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MCQs 1: Which of the following affects audit effectiveness?

Risk of over reliance Risk of incorrect rejection Risk of incorrect acceptance Both A and C
Answer Explanation

MCQs 2: What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?

The auditor has ascertained that the balance is materially correct when in actual fact it is not The auditor concludes the balance is materially misstated when in actual fact is not The auditor has rejected an item from sample which was not supported by documentary evidence He applies random sampling on data which is inaccurate and inconsistent
Answer Explanation

MCQs 3: Audit programme is prepared by____________?

The auditor The client The audit assistants The auditor and his audit assistants
Answer Explanation

MCQs 4: The working papers which auditor prepares for financial statements audit are___________?

Evidence for audit conclusions Owned by the client Owned by the auditor Retained in auditor’s office until a change in auditors
Answer Explanation

MCQs 5: The quantity of audit working papers complied on engagement would most be affected by__________?

Management’s integrity Auditor’s experience and professional judgment Auditor’s qualification Control risk
Answer Explanation

MCQs 6: Which of the following best describes the primary purpose of audit programme preparation?

To detect errors or fraud To comply with GAAP appropriate evidence To gather sufficient To assess audit risk
Answer Explanation

MCQs 7: Which of the following is not an advantage of the preparation of working paper?

To provide a basis for review of audit work To provide a basis for subsequent audits To ensure audit work is being carried out as per programme To provide a guide for advising another client on similar issues
Answer Explanation

MCQs 8: The auditor’s permanent working paper file should not normally, include__________?

Extracts from client’s bank statements Past year’s financial statements Attorney’s letters Debt agreements
Answer Explanation

MCQs 9: For what minimum period should audit working papers be retained by audit firm?

For the time period the entity remains a client of the audit firm For a period of ten years For a period auditor opines them to be useful in servicing the client For the period the audit firm is in existence
Answer Explanation

MCQs 10: Which of the following factors would least likely affect the quantity and content of an auditor’s working papers

The assessed level of control risk The possibility of peer review The nature of auditor’s report The content of management representation letter
Answer Explanation

MCQs 11: Which of the following statement is true regarding an auditor’s working papers?

They document the level of independence maintained by the auditor They should be considered as the principle support for the auditor’s report They should not contain details regarding weaknesses in the internal control system They help the auditor to monitor the effectiveness of the audit firm’s quality control
Answer Explanation

MCQs 12: Which of the following statement best describes the understanding with respect to ownership and custody of working papers prepared by an auditor?

The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation The safe custody of working papers is the responsibility of client, if kept at his premises The working papers must be retained by an audit firm for a period of 10 years Successor auditors may have access to working papers of the predecessor auditors. The approval of client is not required
Answer Explanation

MCQs 13: The current file of the auditor’s working papers, generally, should include____________?

A flowchart of the internal controls Organisation charts A copy of financial statements Copies of bond and debentures
Answer Explanation

MCQs 14: Audit of banks is an example of__________?

Statutory audit Balance sheet audit Concurrent audit Both (A. and (B. All of the above
Answer Explanation

MCQs 15: In Pakistan, balance sheet audit is synonymous to___________?

Annual audit Continuous audit Detailed audit Statutory audit
Answer Explanation

MCQs 16: Audit in depth is synonymous for­_____________?

Complete audit Completed audit Final audit Detailed audit
Answer Explanation

MCQs 17: Balance sheet audit includes verification of____________?

Assets Income and expense accounts where appropriate Liabilities All of the above
Answer Explanation

MCQs 18: Balance sheet does not include­:_____________?

Verification of assets and liabilities Vouching of income and expense accounts related to assets and liabilities Examination of adjusting and closing entries Routine checks
Answer Explanation

MCQs 19: _______the audit risk,_______the materiality and _______the audit effort?

Lower, Higher, Lower Lower, Lower, Higher Higher, Lower, Lower Lower, Higher, Higher
Answer Explanation

MCQs 20: When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the_____________?

Amount of known misstatement is documented in working papers Estimates of the total likely misstatement is less than materiality level Estimate of the total likely misstatement is more than materially level Estimates of the total likely misstatement cannot be made
Answer Explanation

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