Page 184 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
VI. Work relating to verification of revenue was assigned to Mohit in audit programme. However, it
is being performed by Rohit actually. Verification of trade receivables was planned to be carried
out by Rohit in audit programme. However, it being performed by CA Rajan Pillai due to last
minute practical issues. Which of the following statements is most appropriate in this regard
relating to audit documentation?
(a) Audit programme contains names of persons and work to be performed. It is immaterial
whether work assigned to one person is performed by another person.
(b) Audit programme was already prepared. Only persons assigned specific responsibilities can
perform those duties.
(c) It is necessary that audit programme be suitably updated or notes are given in working
papers to this effect so that planned duties are in accordance with actual work performance.
(d) Changes in audit programme or notes clarifying the matter are required only when a person
not forming part of engagement team is deputed to perform a duty. Otherwise, this issue of
inter-shuffling of team members is frivolous
VII. As regards materiality, which of the following statements is most appropriate in context of audit
documentation?
(e) Materiality has already been determined. There is no need to put it into working papers.
(f) Materiality depends upon professional judgment of auditor. Whatever amount has been
determined can be documented in working papers.
(g) Materiality arrived on basis of professional judgment along with factors considered in the
determination has to be documented.
(h) Materiality has been arrived upon professional judgment. It also depends upon professional
judgment of auditor whether he wants to document it or not.
VIII. As regards team’s assessment that risk of material misstatements is low, which of the following
statements is odd one relating to documentation of risk?
(e) Discussion amongst engagement team members and detail of significant decisions reached
has to be documented.
(f) Details of risk assessment procedures have to be documented.
(g) Details about how understanding of each component of internal control was obtained has
to be documented.
(h) Precise calculation of risk of material misstatements has to be documented.
IX. 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.
X. 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.

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