auditing MCQs – Page 8

Practise multiple-choice questions from auditing for competitive examinations and subject revision. Review each marked answer and report any item that may be outdated or unclear.

auditing Mcqs

141. In an audit of financial statements, substantive tests are audit procedures that __________?
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A. May be test of transactions, test of balance and analytical procedures

B. Are designed to discover significant subsequent events

C. Will increase proportionately when the auditor decreases the assessed level of control risk

D. May be eliminated for an account balance under certain conditions

142. What is the primary objective of analytical procedures used in the overall review stage of an audit?
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A. To reduce specific detection risk

B. To help to corroborate the conclusions drawn from individual components of financial statements

C. To direct attention to potential risk areas

D. To satisfy doubts when questions arise about a clients ability to continue

143. What would most appropriately describe the risk of incorrect rejection in terms of substantive testing?
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A. The auditor concludes that the balance is materially misstated when in actual fact it not

B. The auditor has rejected an item for sample which was material

C. None of the above

D. The auditor concludes balance is materially correct when in actual fact it is not

144. Which of the following describes sampling risk?
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A. The risk of the auditor carrying out a test the wrong way round

B. The risk that the sample does not reflect the population

C. The risk of the auditor reaching the wrong conclusions from testing

D. The risk of reliance on unsuitable audit evidence

145. Window dressing implies_______________?
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A. Over Valuation of assets

B. Checking of Wastages

C. Curtailment of expenses

D. Under valuation of assets

146. ______the audit risks_______the materiality and_________the audit effort.
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A. Lower, Lower, Higher

B. Lower, Higher, Higher

C. Lower, Higher, Lower

D. Higher, Lower, Lower

147. To test whether sales have been recorded, the auditor should draw a sample from a file of__________?
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A. sales invoices

B. sales orders

C. bill of loading

D. purchase orders

148. When an auditor is proposed for removal from office, which one of the following is he NOT permitted to do?
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A. Apply to the court to have the proposal removed

B. Speak at the AGM/EGM where the removal is proposed

C. Receive notification of the AGM/EGM where the removal is proposed

D. Circulate representations to members

149. When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the___________?
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A. Estimates of the total likely misstatement is less than materiality level

B. Estimate of the total likely misstatement is more than materially level

C. Amount of known misstatement is documented in working papers

D. Estimates of the total likely misstatement cannot be made

150. The nature, timing and extent of substantive procedures is _________ related to assessed level of control risk?
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A. randomly

B. directly

C. disproportionately

D. inversely

151. Process of verifying the documentary evidences of transactions are known as___________?
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A. Auditing

B. Verification

C. Testing

D. Vouching

152. In an audit of financial statements, substantive tests are audit procedures that___________?
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A. may be eliminated for an account balance under certain conditions

B. may be test of transactions, test of balance and analytical procedures

C. will increase proportionately when the auditor decreases the assessed level of control risk

D. are designed to discover significant subsequent events

153. Which one of the following is part of the auditors function?
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A. Obtaining and evaluating audit evidence on the financial statements

B. Conducting the inventory count

C. Calculating the year-end accruals figure for inclusion in the accounts

D. Providing representations to management

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