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Amity B.COM 4 Sem Assignment For Auditing

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Amity B.COM 4 Sem Assignment For Auditing

 

S. No.  Questions        Marks - 10

 

1          Discuss the advantages and disadvantages of internal check.

 

2          Discuss the advantages of internal audit and also its limitations.

 

3          Write types of audit.

 

4          Write short note on any three of the following.

 

a)     Internal check

 

b)    Verification and valuation of asset and liabilities

 

c)     Sundry Creditors

 

d)    Impairment of asset

 

e)   Audit planning

 

5          What is continuous audit and what are the precautions should be taken to avoid the disadvantages of continuous audit?

 

6          Define basic principle of governing audit.

 

7          Write the preliminary steps before commencing a Company Audit.

 

8          Differentiate between auditing and accountancy.

 

Case Detail :

Read the case and answer the following questions:

 

 

 

An XYZ Real Estate Ltd. is a company offering estate agency services to the public through a network of branches all over the country. The board consists of six people, a part-time chairman, a chief executive, two other full time executives and two representatives of the owners. The company is jointly owned by a foreign bank and the City Property Group. The company has an internal audit department consisting of Sanjeev is a young chartered accountant and Rajeev who is an accounting expert. They have also a secretary, Ritwika. They report their activities monthly in detail to the audit committees of the foreign bank and the City Property Group.

 

1.         What work would the internal audit department do?

2.         In what ways may the external auditors place reliance on their work?

3.         Draw up a checklist, which the external auditor could use to assess the internal auditors as potentially being capable of producing work on which the external auditors may rely.

 

Assignment c

 

Question No: 1

The main object of an audit is ___

  1. Expression of opinion
  2. Detection and Prevention of fraud and error
  3. Both (a) and (b)
  4. Depends on the type of audit.

Question No: 2

The title of AAS2 issued by Council of ICAI is ___

  1. Objective and Scope of the Financial Statements
  2. Objective and Scope of the Audit of Financial Statements
  3. Objective and Scope of Business of an Entity
  4. Objective and Scope of Financial Statements Audit
  5.  

Question No: 3

Both auditing and accounting are concerned with financial statements. Which of the following:

           

 

  1. Auditing uses the theory of evidence to verify the financial information made available by Accountancy 
  2. Auditing lends credibility dimension and quality dimension to the financial statements prepared by the accountant. 
  3. Auditor should have through knowledge of accounting concepts and convention to enable him to express an opinion on financial statements 
  4. All of the above.
  5.  

Question No: 4

Audit of banks is an example of –

  1. Statutory audit
  2. Balance sheet audit
  3. Concurrent audit
  4. All of the above 

           

Question No: 5

Concurrent audit is a part of  

  1. Internal check system
  2. Continuous audit
  3. Internal audit system
  4. None

           

Question No: 6

In India, balance sheet audit is synonymous to         

  1. Annual audit
  2. Continuous audit
  3. Detailed audit
  4. Statutory audit

           

Question No: 7

Audit in depth is synonymous for

  1. Complete audit
  2. Completed audit
  3. Final audit
  4. Detailed audit

           

Question No: 8

Balance sheet audit includes verification of_

  1. Assets
  2. Liabilities
  3. Income and expense accounts where appropriate
  4. All of the above

           

Question No: 9

Which of the following affects audit effectiveness? 

  1. Risk of over reliance
  2. Risk of incorrect rejection
  3. Risk of incorrect acceptance
  4. Both (a) and (c)

           

Question No: 10

Which of the following Auditing Assurance Standard deals with Audit Planning?

  1. AAS7   
  2. AAS8 
  3. AAS9
  4. AAS3 

           

Question No: 11

Audit programme is prepared by

           

 

  1. the auditor
  2. the client
  3. the audit assistants
  4. the auditor and his audit assistants

           

Question No: 12

The auditor’s permanent working paper file should not normally, include

  1. extracts from client’s bank statements
  2. past year’s financial statements
  3. attorney’s letters
  4. debt agreements

           

Question No: 13

For what minimum period should audit working papers be retained by audit firm?

  1. For the time period the entity remains a client of the audit firm.
  2. For a period of ten years
  3. For a period auditor opines them to be useful in servicing the client
  4. For the period the audit firm is in existence
  5.  

Question No: 14

Which of the following is not true with regard to verification of assets?

  1. It invoices substantiation of occurrence of transactions
  2. Its objective is to establish existence, ownership, possession, valuation and disclosure of
  3.  
  4. The auditor has to form an opinion on different aspects
  5. All are true

           

Question No: 15

Which of the following statements is not true?

           

  1. Valuation of assets is the responsibility of management
  2. The auditor can rely on a certificate issued by an authorized valuationer as to the valuation of assets in the balance sheet
  3. The auditor should value the asset as per generally accepted accounting principle
  4. Valuation is no part of auditor’s duty

           

Question No: 16

Which of the following is not a proper third party to hold investments on behalf of the client?

  1. Regional level custodian
  2. National level custodian
  3. India trills – National level stock broking firm
  4. AEZ Securities Ltd. a stock broking firm
  5.  

Question No: 17

Which of the following would give the assurance that debtors mentioned on the date of balance sheet actually exist?

  1. Sending debtor’s confirmation letters
  2. Reviewing subsequent collection
  3. Verify debtors against sales document
  4. Both (a) and (b)

           

Question No: 18

Which of the following is not an inherent limitation of internal control system?

  1. Management override
  2. Collusion among employees
  3. Inefficiency of internal auditor
  4. Abuse of authority

           

Question No: 19

An auditor should study and evaluate internal controls to

           

  1. determine whether assets are safeguarded
  2. Suggest improvements in internal control
  3. Plan audit procedures
  4. express and opinion
  5.  

Question No: 20

XYZ Ltd. Conducts quarterly review of operations. It discovers that unrest in a south east

Asian country may affect the supply of raw materials to it the next quarter. This is an example of:

  1. risk assessment
  2. control procedure
  3. supervision
  4. control environment

           

Question No: 21

The definition of auditing states that the auditor

  1. objectively obtains evidence
  2. is independent
  3. must evaluate internal control
  4. none of the above
  5.  

Question No: 22

Various types of quality audits are:   

  1. product
  2. process
  3. management (system)
  4. All of above
  5.  

Question No: 23

When the auditor is an employee of the organization being audited (auditee), the audit is classified as an........ quality audit.

  1. internal
  2. external
  3. compliance
  4. Both A & B

 

Question No: 24

The most comprehensive type of audit is the ......... system audit, which examines suitability and effectiveness of the system as a whole.

  1. quantity
  2. quality
  3. Preliminary
  4. sequential
  5.  

Question No: 25

Each of the three parties involved in an audit ......................... plays a role that contributes to its success.

  1. the client, the auditor, and the auditeer
  2. the client, the auditor, and the audite
  3.  the client, the moderator, and the auditee
  4. the client, the auditor, and the auditee

 

Question No: 26

An audit is usually conducted in three steps:

(1) A pre-examination or opening meeting with the auditee marks the beginning of the process.

(2) Involves a suitability audit of the documented procedures against the selected reference standard.

(3) The auditor examines in depth the implementation of the quality system.

  1. True
  2. False

 

Question No: 27

The audit final report should include, at a minimum, the following:

(Choose the one NOT required)

1. Type of audit conducted

2. Characteristics of audit

3. Identification of involved parties: auditor, auditee, and third party

4. Audit team members

5. Critical nonconformities and other observations

6. Audit standards and reference documents used

7. Determination of proper corrective action(s)

8. Duration of audit

  1. 1
  2. 2
  3. 4
  4. 8
  5.  

Question No: 28

The time required and costs involved in an external audit are much higher as compared to internal audits.

  1. True
  2. False

 

Question No: 29

Audit is a fact-finding process that compares actual results with......................

  1. specified standards and plans
  2. expected results
  3. premature results
  4. preliminary results

 

Question No: 30

The ......... is also expected to provide the resources needed and select staff members to accompany the auditors.

  1. auditor
  2. client
  3. internal auditor
  4. auditee

 

Question No: 31

For the benefit of the organisation, quality auditing should only report non-conformances and corrective actions, but should not highlight areas of good practice.

  1. True
  2. False

 

Question No: 32

How many principles are listed in AAS1 which govern auditor’s professional obligation?

  1. Nine
  2. Fourteen
  3. Seven
  4. Eight
  5.  

Question No: 33

An auditor assesses control risk because it

  1. affects the audit risk
  2. affects the level of detection risk that auditor may accept
  3. helps him to fix materiality level for each financial assertion
  4. is directly related to inherent risk

           

Question No: 34

The most difficult type of misstatement to detect fraud is based on:

  1. Related party purchases
  2. Related party sales
  3. The restatement of sales
  4. Omission of a sales transaction from being recorded.

           

Question No: 35

Which of the following statements is correct concerning the required documentation in working papers of fraud risk assessment undertaken by the auditor?

  1. All risk factors as mentioned in AAS4, should be considered and documented along with response to them. 
  2. Document the identification of fraud risk factors along with response to them.
  3. Document material fraud, risk factors and response to them.
  4. No documentation in required.

 

Question No: 36

Which of the following is the most appropriate potential reaction of the auditor to his assessment that the risk of material misstatement due to fraud is high in relation to existence of inventory?    

  1. Visit location on surprise basis to observe test counts
  2. Request inventory count at a date close to yearend
  3. Vouch goods sent on approval very carefully
  4. Perform analytical procedures.
  5.  

Question No: 37

Which of the following is not likely to be a fraud risk factor relating to management’s characteristics

  1. Tax evasion
  2. Failure to correct known weakness in internal control system
  3. Adoption of conservative accounting principles
  4. High management turnover

 

Question No: 38

The term 'scope of an audit' refers to the audit procedures deemed necessary in the circumstances:      

  1. In order to cover auditor liability
  2. As required by IFRSs
  3. To achieve the objective of the audit
  4. As required by IASs

 

Question No: 39

Bookkeeping as a support mechanism for the determination of ______, or as a decision support system for achieving ______, was basically unknown in ancient cultures like the Mesopotamian, Egyptian, Greek or Roman.

  1. Assets, valuation of assets
  2. Liabilitities, liquidity analysis
  3. Profit or wealth, profit maximization
  4. Tax liabilities, tax avoidance
  5.  

Question No: 40

Which of the following is not a benefit of international auditing standards?

  1. Encourage and assist developing nations to adopt national standards
  2. Foreign investors are more likely to channel funds into a developing country
  3. Investors can more readily comprehend a set of financial statements drawn up in another country
  4. Financial statement disclosure is more consistent

           

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Title:
Amity B.COM 4 Sem Assignment For Auditing (General)
Short Name or Subject Code:  Auditing
University:  Amity
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