Page 24 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs

b) Performance reviews.
c) Information processing.
d) All of the above

ICS.4 N22M
A company is engaged in manufacturing of wooden furniture. The auditor of company notes that
company has identified emerging risks pertaining to probable reduction in demand of company’s
products due to procurement of imported furniture from South East Asian nations. It has also

estimated how significant are those risks and their possibility of happening. Besides, it has also
formulated an action plan to deal with the situation, in case these risks materialize. Which of the
following options would be most appropriate to describe above situation?
a) An example of audit risk for auditor
b) An example of component of internal control of company
c) An example of control risk of company
d) An example of inherent risk for auditor

ICS.5 N23M
To evaluate the Internal Control of Kingsway Limited, a team member of the auditors used a method
according to which, number of questions relating to internal control of the company were required
to be answered by the employees of the company. After obtaining the answers there was a
discussion relating to those answers between team member of the auditor and employees of the
company for a clear picture. State the method of evaluation of internal control as discussed above.
a) Narrative record
b) Check List
c) Internal Control questionnaire
d) Flow chart

ICS.6 N23M
The term Internal Financial Controls (IFC) basically refers to the policies and procedures put in place
by companies for ensuring:
(i) Reliability of financial reporting
(ii) Compliance with applicable laws and regulations
(iii) Safeguarding of assets.
(iv) Effectiveness and efficiency of operations
(v) Prevention and detection of frauds

Which statement is correct?
a) (i), (ii)and (iv)
b) (i), (iii) (v) and (ii)
c) (i), (ii), (iii) and (iv)
d) (i), (ii), (iii), (iv)and (v)

ICS.7 SM23
Who is responsible for maintaining effective internal financial controls?
a) Statutory auditor
b) Audit Committee
c) Management
d) Shareholders

ICS.8 SM23
Which of the following is not a risk to a company’s internal control due to its IT environment?

a) Potential loss of data
b) Inability to access data when required
c) Unauthorized access to data
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