Auditing of Companies MCQs

NOTE: Attempt all Questions to see the Result at the bottom of this page.

  1. 1)

    Who is responsible for the appointment of statutory auditor of a limited company ?

    • A) Directors of the company
    • B) Members of the company
    • C) The Central Government
    • D) All of the above

  2. 2)

    When restrictions that significantly affect the scope of the audit are imposed by the client, the auditor generally should issue which of the following opinion?

    • A) Qualified opinion
    • B) Disclaimer of opinion
    • C) Adverse opinion
    • D) Unqualified report with ‘an emphasis of matter’ paragraph;

  3. 3)

    Which of the following report not result in qualification of the auditor’s opinion due to a scope limitation?

    • A) Restrictions the client imposed
    • B) Reliance on the report of other auditor
    • C) Inability to obtain sufficient appropriate evidential matter
    • D) Inadequacy of accounting records

  4. 4)

    The inventory consists of about one per cent of all assets. The client has imposed restriction on auditor to prohibit observation of stock take. The auditor cannot apply alternate audit procedures.

    • A) unqualified opinion
    • B) qualified opinion
    • C) disclaimer of opinion
    • D) adverse opinion

  5. 5)

    If in the above question, the inventory consisted of about ten per cent of total assets, other conditions remaining same, the auditor should issue __

    • A) unqualified opinion
    • B) qualified opinion
    • C) disclaimer of opinion
    • D) adverse opinion

  6. 6)

    The auditor has serious concern about the going concern of the company. It is dependent on company’s obtaining a working capital loan from a bank which has been applied for. The management of the company has made full disclosure of these facts in the notes to the balance sheet. The auditor is satisfied with the level of disclosure. He should issue_

    • A) unqualified opinion
    • B) unqualified opinion with reference to notes to the accounts
    • C) qualified opinion
    • D) disclaimer of opinion

  7. 7)

    Which of the following is true about explanatory notes?

    • A) These are given by the directors of the company
    • B) These are given by auditors of the company in auditor’s report
    • C) These are given to adhere to requirements of law
    • D) All of the above

  8. 8)

    The client changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express?

    • A) Unqualified opinion
    • B) Qualified opinion
    • C) Disclaimer of opinion
    • D) Adverse opinion

  9. 9)

    In case the auditor gives a disclaimer of opinion in the audit report which of the following paragraph(s) of a standard unqualified audit report are modified?

    • A) Scope paragraph
    • B) Opinion paragraph
    • C) Scope and opinion paragraphs
    • D) Introductory, scope and opinion paragraph

  10. 10)

    A departure from recognized accounting principle is disclosed in a note to the financial statements. The auditor should

    • A) issue a standard unqualified audit report
    • B) issue a qualified report
    • C) issue an unqualified report with ‘emphasis of matter’ paragraph
    • D) disclaim opinion