Virtual University Of Pakistan

Quiz 01

Spring Semester 2016

Fundamentals of Auditing ACC311

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? This Quiz covers Lesson no. 11 to 18

? Due date of quiz no 01 is 6/4/16. It means that you can submit your solution file till

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Fundamentals of Auditing ACC311 Quiz 01

Spring Semester 2016

Choose the correct/best option from given MCQs and put your answer in tabular

Form as drawn above.

1. Risk assessment procedures include which one of the following?

a. Inquiries of management and others within the entity

b. Preparing the audit reports

c. Segregation of duties

d. Internal control questionnaire development

2. Auditors perform risk assessment procedures for which one of the following

purposes?

a. To understand the entity?s business

b. To understand the entity?s accounting systems

c. To understand the entity?s environment

d. To understand the entity?s legal status

3. Internal controls are designed to achieve companies objectives in all of the following

areas EXCEPT:

a. Safeguarding of assets

b. Reliability of financial reporting

c. Reduction of debt financing costs

d. Compliance with laws and regulations

4. Which one of the following statements is CORRECT with respect to obtaining an

understanding of a client?

a. Auditors are not required to obtain an understanding with their clients

b. Auditors must obtain an understanding only if an audit is to be conducted

c. Auditors must obtain an engagement letter

d. Auditors must document their understanding of the engagement

5. Which one of the following is NOT a factor included in the control environment of

an entity?

a. Integrity and ethical values

b. Risk assessment

c. Commitment to competence

d. Organizational structure

6. The auditor’s understanding of the client’s internal control system is documented in

order to substantiate which one of the following requirements?

a. Compliance with generally accepted auditing standards

b. Conformity of the accounting records with company’s policies

c. Adherence to requirements of management and local legislations

d. The fairness of the financial statement presentation

7. Which of the following is one of the most fundamental and effective internal

controls?

a. Increased use of computers for recording accounting transactions

b. Increased reliance on internal auditors to monitor accounting systems

c. Segregation of incompatible duties across several people

d. Having internal auditors report only to the Board of Directors

8. Audit procedures are determined by which one of the following authorities?

a. Members of the company

b. Auditors themselves

c. Management of the entity

d. Appointing authority of the auditor

9. Which one of the following is TRUE about Narrative Notes?

a. Notes can take up a disproportionate amount of space

b. Notes are complex way of describing systems

c. Notes is becoming increasingly widely used technique for describing systems

d. Notes portray the flow of document

10. An Internal Control Questionnaire (ICQ) should carry the following basic information

EXCEPT:

a. The name of the document (ICQ)

b. The client to whom it relates

c. The accounting period under review

d. Evidence of who has filled the document

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Inquiries of management and others within the entity
To understand the entity?s environment
Reduction of debt financing costs
Auditors must document their…