Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Advanced Auditing, Assurance and Professional 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 an example of a substantive test in auditing? Observing the operation of internal controls Reviewing management’s internal control procedures Testing the accuracy of specific transactions or balances Sending a confirmation letter to a client’s customer None 2. In which of the following circumstances would an auditor most likely issue a disclaimer of opinion? In which of the following circumstances would an auditor most likely issue a disclaimer of opinion? The auditor finds material misstatements in the financial statements The client refuses to correct a misstatement in the financial statements The auditor discovers fraud during the audit None 3. Which of the following best describes the audit procedure of “confirmation”? Comparing the client’s transactions to industry averages Confirming with external parties about the existence or accuracy of financial information Performing substantive testing on transactions Reviewing the management’s representations None 4. An auditor performs an engagement quality control review to: Verify the auditor’s independence Evaluate the quality of audit evidence collected Ensure the audit report is free of material misstatements Ensure that the audit complies with applicable standards and regulations None 5. Which of the following is a risk that arises from a lack of internal controls over financial reporting? Increased audit fees Higher audit risk due to potential misstatements Decreased ability to perform substantive tests The auditor may issue an unqualified opinion None 6. In an audit, which of the following is an example of "analytical procedures"? Confirming receivables with customers Comparing current-year financial information with prior-year data Performing substantive tests on transactions Inspecting invoices and contracts None 7. According to the International Standards on Auditing (ISA), which of the following is the auditor’s responsibility when assessing the risk of fraud? To conduct a forensic investigation to detect fraud To obtain sufficient audit evidence to detect fraud To assess the risk of fraud and address it in the audit plan D) To ignore fraud if it does not materially affect the financial statements To ignore fraud if it does not materially affect the financial statements None 8. When is it appropriate for an auditor to rely on internal audit work? When the internal audit function is not independent When the internal audit function is not competent When the internal audit function is properly designed, implemented, and independent When there is no external audit team in place None 9. Which of the following is an example of an ethical conflict for an auditor? Providing a reasonable level of assurance on financial statements Accepting a gift from a client that could influence the audit opinion Reviewing the financial statements for errors and omissions D) Preparing an audit report based on objective evidence Preparing an audit report based on objective evidence None 10. What is the purpose of conducting an audit of financial statements? To prepare the financial statements To provide assurance that the financial statements are free from material misstatements To guarantee that the financial statements are accurate To protect the company from legal liabilities None 11. Which of the following is true about the auditor’s role in corporate governance? The auditor is responsible for ensuring that the company’s governance structure is effective The auditor provides assurance on the effectiveness of corporate governance he auditor has no role in corporate governance The auditor is responsible for managing corporate governance issues None 12. What should an auditor do if they become aware of a significant deficiency in the client’s internal controls? Issue an unmodified opinion with a paragraph explaining the deficiency Immediately notify the regulators Discuss the deficiency with management and request corrective action D) Ignore the deficiency if it is not material to the financial statements Ignore the deficiency if it is not material to the financial statements None 13. What is the effect of an auditor finding material misstatements in the financial statements on the audit opinion? The auditor will issue a disclaimer of opinion The auditor will issue an adverse opinion or a qualified opinion depending on the pervasiveness of the misstatements The auditor will issue an unmodified opinion with emphasis of matter The auditor will issue a standard report None 14. Which of the following represents a limitation of the auditor’s work? The auditor’s ability to identify fraud in the financial statements The auditor’s ability to issue a guarantee on the accuracy of the financial statements The auditor’s ability to perform tests of controls The auditor’s ability to access management’s decision-making processes None 15. When auditing a complex entity, which of the following is the auditor most likely to rely on? Simple analytical procedures Detailed substantive tests and expert assistance The internal audit’s findings without additional testing A blanket opinion based on the entity’s size None 16. Which of the following is a characteristic of an unmodified (clean) audit opinion? It indicates that the financial statements are materially misstated It is issued when the auditor is unable to obtain sufficient evidence It confirms that the financial statements present a true and fair view in accordance with the relevant financial reporting framework It indicates that the auditor has found fraud in the financial statements None 17. Which of the following types of fraud is the auditor most likely to detect? Fraudulent financial reporting Misappropriation of assets Fraudulent financial reporting committed by a CEO Fraud involving external auditors None 18. What is the role of the audit committee in the audit process? To review the auditor’s findings and ensure the audit complies with standards To select the auditor and manage the audit engagement To oversee the financial reporting process and the internal control system All of the above None 19. What is the significance of professional ethics in auditing? They ensure the auditor complies with legal regulations They promote trust and confidence in the audit process They allow auditors to disregard client confidentiality for their own benefit They provide auditors with guidelines for making personal decisions None 20. How should an auditor respond if they are offered a gift or incentive by the client during the audit? Accept the gift if its value is below a set threshold Politely decline and report the offer to the audit committee Accept the gift if the client insists ) Continue the audit without any changes to the work plan None 21. Which of the following is true regarding an auditor's responsibility for detecting fraud in an audit engagement? The auditor is responsible for detecting all fraud, regardless of materiality The auditor is responsible for detecting fraud that could result in material misstatement in the financial statements The auditor only needs to detect fraud involving management The auditor is not responsible for detecting fraud unless it is directly reported by management None 22. What is the key characteristic of a qualified audit opinion? It is issued when the financial statements are free from material misstatements It is issued when the auditor is unable to obtain sufficient evidence due to a scope limitation It is issued when the auditor identifies material misstatements but they are not pervasive It is issued when the auditor has no doubts about the company’s ability to continue as a going concern None 23. In which of the following situations would an auditor most likely issue a disclaimer of opinion? he auditor identifies material misstatements but they are not pervasive There is a limitation on the scope of the audit that prevents the auditor from obtaining sufficient appropriate audit evidence The financial statements are free from material misstatement but there are concerns about the going concern assumption The auditor identifies material misstatements and they are pervasive None 24. Which of the following is considered a common example of a fraud risk factor in an audit? Low volume of transactions Independence of the audit committee Lack of internal controls over financial reporting None 25. What is the auditor's primary responsibility regarding going concern? To confirm that the company will continue operating indefinitely To assess the company's ability to continue as a going concern for the foreseeable future To guarantee that the company will remain solvent To suggest financial strategies for ensuring business continuity None 26. Which of the following is an example of a control activity in internal control systems? Performing reconciliations on a timely basis Identifying the risk of fraud during the audit Monitoring compliance with tax regulations Reviewing financial statement disclosures for material misstatements None 27. What is the purpose of a management representation letter in an audit? To provide the auditor with written confirmation of the management’s assertions To allow the auditor to discuss potential fraud or misstatements with management To provide the auditor with financial records and transaction details To give the auditor permission to perform audit procedures None 28. Which of the following is a key principle of professional ethics for auditors? Objectivity Creativity Flexibility Loyalty None 29. Which of the following would most likely affect the auditor’s assessment of audit risk? The auditor’s prior knowledge of the industry The complexity of the client’s transactions and financial reporting The availability of audit evidence The auditor’s experience with the client's internal controls None 30. What is the auditor's responsibility when it comes to evaluating the adequacy of the client’s internal controls? The auditor must design and implement the controls The auditor is responsible for ensuring that the internal controls are effective The auditor must express an opinion on the effectiveness of internal controls in the audit report The auditor must review the design of internal controls and identify any weaknesses None 31. What is the purpose of the International Financial Reporting Standards (IFRS) in auditing? To set auditing standards To govern the preparation of financial statements To regulate the audit profession To provide a framework for accounting principles None 32. An auditor discovers an immaterial misstatement in the financial statements. Which of the following is the most appropriate action? Ignore the misstatement as it is immaterial Discuss the misstatement with management and correct it Issue a disclaimer of opinion because of immaterial misstatements Modify the audit report to include an emphasis of matter None 33. What is the purpose of conducting an “engagement quality control review”? To ensure the engagement team is in compliance with legal regulations B To evaluate the overall quality of the audit and ensure compliance with auditing standards To assess the internal controls of the audit client To provide feedback on the audit team’s performance None 34. Which of the following is a safeguard against threats to an auditor’s independence? The auditor obtaining financial interests in the audit client The auditor performing nonaudit services for the client The auditor disclosing all relationships with the client in the audit repor The auditor declining to perform non-audit services for the audit client None 35. What is the auditor's responsibility in relation to the going concern assumption? To review whether the company has made the correct going concern assumption To evaluate the company’s ability to continue as a going concern for the next 12 months To ensure that management’s going concern assumption is accurate and reasonable To manage the company’s operations in a way that supports the going concern assumption None 36. What is the effect of an adverse audit opinion? The financial statements are fairly presented in accordance with the applicable financial reporting framework The auditor believes that the financial statements contain material misstatements that are pervasive The auditor is unable to obtain sufficient audit evidence to form an opinion The auditor expresses a modified opinion because of disagreements with management None 37. Which of the following is true about the relationship between the auditor and the audit committee? The audit committee should be responsible for performing the audit The audit committee reviews and approves the audit report issued by the auditor The audit committee prepares the financial statements for the auditor to review The audit committee may assist in drafting the audit report None 38. When an auditor encounters a scope limitation during the audit, what is the appropriate action? Issue a clean (unmodified) opinion, assuming no material misstatement Modify the audit opinion based on the extent of the scope limitation Ignore the limitation and issue a standard audit report Discontinue the audit engagement None 39. What is the purpose of “substantive procedures” in an audit? To assess the risk of material misstatement To test the operating effectiveness of internal controls C) To gather sufficient evidence to detect material misstatements in the financial statements D) To evaluate the adequacy of the company’s internal control system To gather sufficient evidence to detect material misstatements in the financial statements To evaluate the adequacy of the company’s internal control system None 40. What does an audit engagement letter typically include? The auditor's opinion on the financial statements A statement of the auditor's responsibility for detecting fraud The scope, objectives, and terms of the audit engagement Detailed financial records and audit evidence 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!
