Auditing MCQs

Question 1

A Company Auditor may be removed by the

Accepted Answer

Shareholders in General Meeting

Answer

Managing Director

Answer

Board of Directors

Answer

None of the above

Question 2

Which of the following statements is not correct regarding removal of first auditor before expiry of the term?

Accepted Answer

The approval of the Central Government is required for such removal

Answer

He is removed at a general meeting

Answer

The shareholders are authorized to do so

Answer

None of these

Question 3

Civil liability of an auditor implies liability for:

Accepted Answer

Misfeasance

Answer

Misappropriation of cash

Answer

Misappropriation of goods

Answer

Fraud

Question 4

Which of the following is not an inherent limitation of internal control system?

Accepted Answer

Inefficiency of internal auditor

Answer

Management override

Answer

Collusion among employees

Answer

Abuse of authority

Question 5

A Statutory Auditor of a private limited company is duty-bound to submit his report to:

Accepted Answer

The Shareholders of the Company in the Annual General Meeting

Answer

The financial institutions

Answer

The Government through the Registrar of Companies

Answer

The Managing Director of the Company

Question 6

When auditing prepaid insurance, an auditor discovers that the insurance policy bond on building is not available for inspection. This may indicate:

Accepted Answer

Lien on building

Answer

No insurance has been undertaken for building

Answer

Insurance premium has not been paid

Answer

Insurance premium paid but not recorded

Question 7

The scope of internal audit is decided by the:

Accepted Answer

Management

Answer

Shareholders

Answer

Government

Answer

Law

Question 8

If the Board of Directors fails to appoint the first auditor, then the first auditor is appointed by

Accepted Answer

Company in its annual general meeting

Answer

Central Government

Answer

Registrar

Answer

Company Law Board

Question 9

Balance Sheet audit is useful when:

Accepted Answer

Concern is very large

Answer

Concern is very small

Answer

Internal check is weak

Answer

No audit system exists