Page 161 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
(a) Discussion amongst engagement team members and detail of significant decisions reached
has to be documented.
(b) Details of risk assessment procedures have to be documented.
(c) Details about how understanding of each component of internal control was obtained has
to be documented.
(d) Precise calculation of risk of material misstatements has to be documented.
IV. CA Shobhit is responsible for attending physical inventory count of the company. Which of the
following is not true in this regard relating to audit documentation?
(a) Dates on which physical inventory count process was attended by him should be
documented. It may also include photographs of that date showing his attendance of
inventory counting process at a particular location.
(b) Detail of test counting undertaken should form part of audit documentation.
(c) Detail of obsolete goods found should form part of audit documentation.
(d) Reports showing that stocks conform to quality control standards in accordance with law are
essential part of audit documentation.
V. As regards related party transactions, which of the following should not be part of audit
documentation?
(a) Management representation letter in this regard
(b) Related party transaction policy of the company
(c) Documentation to show that such transactions are at arm’s length basis
(d) Documentation to show that such transactions are at close length basis.

67. (M23M)
M/s SPR & Associates are appointed as auditors of XYZ Ltd. for the Financial Year 2021-22.
• The team consisted of Mr. S, Mr. P, Mr. R all Chartered Accountants and three article assistants.
• Mr. S, the engagement partner, briefed the audit staff about various items of financial statement to
be checked in detail in case of XYZ Ltd and about various aspects to be covered in the audit of the
company.
• Mr. S told the audit staff about audit documentation, audit evidence, audit file, completion
memorandum and many other things along with relevant Standards of Auditing applicable.
• Mr. S also told the staff about the risk of material misstatement that the financial statements are
prone to and how it affects the sufficiency and appropriateness of audit evidence.
• The audit staff was also apprised about the various audit procedures to be a dopted while
conducting the audit of XYZ Ltd.
• Further discussions were done about various types of risks related to financial statement and the
audit work, the related audit procedures, and the risk assessment procedures.
• The engagement team is also very particular about the application of various Standards on Auditing
applicable in case of XYZ Ltd.
I. …………. is the summary of significant matters identified during audit and way they are addressed :
(a) Audit File
(b) Audit Programme
(c) Completion memorandum
(d) Checklists
II. The susceptibility of an assertion to a misstatement that could be material before consideration
of any related control is………………:
(a) Control Risk
(b) Inherent Risk
(c) Audit Risk
(d) Significant Risk
III. Statement 1: Audit procedures consist of Risk Assessments Procedures and other procedures.
Statement 2: Substantive procedures consist of test of details and analytical procedures.
(a) Only Statement 1 is correct.
(b) Only Statement 2 is correct.

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