Financial statement audits, or an objective study and assessment of a company's financial statements – usually undertaken by an external third party – are the most common kind of auditing. Internal audits and government audits, such as those conducted by the Internal Revenue Service (IRS), are also possible options.
Importance of Auditing :
The term audit in accounting refers to the examination and verification of a company's financial records. Its goal is to ensure that financial data is presented in an honest and objective way at all times. Financial statements are also audited to ensure that they are prepared in accordance with accounting rules.
Types of Audits :
Audits may be divided into three categories:
- A company or organization's workers conduct internal audits, as defined by the term. These audits aren't shared with anybody outside of the firm. They are instead ready for management and other internal stakeholders to use.
- External audits: External audits, which are conducted by external organizations and other parties, provide an unbiased perspective that internal auditors may not be able to deliver. External financial audits are used to assess whether a company's financial statements include any major misstatements or inaccuracies.
- Government audits: Government audits are conducted to check that financial statements have been made correctly and that a company's taxable revenue has not been misrepresented. Conclusion Auditing is necessary to guarantee that organizations correctly and fairly portray their financial status in compliance with accounting standards.
Following are some of the multiple choice questions on the Auditing with answers that will help the students in developing their knowledge.
1. Auditing is compulsory for
2. Errors of Omission are
3. Civil liability of an auditor implies liability for
4. Audit of banks is an example of –
5. The first auditor of a company will hold office
7. Audit in depth is synonymous for
8. Purchase returns should be vouched with the help of
9. The auditor should state the reasons for his reservations in audit report andshould try to quantify the effect on them. This should be done in case he has expressed _ i) A qualified opinion ii) an unqualified opinion with emphasis of matter paragraph iii) An adverse opinion IV) a disclaimer of opinion
10. Vouching of the balances of all incomes and expenses account is known as vouching of _____
11. Internal audit is undertaken
12. The term ‘Audit’ is derived from a Latin word “audire” which means;
13. Which of the following affects audit effectiveness?
14. Which of the following statements is not true about continuous audit?
15. An auditor assesses control risk because it
16. Errors and frauds already committed can be discovered under the system of ________.
17. Which of the following describe the true relationship between auditor, client and external users?
18. An auditor should study and evaluate internal controls to
19. The title of AAS2 issued by Council of ICAI is ___
20. The performance of tests of control is documented in
21. Control risk is assessed at
22. While observing a client’s annual physical inventory, an auditor conducted testcounts for certain test counts were higher than the recorded quantities in the client’s perpetual records. This situation could be the result of the client’s failure to record –
23. The current file of the auditor’s working papers, generally, should include
24. Which of the following is not an inherent limitation of internal control system?
25. The independence of an internal auditor will most likely be assured if he reportsto the
26. Which of the following are included in test of control?
27. Which of the following assets is least likely to be subjected to lien?
28. Which of the following is not true with regard to verification of assets?
29. Which of the following statements with regard to rules regarding exemptionfrom branch audit is not true?
30. Who among the following can be appointed as special auditor by the CentralGovernment?
31. An auditor in a casual vacancy is appointed by the _______
32. Internal check is done by the
33. Which of the following statements is most closely associated with analytical procedureapplied at substantive stage?
34. What would most effectively describe the risk of incorrect acceptance in terms ofsubstantive audit testing?
35. What would most appropriately describe the risk of incorrect rejection in terms ofsubstantive testing?
36. Which of the following is not true about opinion on financial statements?
37. Internal check is carried on by
38. Institute of Chartered Accountants of India was established
39. An auditor is held criminally liable for
40. Which of the following statement is not true regard to auditor’s attendance atstock taking?
41. Which of the following financial statements assertions are addressed by testingthe cut off for plant asset addition?
42. Which of the following report not result in qualification of the auditor’s opinion due to a scope limitation?
43. Which of the following is true about explanatory notes?
44. The overall attitude and awareness of an entity’s board of directors concerningthe importance of internal control is reflected in
45. Analytical procedures are least likely to be use in the audit of –
46. Which of the following statements is not true with regard to teeming andlading ?
47. The auditor has noticed existence of recurring losses sale of fixed assets thisindicates
48. The auditor is most likely to examine related party transactions very carefullywhile vouching
49. External auditor considered reliance on internal auditor based on the evaluation of effectiveness of audit conduct by internal auditor if
50. The internal auditor’s independence is most likely to be compromised when the internal audit department is responsible directly to audit committee of the board of directors.
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