CA Inter Audit Lec 57 & 58

200.2

As explained in SA 200, “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing”, _________is obtained when the auditor has obtained sufficient appropriate audit evidence to reduce audit risk (i.e., the risk that the auditor expresses an inappropriate opinion when the financial statements are materially misstated) to an acceptably low level.

• a) absolute assurance

• b) limited assurance

• c) reasonable assurance

• d) reasonable or absolute assurance

200.4

As per SA-200 “Overall Objectives of the Independent Auditor”, in conducting an audit of financial statements, the overall objectives of the auditor are:

• a) To obtain reasonable assurance

• b) To report on the financial statements

• c) Both (a)and (b) above

• d) none of the above

200.3

______ refers to an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence.

• a) Professional skepticism

• b) Professional Judgement

• c) Integrity

• d) Objectivity

200.5

Professional skepticism is necessary to the critical assessment of

• a) audit documentation

• b) audit evidence.

• c) audit procedures

• d) All of the above

200.6

In order to form the opinion, the auditor shall conclude as to whether the auditor has obtained ______ about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error.

• a) reasonable assurance

• b) absolute assurance

• c) Limited assurance

• d) None of the above

200.12

An employee of Fruits and Vegetables Limited was of the opinion that auditor of a company is required to express an opinion. On which one of the following the auditor of a company is required to express an opinion:

• a) Only Balance Sheet of the Company.

• b) Financial Statements of the Company.

• c) Only Profit and Loss Account of the Company.

• d) Only Cash Flow Statement of the Company.

200.14

The auditor of Delicious Sweets Limited was of the opinion that objective of audit of financial statements of a company is to provide reasonable assurance that financial statements of that company are free from misstatements. Which type of misstatements are mentioned by auditor of Delicious Sweets Limited:

• a) Simple.

• b) Material

• c) Easy

• d) Competent

200.16

Which of the following is Incorrect:

• a) An auditor conducting an audit in accordance with SAs is responsible for obtaining absolute assurance that the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error

• b) As described in SA 200, owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements will not be detected, even though the audit is properly planned and performed in accordance with the SAs.

• c) The risk of not detecting a material misstatement resulting from fraud is higher than the risk of not detecting one resulting from error.

• d) The risk of the auditor not detecting a material misstatement resulting from management fraud is greater than for employee fraud

200.17

Which of the following is the responsibility of the auditor:

• a) Preparation and presentation of the financial statements in accordance with applicable financial reporting

• b) Design, implementation, and maintenance of internal controls

• c) Express an opinion on the Financial Statements

• d) To obtain limited assurance.

200.20

Owing to the _______ limitations of an audit, there is _________ risk that some material misstatements of the financial statements will not be detected, even though the audit is properly planned and performed in accordance with the SAs.

• a) Inherent, unavoidable

• b) Inherit, complete

• c) Management, unavoidable

• d) Regulatory, control