Page 142 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
The Auditors are performing their Audit work in the Company Search Results Ltd by using CAAT’s. The
Company is completely automated and all the processes, operations are carried out using the Computer
systems. Testing is performed in an automated environment to increase the efficiency and allow for
more robust tools to be built. There are four types of testing methods in an Automated environment.
They are Inquiry, Observation, Inspection and Re-performance.
I. “Sec. 52 of the Companies Act states that Security Premium Account can be applied by the
Company for one of the purpose mentioned below. Which of the following is an INCORRECT
option?

(a). To write off preliminary expenses of the Company
(b). To pay dividend to equity shareholders
(c). To provide premium on redemption of Preference share capital
(d). To purchase its own shares or other securities under Sec 68(Buyback)
II. “In reference to para 2, which of the following Statement is inappropriate?
(a). Once the overall audit strategy is established, an audit plan can be developed to address the
various matters identified in the overall audit strategy.
(b). The establishment of overall audit strategy as well as detailed audit plan is a discrete and
sequential process.
(c). Audit Strategy and Audit plan are inter-related as changes in one may result in consequential
changes to the other.
(d). The Audit plan is more detailed than the Audit Strategy that includes the nature, timing and
extent of audit procedures to be performed by engagement team members.
III. “In reference to para 3, which form from the following should be filed by the Partners to avoid
penalty consequences?
(a). Form 11 within 90 day of end of closer of financial year and Form 8 within a period of 60 days
from the end of six months of the financial year.
(b). Form 11 within 60 days of end of closer of financial year and Form 8 within a period of 30 days
from the end of six months of the financial year.
(c). Form 11 within 30 days of end of closer of financial year and Form 8 within a period of 60 days
from the end of three months of the financial year.
(d). Form 11 within 60 day of end of closer of financial year and Form 8 within a period of 90 days
from the end of three months of the financial year.
IV. “With reference to para 4, which of the following point ensures implementation of policies and
procedures with regard to Internal Financial Control by the Companies?
(a). Reliability of Financial Reporting
(b). Effectiveness and efficiency of operations
(c). Compliance with applicable laws and regulations
(d). All of the above.
V. “Which of the following statement is inappropriate with regard to testing methods as mentioned
in Para 5 above?
(e). Inquiry in combination with Inspection gives the most effective and efficient audit evidence.
(f). Re-performance is the most effective as an audit test and gives the best audit evidence.
(g). Inquiry should always be used in combination with any other testing method.
(h). which audit test to use and in what combination does not require professional judgment.

54 (N21M)
A Partnership Firm of Chartered Accountants by the name of S K and Associates were appointed as the
Auditors of the Company named Big Box Ltd.

Para 1
Big Box Ltd is a Public Listed Company. The CA Firm comprised of 2 partners namely CA S and CA K.
Subsequently, a close relative of CA K, acquired security having face value Rs.495000/- of Big Box Ltd.
As per the provisions of Section 141 of the Companies Act 2013, an Auditor will be disqualified from

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