Page 157 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
review procedures.”

The issues pertaining to above for audit period under consideration were communicated with
responsible persons in management.
I. Regarding description of expenditure on capital items reflected in Para A, which of the following views
is Most appropriate?
(a) Meeta is of view that such a document is in nature of a checklist for evaluating internal control
over capital items.
(b) Neeta is of view that such a document is in nature of audit programme for verification of capital
items.
(c) Babita considers that such a document is in nature of an internal control questionnaire for
evaluating internal control over capital items.
(d) Rita considers it to be specific audit plan in relation to capital items.
II. On reading description in Para B, what were the auditors trying to do by studying employee
recruitment and related HR matters?
(a) Auditors were trying to gain an understanding of how the company is monitoring controls.
(b) Auditors were gaining knowledge to understand how employee pay rolls are prepared and
whether there could be any misstatements in pay rolls due to non- inclusion of promotion
increments
(c) Auditors were trying to understand control environment of the company.
(d) Auditors were trying to assess the control activities relevant to audit to assess risk of material
misstatement.
III. On the basis of description provided in Para C, identify audit procedure(s) performed by auditors.
(a) Test of Controls
(b) Vouching
(c) Analytical Procedures
(d) Verification
IV. What would the most appropriate nomenclature to extract of document described in Para D?
(a) Engagement letter
(b) Written Representation
(c) External confirmation
(d) Offer letter to auditor
V. Given draft in Para E, which of the following views is Most appropriate in accordance with relevant
Standards on Auditing?
(a) Meeta is of the view that draft in Para E needs emphasis in audit report. Therefore, its inclusion
under heading “Emphasis of Matter” is proper.
(b) Neeta is of the view that draft in Para E is a residuary matter. Therefore, its inclusion under
heading “Other Matters” is proper.
(c) Rita is of the view that draft in Para E provides the basis on which opinion is to be given. Therefore,
its inclusion under heading “Basis for Opinion” is proper.
(d) Babita is of the view that draft in Para E relates to significant matter identified during course of
audit and it contains how the same was addressed. Therefore, its inclusion under heading “Key
Audit Matters” is proper.

64 (N22M)
Rohan is part of an engagement team conducting statutory audit of branch of a nationalized bank. The
financial statements to be audited include Balance sheet and Profit & Loss account of the branch drawn
up in accordance with Form A and Form B respectively of the Third Schedule to the Banking Regulation
Act, 1949. Besides, various advances and other returns are also to be verified as part of audit.
Rohan was part of all audit work pertaining to verification of deposits, advances, income and
expenditure of the branch.

While verifying different items of profit and loss account, it was noticed that income included income
on account of interest earned and other income.
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