Page 132 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
(a). Propriety audit
(b). Audit against Rules and orders
(c). Performance Audit
(d). Audit against Provision of funds
III. “While conducting audit against provision of funds, the statutory auditors, M/s Suresh Rana &
Associates must check:-
(a). That each item of expenditure is covered by a sanction either general or special of a competent
authority.
(b). That the expenditure incurred has been on the purpose for which the grant and appropriation
has been provided and the amount of expenditure does not exceed the appropriation made.
(c). That the expenditure conforms to the relevant provision of the constitution.
(d). That the expenditure is in accordance with the financial rules, regulations and orders issued by
the competent authority.
IV. “Which part of expenditure audit covers the scrutiny of the expenditure incurred on the
construction of stockyard by the company which is considered as infructuous and avoidable by
CA Suresh Rana?
(a). Propriety Audit
(b). Audit against provision of funds
(c). Audit of sanctions
(d). Performance Audit
V. “While conducting the audit of receipts of HAIL Ltd., which of the following area is to be covered
as part of Audit of Receipts?

1. Whether all revenues or other debts due to government have been correctly assessed, realised
and credited to government account by the designated authorities of HAIL Ltd.

2. Whether adequate checks are imposed to ensure the prompt detection and investigation of
irregularities, double refunds, fraudulent or forged refund vouchers or other loss of revenue
through fraud or wilful omission or negligence to levy or collect taxes or to issue refunds.

3. Whether the expenditure incurred has been on the purpose for which the grant and
appropriation had been provided and that the amount of such expenditure does not exceed the
appropriation made.

4. Whether the various schemes/projects are executed and their operations conducted
economically and whether they are yielding the results expected of them.
(a). Only statement 1 is correct
(b). Statements 1 & 2 are correct
(c). Statements 1,2,3,4 are correct
(d). (Statements 1,2,3 are correct

46 (M21R)
RS & Associates have been appointed as the statutory auditors of MNO Ltd. for the Financial Year 2019-
20. CA Ramesh is the engagement partner for the assignment. The management of MNO Ltd. has duly
given a written representation letter to CA Ramesh regarding acknowledgement of its responsibility for
the implementation and operation of accounting system and the internal control system of the
company. The management has assured the audit firm that such accounting and internal control
systems are designed and implemented to prevent and detect any misstatement on account of fraud or

error.
During the course of audit, the auditor found that the wages cost has increased substantially as
compared to the last year. On detailed checking CA Ramesh found that many new workers have been
added to the workers list which appear to be dummy workers to CA Ramesh.
Further the auditor found that there was a fraud amounting to Rs. 2 crores committed during the year
under audit by an officer of the company. Such fraud has already been reported by the Cost Accountant

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