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.
Auditing MCQs
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.
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.
Which of the following is not true regarding requirements under section 227(3) (f) of the Companies Act, 1956?
A. The auditor has to satisfy himself whether any of the directors of the company, whether public or private, are disqualified from being appointed as directors as per section 274(1) (g).
B. Section 274(1) (g) is applicable to appointment of directors both in public and private companies but reporting is limited to only those directors of a company who are also directors of a public company
C. The auditor requires every director to submit a written representation in respect of each Public company, of which the is a director, as to whether such company has defaulted in terms of provisions of sections 274(1) (g)
D. The disqualification should be considered on the date of audit report.
✅ The correct answer is option D.
While vouching, how will the auditor ensure himself that all credit sales transactions have been recorded by the entity?
A. Examining cut-off points
B. Matching entries in the sales book against renumbered sales invoices and goods outward notes
C. Counting the number of invoices and matching the number with entries on sales book
D. Both (a) and (b)
✅ The correct answer is option D.
In order to vouch, which of the expenses, the auditor will examine Bill of Entry?
A. Custom
B. Excise duties
C. Sales tax
D. Income tax
✅ The correct answer is option A.
While vouching wages, auditor should examine whether there is proper segregation of duties. Which of the following activities should not be done by same department?
A. Maintaining personnel records and approving changing in wages rates
B. Proposing pay roll summary and disbursement of wages
C. Making salary statements and filing tax returns
D. Comparing time clock records with time reports prepared by supervisors and preparing list of workers employed along with the units of production for each one of them
✅ The correct answer is option B.
In case of unclaimed wages, the auditor should examine whether
A. The amount has been deposited in a separate bank account
B. Deposited with the cashier
C. Held in a safe deposit box
D. All of these
✅ The correct answer is option A.
Which of the following would prevent double payment of the same voucher?
A. The person signing the cheque should cancel the supporting documents
B. Cheques should be signed by at best two persons
C. The data of payment of vouchers of similar nature should be the same or close to each other
D. All of the above
✅ The correct answer is option A.
An auditor conducts a surprise check on the pay day (i.e) the day wages and salaries are paid. The primary purpose of this audit procedure is
A. To ensure that there are no ghost workers
B. To ensure the casual workers employed are authorized by the supervisor
C. To test procedures for distributing pay cheques
D. To obtain understanding of internal control system
✅ The correct answer is option C.