive accounts - 1/2 %, sensitive accounts - 1/2% to 2% and non sensitive accounts - 2%
C. For very sensitive accounts - 2 %, sensitive accounts - 5% and non sensitive accounts - 8%
D. none of these
Answer» 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.

A. TRUE
B. FALSE
C. none
D. all
Answer» A. TRUE
30.

Which of the following statements is true about Precision

A. It is a range of error in an account between MLE & materiality
B. It is a range of error in an account between MLE & AMLE
C. It is a range of error in an account between Materiality & AMLE
D. None of these
Answer» 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

A. Reporting
B. Evaluation of results
C. Planning
D. Field Audit
Answer» C. Planning
32.

The formula for calculating precision is

A. (Materiality - Range of error possible) x AMLE
B. (Materiality - AMLE) x Range of error possible
C. (AMLE - Range of error possible) x Materiality
D. None of these
Answer» B. (Materiality - AMLE) x Range of error possible
33.

There is a direct relationship between materiality level and the level of audit risk

A. TRUE
B. FALSE
C. none
D. all
Answer» B. FALSE
34.

The three components of Audit Risk as per the risk model are

A. Inherent Risk, Control Risk, Mitigation Risk
B. Inherent Risk, Control Risk, Litigation Risk
C. Inherent Risk, Control Risk, Detection Risk
D. None of these
Answer» 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

A. 90%
B. 95%
C. 99%
D. 75%
Answer» D. 75%
36.

what are the audit procedures commonly used to obtain audit assurance?

A. Analytical Procedures
B. Systems Based Audit
C. Direct Substantive Testing
D. All of the above
Answer» D. All of the above
37.

Which of the following is not a part of analytical procedures?

A. System Analysis
B. Economic Analysis
C. Regression Analysis
D. Predictive Analysis
Answer» B. Economic Analysis
38.

When you are finding out the inventory-turnover ratio, you are doing

A. Comparison across components
B. Comparison involving a single component
C. Regression analysis
D. Economic analysis
Answer» 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.

A. Comparison across components
B. Predictive Analysis
C. Regression analysis
D. Economic analysis
Answer» 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?

A. Analytical Procedures
B. Systems Based Audit
C. Direct Substantive Testing
D. All of the above
Answer» C. Direct Substantive Testing
41.

Which kind of audit sampling is generally used for testing controls?

A. Attribute Sampling
B. Random Sampling
C. Monetary Unit Sampling
D. Stratified Sampling
Answer» A. Attribute Sampling
42.

Which method of sampling is expected to produce representative samples?

A. Block Selection
B. Judgmental Sampling
C. Random Sampling
D. Convenient Sampling
Answer» C. Random Sampling
43.

Which method of sampling is not expected to produce representative samples?

A. Block Selection
B. Random Sampling
C. Systematic Sampling
D. Monetary Unit Sampling
Answer» A. Block Selection
44.

A pre-condition for any statistical sampling is the availability of a _______

A. Sampling unit
B. sampling frame
C. Sampling structure
D. All of the above
Answer» B. sampling frame
45.

Population is divided into groups, each being fairly homogenous with respect to value and risk in this kind of sampling

A. Block Selection
B. Random Sampling
C. Stratified Sampling
D. Monetary Unit Sampling
Answer» C. Stratified Sampling
46.

Sampling interval is calculated in this kind of sampling

A. Simple Random Sampling
B. Systematic Sampling
C. Stratified Sampling
D. All of the above
Answer» B. Systematic Sampling
47.

This method of sampling is also called probability proportionate to size (PPS) sampling

A. Block Selection
B. Random Sampling
C. Stratified Sampling
D. Monetary Unit Sampling
Answer» D. Monetary Unit Sampling
48.

Extrapolation of sampling results to the population is possible in the case of Judgmental Sampling.

A. TRUE
B. FALSE
C. none
D. all
Answer» B. FALSE
49.

Risk assessment is primarily a part of which of these stages in the audit process?

A. Planning
B. Excecution
C. Reporting
D. Follow up
Answer» 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

A. Accrual system accounting
B. Mercantile system of accounting
C. Both
D. None of these
Answer» C. Both
51.

Which of the following statements are true?

A. The Union and State Governments follow cash based accounting while Corporations and autonomous bodies mainly follow accrual based accounting
B. The Union and State Governments follow accrual based accounting while Corporations and autonomous bodies mainly follow cash based accounting
C. The Union and State Governments and Corporations and autonomous bodies follow accrual based accounting
D. The Union and State Governments and Corporations and autonomous bodies follow cash based accounting
Answer» 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:

A. Treasuries and Sub-Treasuries
B. Pay and Accounts Offices
C. Forest Divisions
D. All of the above
Answer» 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

A. TRUE
B. FALSE
C. none
D. all
Answer» A. TRUE
54.

Which of the following statements is false?

A. Planning materiality may be set at a lower level than reporting materiality
B. It is easier to plan for errors material by nature
C. At the planning stage, the audit team is concerned primarily with materiality by value
D. Materiality by context is easy to assess at the planning stage
Answer» 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.

A. Materiality by value
B. Materiality by context
C. Materiality by nature
D. all
Answer» 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

A. Entity Risks
B. Accounting Risks
C. Inherent Risks
D. Account Area Risks
Answer» A. Entity Risks
57.

The process for identifying material risk factors has ____ key stages

A. Four
B. Five
C. Six
D. Seven
Answer» C. Six
58.

The three levels of substantive procedures that can be performed in decreasing order of assurance required are:

A. Standard, Focused, Minimum
B. Focused, Standard, Minimum
C. Maximum, Standard, Minimum
D. Minimum, Standard, Focused
Answer» B. Focused, Standard, Minimum
59.

The extent of audit procedures and the the level of assurance required are

A. Directly related
B. Indirectly related
C. none
D. all
Answer» 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

A. Audit memorandun
B. Audit execution memorandum
C. Audit Note
D. Audit Planning memorandum
Answer» D. Audit Planning memorandum
61.

Instructions to audit team members on the performance of chosen audit procedures are contained in the

A. Plan Document
B. Audit Planning memorandum
C. Detailed Audit Programme
D. None of these
Answer» 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

A. Focused Subtantive Procedures
B. Standard Substantive Procedures
C. Minimum Substantive Procedures
D. all
Answer» 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.

A. Focused Subtantive Procedures
B. Standard Substantive Procedures
C. Minimum Substantive Procedures
D. all
Answer» B. Standard Substantive Procedures
64.

These are Performed if the audit team plans to take assurance from mitigating controls or from other controls .

A. Focused Subtantive Procedures
B. Standard Substantive Procedures
C. Minimum Substantive Procedures
D. all
Answer» C. Minimum Substantive Procedures
65.

Analytical Procedures are unlikely to be used when these are performed.

A. Focused Subtantive Procedures
B. Standard Substantive Procedures
C. Minimum Substantive Procedures
D. all
Answer» A. Focused Subtantive Procedures
66.

Which of the following statements is false?

A. Documentary evidence is more reliable than oral evidence.
B. Evidence, of which the auditor has direct personal knowledge, is the most reliable evidence.
C. Independent evidence obtained from external sources is more reliable than internal evidence.
D. Visual evidence is highly reliable for confirming the ownership of the assets and their value.
Answer» D. Visual evidence is highly reliable for confirming the ownership of the assets and their value.
67.

Which of the following statements is True?

A. Oral evidence must be considered as the least reliable.
B. Photocopies are as reliable as the originals.
C. Evidence, which is accepted by the auditee entity, is not always reliable.
D. The auditor may gain increased assurance even when audit evidence obtained from different sources is not consistent.
Answer» A. Oral evidence must be considered as the least reliable.
68.

Which of the following is False?

A. A systematic error is one which will only occur in defined circumstances
B. A systematic error affects only a proportion of the population
C. A random error is one which coul
D. have also occurred in any of the tr
Answer» A. A systematic error is one which will only occur in defined circumstances
69.

Which of the following is True?

A. A systematic error should be extrapolated over the entire population
B. A random error is to be extrapolated over a defined subset of population
C. Both A & B
D. None of these
Answer» D. None of these
70.

The audit working papers contain

A. the details of the audit procedures undertaken
B. conclusions drawn and the implications for the audit opinion
C. the record of the reasoning on all significant matters where the members of the audit teams have exercised judgment
D. all of the above
Answer» D. all of the above
71.

The acid test for good documentation is

A. when it is appreciated by the higher authorities
B. when it results in good quality audit observations
C. when it results in giving a clean chit to the entity observed
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.
Answer» 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

A. Clarity and conciseness
B. Legibility and neatness
C. Completeness
D. Accuracy
Answer» 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?

A. Clarity and conciseness
B. Legibility and neatness
C. Relevance
D. Accuracy
Answer» 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

A. does not give any opinion
B. gives a qualified opinion
C. gives an unqualifie
D. opinion
Answer» C. gives an unqualifie
75.

A material but not fundamental uncertainty would lead to

A. disclaimer
B. qualified opinion
C. unqualified opinion
D. adverse opinion
Answer» B. qualified opinion
76.

A fundamental disagreement would lead to

A. disclaimer
B. qualified opinion
C. unqualified opinion
D. adverse opinion
Answer» 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

A. employees
B. internal auditor
C. management
D. statutory auditor
Answer» C. management
78.

Policies, systems and procedures established by Comptroller and Auditor General to maintain a high standard of audit activity are also called

A. Quality control
B. Reasonable Assurance
C. Quality Check
D. Quality Assurance
Answer» D. Quality Assurance
79.

Teammate software is

A. a data extraction tool
B. a data analytic tool
C. an audit documentation tool
D. none of these
Answer» C. an audit documentation tool
80.

COBIT is

A. a data extraction tool
B. an IT Audit framework
C. an audit documentation tool
D. none of these
Answer» B. an IT Audit framework
81.

COBIT is developed by

A. SAI, India
B. INTOSAI
C. ICAI
D. IT Governance Institute and ISACA
Answer» D. IT Governance Institute and ISACA
Tags
  • Question and answers in Financial Attest Audit Manual,
  • Financial Attest Audit Manual multiple choice questions and answers,
  • Financial Attest Audit Manual Important MCQs,
  • Solved MCQs for Financial Attest Audit Manual,
  • Financial Attest Audit Manual MCQs with answers PDF download