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. In the context of auditing, what does ‘audit risk’ refer to? The risk that the auditor will miss fraud The risk that the auditor expresses an inappropriate opinion on the financial statements The risk that audit procedures will be ineffective The risk that the auditor will miss material misstatements None 2. What is a key principle underlying the auditor’s independence? The auditor must not be influenced by personal interests or relationships The auditor must rely on the financial statements The auditor must accept management’s explanations The auditor must focus on improving internal controls None 3. Which of the following is the responsibility of the auditor regarding going concern? To guarantee that the company will remain in business for the foreseeable future To evaluate whether there are substantial doubts about the entity’s ability to continue as a going concern To issue an unmodified opinion in every case To manage the client’s cash flow issues None 4. What type of audit opinion should be issued when an auditor finds that the financial statements are materially misstated and cannot be corrected? Unmodified opinion Qualified opinion Adverse opinion Disclaimer of opinion None 5. In which of the following circumstances would an auditor be required to issue a disclaimer of opinion? The financial statements are free from material misstatement The auditor is unable to obtain sufficient appropriate audit evidence due to a scope limitation The auditor discovers fraud in the financial statements The auditor identifies a material misstatement in the financial statements None 6. Which of the following is considered a threat to the auditor’s independence? Providing only auditing services to a client Receiving a fee that is contingent on the outcome of the audit Regular communication with management Reviewing financial statements prepared by the client None 7. The engagement letter for an audit engagement typically includes all of the following except: The scope of the audit The auditor’s fee structure The financial statements’ disclosures The responsibilities of both the auditor and the client None 8. What is the purpose of performing an audit risk assessment? To increase the amount of audit evidence collected To identify risks that may result in a material misstatement in the financial statements To determine the cost of the audit To evaluate the financial performance of the company None 9. Which of the following audit procedures is primarily used to obtain evidence about the effectiveness of internal controls? Substantive testing Analytical procedures Test of controls External confirmations None 10. According to SA 500, audit evidence must be: Sufficient and reliable Sufficient only Reliable only Relevant and comprehensive None 11. Which of the following types of audit evidence is generally considered the most reliable? Oral representations from management Internal reports and schedules Written representations from management External confirmations None 12. Which of the following is NOT a type of audit evidence? Physical evidence Documentary evidence Verbal evidence Logical evidence None 13. Which of the following is a potential consequence of failing to maintain auditor independence? A more efficient audit process A less reliable audit opinion Higher client satisfaction Reduced audit fees None 14. In an audit, analytical procedures are generally performed during: Planning, fieldwork, and completion Planning and reporting stages only Fieldwork and completion only Planning only None 15. In an audit, which of the following statements is true regarding the responsibility of detecting fraud? The auditor is responsible for detecting all fraud that might occur in the company The auditor must detect fraud if it affects the financial statements materially The auditor is not responsible for detecting fraud under any circumstances The auditor only detects fraud related to financial statement preparation None 16. Under which of the following circumstances should an auditor consider issuing a modified opinion? If there is a material misstatement in the financial statements If the client refuses to provide audit evidence If the client has weak internal controls If the auditor suspects fraud None 17. Which of the following standards deals with the communication of audit findings to those charged with governance? SA 260 SA 320 SA 510 SA 700 None 18. What is the auditor’s responsibility in relation to the client’s internal controls? To design and implement internal controls To provide recommendations for improving internal controls To evaluate the effectiveness of internal controls in preventing material misstatements To audit only the financial statements, not internal controls None 19. Which of the following best describes the primary function of an audit committee? To manage day-to-day financial operations To ensure the preparation of accurate financial statements To review the auditor’s work and ensure the audit process is effective To approve all financial transactions None 20. What is the auditor’s responsibility for detecting non-compliance with laws and regulations? The auditor is responsible for ensuring that the company complies with all laws and regulations The auditor is responsible for detecting material non-compliance during the audit The auditor should ignore non-compliance unless it affects financial statements The auditor only reviews compliance with tax laws None 21. Which of the following is a characteristic of an external audit? It is performed only for internal purposes It is an independent examination of financial statements C. It is focused solely on improving internal controls It is focused solely on improving internal controls It only evaluates the accuracy of financial statements without considering the company’s operations None 22. The process of evaluating the financial statements, disclosures, and operations of a company to provide assurance that they conform to accounting standards and regulations is called: Internal auditing External auditing Tax auditing Operational auditing None 23. Which of the following is the first step in the audit process? Conducting substantive testing Obtaining an understanding of the client’s business and industry Issuing the audit opinion Preparing the financial statements None 24. In an audit, which of the following is the primary purpose of obtaining written representations from management? To provide audit evidence to support the auditor’s opinion To assure the accuracy of financial statements To guarantee the financial statements are free of fraud D. To verify that all accounting records are accurate To verify that all accounting records are accurate None 25. Which of the following is NOT an example of a safeguard that can reduce threats to auditor independence? Rotation of audit partners Having an independent audit committee Providing non-audit services to the client Establishing a policy for the auditor’s involvement in management decisions None 26. Which of the following is true about the auditor’s responsibility regarding internal controls? The auditor is responsible for designing the internal controls The auditor must assess the effectiveness of internal controls as part of the audit process The auditor is not required to evaluate internal controls if the financial statements are accurate The auditor’s responsibility is limited to reporting weaknesses in the financial statements only None 27. The auditor should perform tests of controls when: The control environment is assessed to be strong The audit risk is considered to be low There is an intention to reduce substantive testing The financial statements are not material None 28. In which of the following cases would an auditor issue a qualified opinion? The financial statements are free from material misstatements The auditor is unable to obtain sufficient appropriate audit evidence but the financial statements are still reliable There is a scope limitation, but the effect is not pervasive The financial statements do not follow the applicable financial reporting framework None 29. Which of the following is true about audit sampling? Audit sampling is used when it is impractical to test every transaction Audit sampling eliminates the need for further testing The auditor must test every transaction in order to ensure accuracy Audit sampling is only used in substantive testing None 30. Which of the following best describes the term "materiality" in auditing? The ability to detect fraud in the financial statements The amount or nature of a misstatement that could influence the economic decisions of users The relative importance of each audit procedure The auditor’s personal judgment on the financial situation of the company None 31. Which of the following is an example of a self-interest threat in the context of auditor independence? An auditor evaluating their own work An auditor receiving gifts from a client An auditor having a close family relationship with the client’s management An auditor reviewing the client’s internal control system None 32. The audit committee plays a key role in which of the following? Preparing the financial statements Ensuring the auditor's independence and reviewing audit findings Performing the audit procedures . Evaluating the auditor's work after the audit report None 33. The auditor’s report should include which of the following? A detailed account of all audit procedures performed A statement about the effectiveness of the company’s internal controls The auditor's opinion on whether the financial statements are free from material misstatements Recommendations for improving the client’s operations None 34. According to SA 240, the auditor’s responsibility regarding fraud is to: Detect and prevent fraud in the company’s operations . Evaluate the risks of material misstatements due to fraud and respond appropriately Guarantee that no fraud exists in the financial statements Report any fraud directly to the financial regulators None 35. What is a primary objective of conducting a forensic audit? To assess financial performance for internal decision-making To detect and investigate fraud, illegal activities, or misappropriations To verify tax compliance To provide assurance on financial statement accuracy None 36. The professional judgment of an auditor is important in: Identifying the types of financial statements to be audited Deciding whether or not to issue an audit opinion Deciding on audit fees Developing audit software None 37. Which of the following best describes the term "audit procedures"? The methods used by the auditor to determine the financial performance of the company The activities performed by the auditor to gather evidence regarding the financial statements The discussions between the auditor and the management regarding financial performance The policies set by the audit committee for the audit work None 38. Which of the following is true about audit documentation? The auditor is not required to document audit procedures if the client’s financial statements are perfect Audit documentation provides the primary basis for auditing evidence Audit documentation is optional and not a regulatory requirement The documentation should be retained only for a short period None 39. Which of the following is an example of substantive testing? Reviewing the client’s internal control system Recalculating the financial ratios Observing the client’s counting of inventory Confirming the balances of accounts payable with vendors None 40. Analytical procedures in audit are most commonly used during which of the following stages? Planning Fieldwork Completion Reporting 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!
