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 most reliable source of audit evidence? Inquiry of management Observation of processes Inspection of external documents Analytical procedures None 2. Who is primarily responsible for the preparation of financial statements? The external auditor . Management of the entity Audit committee Internal auditor None 3. The overall audit strategy focuses on: Determining the nature, timing, and extent of audit procedures Preparing financial statements Evaluating operational efficiency Issuing a qualified audit opinion None 4. A material misstatement in the financial statements may arise from: Errors Fraud Non-compliance with laws and regulations All of the above None 5. Substantive procedures are performed to: Obtain an understanding of internal control Detect material misstatements in the financial statements Test the operating effectiveness of controls Verify compliance with laws None 6. Which of the following is NOT included in the auditor's report? Opinion paragraph Basis for opinion Management’s responsibilities Internal control evaluation None 7. The term 'reasonable assurance' implies that: Auditors guarantee the accuracy of financial statements Auditors provide a high but not absolute level of assurance The audit is conducted within limited resources There is no reliance on internal controls None 8. Which of the following would most likely be considered a fraud risk factor? Excessive pressure on management to meet financial targets Routine transactions A small audit team A highly regulated industry None 9. The term 'audit program' refers to: The set of financial statements to be audited A detailed plan of the audit procedures to be performed The contract between auditor and client A software tool used for auditing None 10. Which of the following is an assertion related to transactions and events? Existence Completeness Accuracy Rights and obligations None 11. What is the purpose of a management representation letter? To provide additional evidence for the auditor’s opinion To certify the financial statements are free of error To communicate the audit findings to the board To state the audit fees None 12. The scope of an internal audit is determined by: The statutory auditor Management Shareholders The regulatory authority None 13. Which standard addresses auditor documentation? SA 230 SA 500 SA 700 SA 260 None 14. Independence of an auditor is primarily ensured by: Rotation of audit firms. Compliance with ethical standards Submission of reports to regulatory authorities Reviewing internal controls None 15. When should analytical procedures be performed in an audit? Only at the planning stage Only during substantive testing At planning, substantive, and concluding stages Only at the concluding stage None 16. The primary purpose of audit sampling is to: Save time and cost Evaluate the entire population Ensure 100% accuracy in testing Identify control deficiencies None 17. SA 315 focuses on: Materiality in planning and performing audits Identifying and assessing the risks of material misstatements Fraud considerations in audits Forming an opinion on financial statjavascript:void(0)ements None 18. Which of the following is NOT a type of fraud? Misappropriation of assets Fraudulent financial reporting Non-compliance with accounting standards Corruption None 19. A disclaimer of opinion is issued when: The auditor finds material misstatements There is a limitation on the scope of the audit The financial statements are misleading The auditor is satisfied with the audit evidence None 20. The term 'audit trail' refers to: The process of obtaining evidence Documentation that provides evidence of transactions and balances The timeline of the audit process The auditor's report None 21. What is the purpose of engagement letters in audits? To set out the audit plan To define the auditor's scope and responsibilities To verify financial statements To confirm the client’s compliance None 22. An adverse opinion is issued when: The auditor finds no material misstatements There is a pervasive and material misstatement in the financial statements The audit is incomplete The client refuses to cooperate None 23. Control environment refers to: The design of specific control activities The overall attitude and actions of management and employees towards controls The tools used for monitoring controls The physical security of assets None 24. SA 520 focuses on: Analytical procedures . Using the work of internal auditors Reporting on financial statements Planning the audit None 25. The auditor communicates with those charged with governance to: Discuss audit fees Report internal control deficiencies Provide accounting advice Express audit opinions None 26. Audit risk is composed of which three components? Inherent risk, detection risk, and operational risk Control risk, detection risk, and inherent risk Inherent risk, control risk, and substantive risk Operational risk, control risk, and inherent risk None 27. Which of the following is a direct responsibility of the auditor? Preparing financial statement Preventing fraud Expressing an opinion on the financial statements Managing internal controls None 28. Which of the following is an example of a compliance audit? Financial statement audit Audit of adherence to laws and regulations Operational audit Tax audit None 29. Which of the following is NOT a type of audit evidence? External confirmations Inquiries of the client Management opinions Inspection of tangible assets None 30. The primary purpose of audit working papers is to: Satisfy the client’s requirements Facilitate the preparation of financial statements Provide evidence of audit work and support the audit report Determine audit fees None 31. The auditor’s independence is impaired when The auditor owns shares in the client’s company The auditor has previous experience with the client The auditor uses sampling techniques The client has weak internal controls None 32. The primary objective of operational auditing is to: Provide an opinion on financial statements Evaluate the efficiency and effectiveness of operations Detect fraud Ensure compliance with laws None 33. The use of an external confirmation is most closely associated with: Verification of intangible assets. Cash and bank balances Valuation of inventory Compliance with laws None 34. Which SA deals with materiality in an audit? SA 320 SA 520 SA 700 SA 500 None 35. The term 'walkthrough' refers to: Reviewing previous audit reports Tracing a transaction from inception to final recording Preparing an audit strategy Performing substantive tests None 36. The term 'subsequent events' refers to: Events occurring during the audit fieldwork Events occurring after the balance sheet date but before the auditor’s report Events occurring after the audit report is issued All events impacting the financial statements None 37. SA 530 deals with: Using the work of an expert Sampling techniques Communication with those charged with governance Fraud in audits None 38. An unmodified audit opinion is issued when: The financial statements are free from material misstatement There is a scope limitation There is uncertainty about going concern The client fails to provide representation None 39. An inherent limitation of an audit is: High cost of the audit The auditor’s dependence on internal controls The use of sampling and judgment The auditor’s reliance on external confirmations None 40. Which of the following is considered a safeguard against ethical threats? Long association with the client Regular performance reviews of audit staff Self-review of prior audits Establishing audit committees 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. 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