ACC311 Fundamentals of Auditing Solved MCQs

During audit of the financial statements, the auditors are concerned with the verification and determination of which one of the following items? 

•  Statements, accuracy, and feasibility
• Date, accuracy, and reliability 
• Policies, value, and reliability
• Cycle, policies, and reliability

Which one of the following authorities shall fix the remuneration of the auditors, if auditors are appointed by the SECP? (Companies Ordinance, 1984)? 

• Directors 
• Shareholders
• Company registrar
• SECP 

The phrase (Scope of an Audit) refers to which one of the followings?

•  Engagement letters
•  Audit procedures 
•  Audit evidence
• Reasonable assurance 

Following statements are true about the legal requirements of books accounts for the companies EXCEPT: (Companies Ordinance, 1984)

• Books of accounts should be preserved for 10 years
• Books of accounts are to be kept at the registered office of the company
• Directors can review the books of account during the business hours
• If a company fails to maintain books of accounts according, it may leads to demolish the entity

 The factors that affect reasonable assurance include all of the following EXCEP:

•  Use of testing (Sampling)
• Interest limitations of accounting and internal control
• Remuneration of the auditor
•  Persuasive nature of audit evidence

 A well designed Internal Control Questionnaire (ICQ) should incorporate the following EXCEPT:

•  Be a sufficient source of data for the evaluation of internal controls
• Identity the internal control system's strengths and weaknesses
• Be organized by individual functional organizations
• Should include simple yes or no responses but no narrative responses

 Which one of the following is FALSE about Internal Control Evaluation Checklists (ICEC)?

•  ICEC is developed to overcome the shortcomings of Internal Control Questionnaire
• The rules of constructing ICEC is different than construction of Internal Control Questionnaire
•  It is designed to determine, whether desirable internal controls are present
• It is normally employed where system's information has already been recorded

 An auditor's flow chart of an entity's information system is a diagrammatic representation. It depicts what kind of information?

•  Program for tests of control
• Understanding of the system
• Understanding of the types of irregularity that are probable given by the present system
• Documentation of the study and evaluation of the system

Which one of the following is NOT a factor included in the control environment of an entity?

•  Integrity and ethical values
• Risk assessment
• Commitment to competence
• Organization structure 

The audit which is a review of any part of an entity's operating procedures and methods is known as: 

• Financial statement audits
• Operational audits 
• Technical Audits
• Compliance audits

 While considering internal control system of an entity, the auditor is basically concerned that the system provides reasonable assurance about which one of the following? 

• That the management can not override the system
• Operational efficiency has been achieved according to management plans
• Errors have been prevented or detected
• Controls have not been circumvented by collusion

 Which one of the following is the source document for staff salaries? 

• Approved payrolls 
• Vouchers
•  Accounting statements
•  Cash memos 

Analytical procedures used in planning an audit should focus on identifying which one of the followings? 

• Areas that may represent specific risks relevant to the audit
•  Material weaknesses in the internal control structure
•  The predictability of financial data form individual transactions
•  The various assertions that are embodied in the financial report

 Which one of the following meetings is considered as a 'meeting of directors or management? 

• General meeting
• Extra ordinary general meeting
• Board meeting 
• Management meeting