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 statements best describes "audit risk"? The risk that the auditor will fail to detect material misstatements The risk that the auditor will issue an unqualified opinion The risk that the auditor will be sued for negligence The risk that the client will refuse to pay the audit fees None 2. The term “materiality” in auditing refers to: The size of the company being audited The significance of an amount, transaction, or discrepancy that would influence a user’s decision The auditor’s professional competence The length of time the auditor has been engaged with the client None 3. An auditor's independence is most compromised when: They perform non-audit services for the client They audit the financial statements of a subsidiary company They provide tax advice to the client They have no direct financial interest in the client None 4. Which of the following is not an example of audit evidence? Observing physical inventory counts Reviewing the minutes of board meetings Examining a client’s bank statement Issuing an auditor’s report None 5. The auditor is required to communicate significant deficiencies in internal control to: The management The shareholders The regulatory authorities The audit committee None 6. Which of the following is true regarding the auditor’s responsibility for fraud detection? The auditor is responsible for detecting all fraud in the financial statements The auditor is responsible for detecting only material misstatements due to fraud The auditor has no responsibility for detecting fraud The auditor is responsible for preventing fraud in the organization None 7. In the context of auditing, "substantive testing" refers to: Testing the operating effectiveness of internal controls Analyzing the financial performance of the client Procedures performed to detect material misstatements in the financial statements Confirming management’s assertions None 8. Which of the following is a characteristic of an unmodified audit opinion? he auditor concludes that the financial statements are materially misstated The financial statements are presented fairly in all material respects There is a limitation in the scope of the audit The auditor has not obtained sufficient audit evidence None 9. Which of the following is not considered a threat to auditor independence? Having a financial interest in the client Providing audit and consulting services to the same client Being employed by the client as a senior executive Offering internal audit services to the client None 10. Which of the following is a method used by auditors to evaluate the reliability of audit evidence? Checking the client’s historical performance Verifying the source of the evidence Analyzing the auditor’s past opinions Estimating future performance trends None 11. Under the Companies Act, 2013, an auditor must submit the audit report within: 30 days from the conclusion of the audit 60 days from the conclusion of the audit 90 days from the conclusion of the audit 180 days from the conclusion of the audit None 12. Which of the following is a responsibility of an auditor in an audit engagement? Preparing the financial statements Ensuring that the company complies with all laws and regulations Providing assurance on the accuracy of the financial statements Managing the company’s operations None 13. An auditor's opinion on the financial statements of a company is: A guarantee of the company’s future financial performance A subjective judgment based on audit evidence An opinion on the company’s internal control system D) A statement of the company’s solvency A statement of the company’s solvency None 14. The auditor’s independence is most closely related to: The company’s financial performance The auditor’s ability to perform audit procedures The auditor's financial interest in the company The length of the audit engagement None 15. What is the role of the audit committee in corporate governance? To ensure that auditors comply with all audit standards To appoint the external auditor and review the audit results To oversee the internal accounting processes To provide financial advice to management None 16. Which of the following is an example of "audit evidence"? A letter from the client's lawyer confirming pending litigation A comparison of the company's budget to actual performance All of the above None 17. Which of the following is considered an “unmodified opinion” in auditing? The auditor concludes that the financial statements are materially misstated The auditor expresses an adverse opinion on the financial statements The auditor is unable to obtain sufficient audit evidence and issues a disclaimer of opinion The auditor concludes that the financial statements are presented fairly in all material respects None 18. The auditor's report on financial statements includes a statement regarding: The auditor's assessment of management's performance The auditor's opinion on the fairness of the financial statements The company's market value The financial stability of the company None 19. The primary purpose of audit sampling is to: Ensure the audit covers all transactions in the financial statements Obtain a representative sample of data to draw conclusions about the entire population Reduce the cost of the audit Perform all necessary audit tests on every transaction None 20. In the context of ethics, an auditor should: Be transparent with clients about potential conflicts of interest Keep all audit findings confidential, including those that could affect the company’s reputation Engage in personal business transactions with the client Rely on management representations without questioning them None 21. What is an auditor’s primary responsibility regarding internal control? To design and implement internal controls To assess the effectiveness of internal controls as part of the audit process To operate the internal controls To report on the adequacy of internal controls to shareholders None 22. When an auditor identifies a material misstatement, the auditor should: Accept the financial statements as they are Report the matter to the regulatory authorities immediately C) Modify the audit opinion accordingly D) Ignore the misstatement if it is not widespread Modify the audit opinion accordingly Ignore the misstatement if it is not widespread None 23. The "Code of Ethics" for auditors is designed to: Regulate the pricing of audit services Ensure that auditors maintain their professional independence and integrity C) Guarantee a favorable audit opinion D) Provide auditors with guidelines on financial statement preparation Guarantee a favorable audit opinion None 24. Which of the following best describes the "going concern" assumption in auditing? The company is expected to be liquidated within the next 12 months The company will continue its operations for the foreseeable future The company is expected to meet its financial obligations The company will sell off its assets to pay creditors None 25. What does the term “professional skepticism” mean in auditing? The auditor maintains a neutral and questioning attitude throughout the audit process The auditor assumes management’s assertions are always truthful The auditor doubts the client’s ability to continue as a going concern The auditor becomes overly suspicious of every transaction None 26. Which of the following is an indicator of a potential conflict of interest for an auditor? The auditor has no financial interest in the client The auditor provides both consulting and auditing services to the client The auditor is independent and objective None 27. In which of the following situations is an auditor most likely to issue an adverse opinion? When there is a material misstatement that is pervasive and affects the financial statements as a whole When the auditor is unable to obtain sufficient evidence When the client’s internal controls are ineffective When the auditor issues a qualified opinion None 28. Which of the following is true regarding the "Code of Ethics" for auditors? The Code of Ethics is optional for auditors to follow It provides a framework for auditors to follow in order to maintain independence and integrity The Code of Ethics only applies to auditors working for large firms Auditors are not required to disclose conflicts of interest under the Code of Ethics None 29. In a situation where an auditor discovers fraud during an audit, the auditor is required to: Report the fraud to the client’s board of directors Disclose the fraud to the public immediately Report the fraud to the regulatory authorities without delay Ignore the fraud if it is not material to the financial statements None 30. Which of the following represents a "control risk" in auditing? The risk that internal controls may not detect or prevent misstatements in the financial statements The risk that the auditor may fail to detect fraud The risk that the financial statements are misstated due to errors or fraud The risk that the auditor’s opinion may be biased None 31. Which of the following is a direct threat to the auditor’s independence? The auditor is employed by the client for a short-term consulting project The auditor has a long-standing personal relationship with the client’s management The auditor has a financial interest in the client The auditor provides training to the client’s staff None 32. Which of the following is a key characteristic of a qualified audit opinion? The auditor concludes that the financial statements are free from material misstatements There is a limitation on the scope of the audit or a disagreement with management The auditor detects fraud in the financial statements The auditor expresses an adverse opinion on the financial statements None 33. Which of the following is not part of the auditor’s responsibility in relation to fraud detection? To assess the risk of material misstatement due to fraud To obtain sufficient audit evidence to detect fraud To report all instances of fraud to the public To evaluate the internal control system for the potential of fraud None 34. Which of the following is most important when evaluating audit evidence? The quantity of evidence collected The auditor’s judgment on the quality and relevance of the evidence The cost of collecting the evidence The speed with which the evidence is collected None 35. The auditor must issue a report that includes the audit opinion. Which of the following is true about this report? The auditor’s report must be issued only to the management of the company The auditor’s report must be issued in compliance with the applicable auditing standards The auditor’s report is an informal statement and does not require compliance with professional standards The auditor’s report must be issued within 12 months of the audit completion None 36. What is the role of the audit committee in a company? To oversee the internal audit process To manage the company’s accounting function To hire the auditor All of the above None 37. Which of the following would be considered a breach of the ethical code for auditors? The auditor performs an audit while maintaining a strict independent stance The auditor is a director of the company being audited The auditor provides a consulting service to the client after the audit The auditor communicates audit results to the client’s audit committee None 38. What is the purpose of the "audit committee" in relation to the external auditor? To provide advice on how the audit should be conducted To communicate any concerns regarding the auditor’s findings to the shareholders To review the external auditor’s performance and independence To review the external auditor’s performance and independence None 39. If the auditor is unable to obtain sufficient evidence to form an opinion, the auditor should: Issue an unmodified opinion Issue a qualified opinion or disclaimer of opinion depending on the severity C) Issue an adverse opinion D) Proceed with the audit and ignore the missing evidence Issue an adverse opinion Proceed with the audit and ignore the missing evidence None 40. Which of the following is a general procedure for the auditor to evaluate "going concern" assumptions? Check for any internal control deficiencies Review the client’s latest financial projections and budget Inspect the company’s product line for possible obsolescence D) Perform substantive testing on inventory transactions C Perform substantive testing on inventory transactions 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!
