Auditing Archives

161. If any director is disqualified from being appointed under section 274(1) (g), the auditor should mention this fact in his audit report. For this purpose, how does he determine their eligibility :

A. He obtains a representation from each director

B. He obtains a management representation

C. He enquiries from Registrar of Companies

D. Any one of the above

✅ The correct answer is option A.

162. The scope of the audit including reference to the pronouncements of the ICAI, which the auditor adheres to, generally is communicated to the client in the ____ i) auditor’s report ii) engagement letter iii) representation letter

A. i) only

B. Both (i) and (ii)

C. Both (i) and (iii)

D. All the above

✅ The correct answer is option B.

163. The auditor should state the reasons for his reservations in audit report and should 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

A. i) only

B. i) and (iv) only

C. i), iii) and (iv) only

D. All of the above

✅ The correct answer is option A.

164. Who among the following can be appointed as special auditor by the Central Government?

A. The statutory auditor

B. chartered accountant in practice

C. Any chartered accounted who is not in practice

D. Both (a) and (b)

✅ The correct answer is option D.

165. A departure from recognized accounting principle is disclosed in a note to the financial statements. The auditor should

A. Issue a standard unqualified audit report

B. Issue a qualified report

C. Issue an unqualified report with ‘emphasis of matter’ paragraph

D. Disclaim opinion

✅ The correct answer is option B.

166. Special audit is conducted at the order of the Central Government. Which section gives such powers?

A. Section 233(A)

B. Section 233A

C. Section 242(A)

D. Section 242A

✅ The correct answer is option C.

167. In case the auditor gives a disclaimer of opinion in the audit report which of the following paragraph(s) of a standard unqualified audit report are modified?

A. Scope paragraph

B. Opinion paragraph

C. Scope and opinion paragraphs

D. Introductory, scope and opinion paragraph

✅ The correct answer is option C.

168. The branch auditor is appointed by –

A. Shareholders in an annual general meeting

B. Shareholders in general meeting

C. Board of directors in board meeting

D. Any of the above

✅ The correct answer is option B.

169. The management of a company, to which AS3 is not applicable, does not include statement of cash flows in its annual report. The auditor should express

A. Unqualified opinion

B. Qualified opinion

C. Adverse opinion

D. Any of these depending upon materiality and pervasiveness and adequacy of disclosure

✅ The correct answer is option A.

170. Which of the following statements with regard to rules regarding exemption from branch audit is not true?

A. A branch office of a company can be granted exemption on the basis of quantum of activity criterion

B. If a satisfactory arrangement of scrutiny check of the books of account of a branch office of a manufacturing company has been made, it can be exempted from branch audit

C. Cost consideration should be considered as an important factor/ground for exemption from branch audit

D. The auditor should state in his audit report that branch office is exempted by virtue of quantum of activity or any other basis

✅ The correct answer is option B.