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 considered an example of an audit procedure to obtain audit evidence? Inspection of records Observation of processes Confirmation with third parties All of the above None 2. Which of the following is a key objective of performing a risk assessment in an audit? To determine the auditor’s fee To evaluate the risk of material misstatement in the financial statements To assess the performance of the audit team To decide the type of audit opinion to be issued None 3. An auditor is required to consider the possibility of fraud during the audit because: Fraud may result in a material misstatement of the financial statements Fraud is always easy to detect Fraud does not impact the financial statementes Fraud detection is the responsibility of management. None 4. According to the Companies Act, 2013, which of the following is a responsibility of the auditor? To prepare the financial statements To express an opinion on the financial statements To approve the company’s budget To ensure the company's operations are profitable None 5. According to the ethical standards for auditors, which of the following is an example of a conflict of interest? An auditor provides both audit and non-audit services to the same client An auditor works with clients from different industries An auditor works independently without consulting any clients. An auditor accepts a referral fee for recommending another auditor None 6. What does “materiality” refer to in an audit? The importance of the auditor’s opinion The amount of evidence needed to form an audit opinion The significance of a misstatement or omission in the financial statements The efficiency of the audit procedures None 7. When should the auditor issue an unqualified opinion on the financial statements? When the financial statements are materially misstated When the auditor cannot obtain sufficient audit evidence When the financial statements are presented fairly in all material respects in accordance with the applicable financial reporting framework When there are going concern uncertainties None 8. What is the role of an auditor when it comes to fraud detection? To investigate all possible fraudulent activities To provide a guarantee that no fraud exists To design audit procedures to identify matierial msstatements due to fraud To report fraud to the relevant authorities None 9. Which of the following is an example of a non-compliance with laws and regulations (NOCLAR) in auditing? Failing to record transactions properly Paying fines due to failure to comply with regulatory requirements Disclosing trade secrets without permission Failing to file annual tax returns on time None 10. The auditor must evaluate whether the going concern assumption is appropriate for a company. This evaluation is based on: A review of the company’s latest financial performance only A judgment about the company’s ability to continue its operations for the foreseeable future The company’s market share and competition The company’s compliance with industry regulations None 11. What is the purpose of a management letter issued by an auditor? To provide a report on the accuracy of financial statements To offer recommendations for improving internal controls and operations To inform management of the auditor’s opinion on the financial statements To give a formal opinion on the company’s compliance with legal regulations None 12. What is the auditor’s responsibility for detecting non-compliance with laws and regulations (NOCLAR)? To assess whether the company has complied with all regulations To investigate and report every instance of non-compliance To design audit procedures that can detect material instances of non-compliance To provide legal advice to the client None 13. Which of the following best describes the audit objective of substantive testing? To evaluate the effectiveness of internal controls To detect material misstatements in the financial statements To verify the accuracy of transactions and balances To confirm the existence of assets None 14. In the context of auditing, the term "audit evidence" refers to: The auditor’s opinion on the financial statements The records and documentation the auditor reviews to form an opinion The procedures the auditor uses to detect fraud The auditor’s professional judgment about the company’s financial situation None 15. What is a significant risk in auditing? A risk that is remote and unlikely to impact the financial statements A risk that has a reasonable possibility of leading to a material misstatement in the financial statements A risk that only affects a few accounts or transactions A risk that can be easily managed through internal controls None 16. Which of the following is the best source for understanding the client’s internal controls? The client’s management reports The auditor’s own review of accounting records The company’s latest financial statements Discussions with the client’s internal auditors and management None 17. According to the ethical guidelines, an auditor’s objectivity can be compromised when: The auditor holds shares in a client company The auditor performs internal audit services for the client C) The auditor has a close personal relationship with the client’s management The auditor has a close personal relationship with the client’s management All of the above None 18. Which of the following is a prohibited practice under ICAI's ethical standards for auditors? Accepting a gift from the client if it is within a nominal value Issuing an audit report without performing sufficient procedures Providing tax services to an audit client All of the above None 19. The auditor’s opinion in the audit report is based on: The auditor’s knowledge of the client’s business The completeness of the client’s financial statements The evidence obtained through audit procedures The management’s internal control system None 20. Which of the following is true about the auditor’s responsibility for the financial statements? The auditor is responsible for preparing the financial statements The auditor’s responsibility is to ensure that the financial statements are free of fraud The auditor is responsible for expressing an opinion on the financial statements The auditor is responsible for managing the company’s operations None 21. In which of the following situations should an auditor issue a disclaimer of opinion? When the financial statements contain material misstatements that cannot be corrected When there is a significant limitation in the scope of the audit When the client fails to provide adequate evidence for an audit opinion All of the above None 22. What is the primary purpose of audit planning? To assess the efficiency of the audit team To ensure the auditor performs necessary procedures to obtain sufficient audit evidence To determine the appropriate audit fee To decide the type of opinion the auditor will issue None 23. Which of the following best describes "audit risk"? The risk that the auditor will fail to detect fraud The risk that the auditor will issue an inappropriate audit opinion The risk that the financial statements contain no misstatements None 24. What does the auditor do during a preliminary engagement activity? Evaluate the risk of material misstatement Review the client’s financial performance Determine the nature and extent of audit procedures to be performed All of the above None 25. In auditing, which of the following is the main purpose of performing substantive tests of details? To confirm balances with third parties To verify the accuracy and completeness of financial transactions C) To test the company’s internal control systems D) To obtain general audit evidence To test the company’s internal control systems To obtain general audit evidence None 26. The key difference between a review engagement and an audit engagement is: A review engagement involves a detailed audit of financial statements A review engagement provides a higher level of assurance than an audit. A review engagement provides limited assurance compared to an audit. A review engagement is conducted only for public companies None 27. What is the primary focus of professional ethics for auditors? To maintain client confidentiality To ensure the auditor’s independence and integrity To improve the quality of audit procedures To reduce the cost of audit services None 28. In which of the following circumstances is an auditor required to modify the audit opinion? When the financial statements are materially misstated When the auditor cannot obtain sufficient audit evidence When the client refuses to provide certain financial information All of the above None 29. In which of the following circumstances is the auditor required to issue a qualified opinion? When the financial statements are prepared in accordance with accounting standards When there are significant issues with the company’s internal controls When there are material misstatements but the impact is not pervasive When there are no misstatements in the financial statements None 30. Which of the following is the primary responsibility of the engagement partner in an audit? To review the audit workpapers To approve the auditor’s report To ensure the audit is planned and executed in accordance with auditing standards To ensure the company’s financial statements are accurate None 31. Which of the following is the primary focus of an internal audit? To assess the fairness of financial statements To evaluate the effectiveness of internal controls To issue an audit opinion on financial statement To confirm the existence of assets None 32. Which of the following is an example of a substantive audit procedure? Inquiry of management about the business risks Inspection of documents and records Confirmation with third parties Performing analytical procedures None 33. What is the key objective of the auditor when assessing the risk of material misstatement (RMM)? To determine the amount of audit fees To evaluate the accuracy of financial reporting To identify the likelihood of misstatements due to fraud or error To assess the effectiveness of internal controls None 34. Which of the following statements is true regarding an auditor’s responsibility for fraud detection? The auditor is responsible for detecting all instances of fraud The auditor is not responsible for detecting fraud but must assess the risk of fraud The auditor’s main responsibility is to identify financial misstatements only The auditor is required to investigate all fraudulent activities within the organization None 35. Which of the following audit opinions indicates that the financial statements are not presented fairly in accordance with the applicable financial reporting framework? Unmodified opinion Modified opinion Qualified opinion Adverse opinion None 36. Which of the following is true about the concept of materiality in auditing? Materiality refers to the level of error that can be ignored by the auditor Materiality refers to errors that do not affect the financial statements Materiality is used to guide the auditor in determining the significance of misstatements Materiality is determined solely by the size of the error in the financial statements None 37. According to professional ethics, what should an auditor do if they suspect non-compliance with laws and regulations (NOCLAR)? Immediately report the issue to the regulatory authorities Ignore the issue if it is not material to the financial statements Discuss the issue with management and take appropriate actions based on their response Discontinue the audit and issue a disclaimer of opinion None 38. What is the main purpose of an audit committee? To assist the auditor in performing the audit To ensure the financial statements comply with regulations To oversee the financial reporting and the audit process To issue the audit report None 39. What is the meaning of "audit evidence" in the context of an audit? Information provided by the client to support their financial statements The documents the auditor gathers to substantiate audit opinions The auditor’s report on the financial statements The procedures used to evaluate management’s integrity None 40. An auditor should exercise professional skepticism throughout the audit. This means the auditor should: Assume that management is always truthful Always trust the information provided by the client Consider the possibility of fraud and remain alert for any inconsistencies or suspicious activities Rely solely on the internal audit department's work 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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