Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Auditing and EthicsTotal Number of Question: 40Time: 41 MinutesPlease check your email after completion of test for result.All the best... Name Phone No Email State 1. Which of the following is the primary purpose of the auditor's report? To detect fraud To verify the accuracy of financial statements To express an opinion on the financial statements To guarantee future financial performance None 2. The auditor’s report should include a statement about: The financial performance of the company The fairness of the financial statements in accordance with accounting standards C) The management’s future plans D) The company's internal control system The management’s future plans The company's internal control system None 3. Under what circumstance can an auditor issue a disclaimer of opinion? When the financial statements are materially misstated When there is a significant limitation on the scope of the audit When the auditor finds fraud When the auditor agrees with management’s representations None 4. Which of the following is a fundamental ethical principle for auditors? Confidentiality Objectivity Professional competence and due care All of the above None 5. Which of the following is not a procedure used to obtain audit evidence? Inspection Observation Calculation Verification None 6. An auditor is considered independent when: He/she has no financial interest in the client's company He/she is employed by the client He/she holds shares in the client’s company He/she has a close personal relationship with the client None 7. What is the purpose of audit sampling? To test all transactions in the financial statements To gather audit evidence for specific audit areas o reduce the cost of the audit To predict future performance of the company None 8. In which of the following circumstances should an auditor perform substantive testing? When control risk is low When control risk is high When internal controls are not functioning effectively When the auditor has gathered sufficient other evidence None 9. In relation to audit documentation, which of the following is true? The documentation should be sufficient to enable an experienced auditor to understand the work performed The documentation must be prepared only when there are discrepancies in the financial statements Audit documentation is not required to be retained after the audit engagement The documentation should include only financial statements None 10. Which of the following is considered a "self-review" threat in auditing? The auditor also provides tax advisory services to the client The auditor has a financial interest in the client’s business The auditor is involved in the client’s decision-making process The auditor has been working with the same client for many years None 11. Under the Companies Act, 2013, the minimum number of partners required for a firm to be eligible for an audit of a public company is: 1 3 2 4 None 12. Which of the following is an example of "audit risk"? The risk of an auditor failing to detect a material misstatement The risk of misstatement in the financial statements The risk of fraud within the company The risk of poor financial management None 13. What is the primary responsibility of the board of directors regarding the financial statements? To prepare and approve the financial statements To approve the auditor’s fee To provide tax advice to shareholders To ensure the auditor’s independence None 14. An audit trail is important because it: Helps to detect fraud Provides evidence of the transactions for the auditor Guarantees the accuracy of financial statements Reduces the audit fees None 15. Which of the following is true about the responsibility of auditors regarding fraud detection? Auditors are responsible for detecting all types of fraud Auditors must assess the risk of fraud but are not responsible for detecting all fraud Auditors are only responsible for fraud committed by employees Auditors are responsible for fraud committed by management only None 16. According to the Code of Ethics, what should an auditor do if they face a conflict of interest? Proceed with the audit after notifying the client Discuss the conflict with the audit committee andseek resolution Continue with the audit and ignore the conflict Notify the regulatory authorities without informing the client None 17. Which of the following is an example of a threat to an auditor’s objectivity? The auditor provides both auditing and consulting services to the same client The auditor works for a company with strong internal controls The auditor does not have any financial interest in the client The auditor performs the audit with professional skepticism None 18. What is the first step in the audit process? Designing audit procedures Obtaining an understanding of the client's business Issuing an audit opinion Gathering audit evidence None 19. Which of the following best describes "audit evidence"? The client’s financial statements Information that auditors collect to draw conclusions for their audit opinion A summary of audit risks The auditor’s opinion on the financial statements None 20. When an auditor's independence is compromised, the auditor must: Continue with the audit engagement but disclose the conflict Resign from the audit engagement Request a new auditor to perform the audit Report the matter to the client’s audit committee None 21. Which of the following is the most appropriate time for an auditor to assess the risk of fraud? At the end of the audit process After the financial statements are prepared After the financial statements are prepared Only when fraud is suspected None 22. What is the purpose of an engagement letter in auditing? To determine the auditor’s fees To outline the scope and terms of the audit To provide the auditor with financial statements To agree on the methodology for auditing the client None 23. Which of the following is not a part of the auditor’s standard report? Auditor’s opinion A statement of the company’s profitability The scope of the audit The auditor’s responsibilities None 24. An audit firm is required to rotate its lead auditor every: 2 years 3 years 5 years 7 years None 25. The risk of material misstatement in financial statements due to fraud is: Controlled entirely by internal auditors The responsibility of the company’s management Part of the audit risk assessment performed by the external auditor Irrelevant in audit planning None 26. What is the role of internal controls in auditing To identify potential fraud in the organization To minimize the risk of material misstatement in the financial statements To help auditors prepare financial statements To ensure the external auditor’s independence None 27. Which of the following best describes "professional skepticism" in auditing? Accepting management’s representations without verification Maintaining an attitude of questioning and critical assessment of audit evidence Relying on prior year’s audit findings Being overly suspicious of the client’s management None 28. Which of the following is not a component of an auditor's report? Auditor’s opinion on financial statements The scope of the audit Management’s future forecasts Auditor’s responsibilities None 29. What is the minimum number of audit partners required to sign the audit report of a public company? 1 2 3 4 None 30. What is the primary objective of the International Standards on Auditing (ISA)? To provide guidelines for auditors on how to conduct an audit To ensure auditors receive proper training To regulate the audit industry To offer recommendations for fraud prevention None 31. Which of the following is an example of an internal control weakness that auditors must address? High turnover of management Lack of segregation of duties in the accounting department Disagreement over the auditor's opinion Excessive audit fees None 32. When performing a risk assessment, an auditor must consider: The likelihood of a material misstatement in the financial statements The quality of the client's customer relationships The company's market share The company's employee morale None 33. What does the term "audit evidence" refer to? Information obtained during the audit process The auditor’s opinion The financial statements The client’s internal control systems None 34. Which of the following would not be considered a related party transaction for an auditor to review? Transactions between the company and its subsidiaries Transactions between the company and its customers Transactions between the company and its executives Transactions between the company and its key management personnel None 35. What is the audit opinion when the auditor concludes that the financial statements do not present a true and fair view, but the misstatements are not pervasive? Disclaimer of opinion Unmodified opinion Qualified opinion Adverse opinion None 36. In the case of a public company, the auditor is required to express an opinion on: The company’s financial performance The fairness of the financial statements in accordance with the applicable financial reporting framework The effectiveness of internal controls The company’s market position None 37. Which of the following is a responsibility of the auditor regarding internal controls? To design and implement the internal controls To assess the effectiveness of the internal controls To operate the internal control system To enforce compliance with internal controls None 38. The audit of a company’s financial statements is based primarily on: The company's strategic plans The opinions of the company's shareholders The auditor’s judgment and professional knowledge The company’s budget None 39. Which of the following audit procedures is most useful in detecting unrecorded liabilities? Confirming bank balances Reviewing the minutes of the board meetings Performing cut-off tests on revenues Inspecting vouchers and invoices for liabilities not recorded None 40. What is the purpose of a management representation letter? To confirm the accuracy of the financial statements To summarize the results of the audit procedures To confirm the scope and objectives of the audit To assert management’s responsibility for the preparation of the financial statements None 1 out of 4 Great job on taking the INCOC Test! We appreciate your interest in test.Look out for results and future opportunities.Stay Connected !! Your quiz time is about to finish. Few seconds left. 1 2 3 4 Time's upYou cannot switch tabs while taking this quiz!You are not allowed to switch tabs violation has been recorded.you cannot minimize full screen mode!You are not allowed to minimize full screen while taking this quiz, violation has been recorded.Access denied! To begin the quiz, please grant this quiz access to your camera.Time is Up!Time is Up!
