Page 36 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs

b) Accept the balances as it is assuming other replies against received confirmation requests being
correct.
c) Accept the balances as it is assuming that the trade payables must have replied in case of any
discrepancies.
d) None of the above.

505.2 #Unique N19R
A failure of the confirming party to respond, or fully respond, to a positive confirmation request, or

a confirmation request returned undelivered is called-
a) Negative confirmation request
b) Non-response
c) Exception
d) Positive confirmation request

505.3 M19M /M20M/SM21
A request that the confirming party respond directly to the auditor only if the confirming party

disagrees with the information provided in the request is-
a) Positive confirmation request
b) Non-response
c) Exception
d) Negative confirmation request

505.4 #Unique SM21
Where no reply is received during the performance of direct confirmation procedures as part of

audit of accounts receivable balances, the auditor should perform:
a) No additional testing
b) Additional testing including subsequent collections testing and agreeing the detail of the
respective balance to the customer’s remittance advice.
c) Additional testing including preparing a detailed analysis of the balance, ensuring it consists of
identifiable transactions and confirming that these revenue transactions actually occurred.
d) Both (b) and (c)
Author’s Note: Answer given by ICAI is “b” but correct is “d” . In option “c” they want to say that we
should trace credit sales transaction which contributed to debtor balance.

505.5 SM21
Statement 1: A response that indicates a difference between information requested to be confirmed
and information provided by confirming party is Negative Confirmation.
Statement 2: A failure of the confirming party to respond, or fully respond, to a positive
confirmation request, or a confirmation request returned undelivered is exception.

a) Statement 1 is correct
b) Statement 2 is correct
c) Both 1 & 2 are incorrect
d) Both 1 & 2 are correct

505.6 SM21
Which of the following is not correct?
a) SA 230- Audit Documentation
b) SA 500- Audit Evidence
c) SA 505- Written Representation
d) SA 560- Subsequent Events

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