Auditing MCQ Quiz in मल्याळम - Objective Question with Answer for Auditing - സൗജന്യ PDF ഡൗൺലോഡ് ചെയ്യുക

The correct answer is the auditor.

Key Points

• Audit documentation refers to the record of audit procedures performed, audit evidence obtained, and conclusions reached by the auditor.
• It is considered the property of the auditor because it is created and maintained by the auditor as evidence of the work performed and the basis for the audit report issued.
• The auditor has a responsibility to maintain the confidentiality and safekeeping of the documentation.
• The client has the right to access the documentation related to their company, but they do not own it.
• The audit committee is responsible for overseeing the audit process but does not have ownership of the documentation.

The correct answer is Board of Directors of the company.

Key Points

• The internal auditor is appointed by the board of directors of the company to evaluate and monitor the company's financial and operational activities.
• The internal auditor works independently to provide assurance to the management that the company's internal controls and risk management processes are working effectively.
• The internal auditor reports to the audit committee, which is a sub-committee of the board of directors and presents the findings of the internal audit to the board of directors.
• The internal auditor plays a crucial role in ensuring the company's compliance with laws and regulations, preventing fraud and mismanagement, and improving the efficiency and effectiveness of the company's operations. 

The correct answer is ₹25,00,000.

Key Points As per section 143 (15) of Companies Act 2013:

If any auditor, cost accountant or company secretary in practice do not comply with the provisions of sub-section (12), he shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees.

Additional Information  As per section 143 (12) of Companies Act 2013:

Notwithstanding anything contained in this section, if an auditor of a company, in the course of the performance of his duties as auditor, has reason to believe that an offence involving fraud is being or has been committed against the company by officers or employees of the company, he shall immediately report the matter to the Central Government within such time and in such manner as may be prescribed. 

The correct answer is the auditor and his audit assistants.

Key Points Audit programme:

• An audit program is a detailed plan or schedule that outlines the specific procedures and steps to be followed during an audit engagement.
• It includes the scope, objectives, timing, and sequencing of audit procedures.

Important Points

• When conducting an audit, the auditor and his audit assistants prepare an audit program that outlines the specific steps to be followed, such as conducting risk assessments, testing internal controls, performing substantive procedures, and verifying the accuracy of financial statements.
• As the professional responsible for conducting the audit, the auditor develops the audit program based on their understanding of the client's business, risks, and relevant audit standards.
• The auditor takes into account the nature and complexity of the client's operations, the materiality of different accounts or transactions, and other factors to design an effective and efficient audit program.

Hence, the Audit Programme is prepared by the auditor and his audit assistants.

The correct answer is Decrease the detection risk.

Key Points

• When the auditor believes that the risk of giving an inappropriate audit opinion is too high, the auditor should consider increasing the level of audit testing to reduce detection risk.
• This may involve increasing sample sizes or conducting additional audit procedures to obtain more reliable evidence.
• Alternatively, the auditor may decide to use a lower level of materiality in order to provide a greater margin of safety in the audit opinion.
• However, decreasing inherent risk or increasing materiality level will not address the issue of inappropriate audit opinion.

The correct answer is Unqualified Report.

Key Points

Unqualified Report:

• When an auditor is satisfied with the financial statements of an organization, he/she submits an unqualified report.
• An unqualified report is a report issued by an auditor that states that the financial statements of an organization are free from material misstatement and that they present fairly, in all material respects, the financial position of the organization at a given point in time and its financial performance during the relevant period.

Additional Information

• A qualified report is issued when the auditor is unable to obtain sufficient evidence to support the financial statements or when the financial statements contain material misstatements.
• An interim report is a report issued between regular annual reports.
• Final report is issued at the conclusion of an audit engagement.

The incorrect statement is It is needed when the organization has a good internal control system.

Key Points

• Continuous audit is a type of auditing where the examination of financial transactions and records is performed on an ongoing and regular basis throughout the year.
• The objective of continuous audit is to provide real-time assurance on the accuracy and reliability of financial information and to identify any errors or irregularities as they occur.
• Continuous audit is achieved through the use of technology and automated audit tools.

Important Points

It is conducted at regular intervals.

• True. Continuous audit involves regular and frequent auditing activities.

It may be carried out on a daily basis.

• True. Continuous audit can be performed daily, as the auditing process is ongoing and does not have a specific end date.

It is needed when the organization has a good internal control system.

• Not true. Continuous audit is usually implemented in organizations with weak internal control systems or when there is a need for real-time monitoring and detection of errors or fraud.
• A strong internal control system may reduce the need for continuous audit since the control measures themselves provide a level of assurance.

It is expensive.

• True. Continuous audit can be expensive to implement and maintain because it requires the use of sophisticated technology and audit tools to monitor transactions and records continuously.
• The costs associated with continuous auditing technology and personnel can be significant.

The correct answer is It reduces cost burden.

Key Points
The advantages of an audit include:

1. It provides satisfaction for the owner:

• An audit provides independent assurance to the owners (shareholders) of the company that the financial statements are prepared in accordance with accounting principles and present a true and fair view of the company's financial position and performance.
• This assurance can increase the confidence and satisfaction of the owners in the company's financial reporting. 

2. It helps in getting loans:

• Lenders, such as banks and financial institutions, often require audited financial statements as part of their due diligence before providing loans to a company.
• Audited financial statements enhance the credibility and reliability of the financial information, making it easier for the company to secure loans.

3. It detects errors and frauds:

• One of the primary objectives of an audit is to detect errors, irregularities, and frauds in the financial statements.
• Auditors perform detailed examination and testing of the financial records and transactions to identify any misstatements or discrepancies, which helps in maintaining the accuracy and reliability of financial reporting.

Additional Information It reduces cost burden. 

• This statement is not an advantage of an audit.
• Auditing is a professional service that comes with a cost, and the audit fee can be considered an additional cost for the company.
• However, the benefits of an audit, such as increased confidence among stakeholders, outweigh the cost burden for most companies.

The correct answer is Latin.

Key Points

• The word "Auditing" is derived from the Latin word "Audire," which means "to hear" or "to listen." In ancient times, auditors would listen to the oral presentations of financial records and accounts to assess their accuracy and reliability.
• Over time, the practice evolved into a formal and systematic examination of financial information, which is known as auditing today.
• The Latin word "Audire" forms the basis for various terms related to auditing, such as auditor (one who listens), audit (the process of examination), and auditory (pertaining to hearing).

Internal audit is an evaluation and analysis of the business operation conducted by the internal audit staff.

Key Points Internal audit 

•  Internal audit is carried out by the internal audit staff, who are employees of the organization but are independent of the areas they audit.
• They assess risks, review financial and operational processes, identify weaknesses, and recommend improvements to enhance the efficiency and effectiveness of operations.

Important Points

Internal auditing is a valuable tool for organizations of all sizes. It can help organizations to:

• Identify and mitigate risks.
• Improve the effectiveness of their controls.
• Ensure that they are complying with laws and regulations.
• Improve their performance.