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Ae 1 Question Paper

The document is a test for CA Intermediate students on the topic of Audit, consisting of multiple-choice questions and descriptive questions. It covers various aspects of auditing, including standards, engagement, assurance, and the auditor's responsibilities. The test aims to assess the understanding of the nature, objectives, and scope of auditing within a time limit of 1.5 hours for a total of 40 marks.

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Kaushik Bharadwaj
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39 views3 pages

Ae 1 Question Paper

The document is a test for CA Intermediate students on the topic of Audit, consisting of multiple-choice questions and descriptive questions. It covers various aspects of auditing, including standards, engagement, assurance, and the auditor's responsibilities. The test aims to assess the understanding of the nature, objectives, and scope of auditing within a time limit of 1.5 hours for a total of 40 marks.

Uploaded by

Kaushik Bharadwaj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CA INTERMEDIATE

SUBJECT- AUDIT
Test Code – A E 1
(Date :)
(Marks - 40)

TOPIC : Nature, Objective and Scope of Audit


Time allowed – 1.5 hours
QUESTION : 1

MULTIPLE CHOICE QUESTIONS :


1. Which of the following is TRUE about Standards on auditing?
a. These deal mainly with voluntary responsibilities of auditors.
b. These deal mainly with mandatory responsibilities of auditors.
c. Their sole purpose is to help government authorities in augmenting revenues.
d. These deal mainly in carrying out audit according to legal provisions
2. Which of the following is not an advantage of audit?
a. It provides high quality financial information.
b. It acts as a moral check on employees.
c. It enhances risk of management bias.
d. It helps in safeguarding interests of shareholders.
3. Which of the following is TRUE about Engagement Standards?
a. Engagement standards ensure proper rights to practitioners in course of
performance of their duties.
b. Engagement standards ensure preparation and presentation of financial
statements in a standardized manner.
c. Engagement standards ensure uniformity by practitioners in course of
performance of their duties.
d. Engagement standards ensure savings in resources of Clients.

4. Which of the following is not a likely benefit of auditing?


a. Since auditing is connected to future events, audited information can be
easily relied upon by users.
b. Errors or frauds may be discovered during audit.
c. Government authorities can make use of audited accounts for different
purposes.
d. It can help in bringing out deficiencies in maintenance of financial record.
5. Consider following statements in relation to “Limited assurance engagement”:-
Statement I - It involves obtaining sufficient appropriate evidence to draw
reasonable conclusions.
Statement II - Review of interim financial information of a company is an example of
limited assurance engagement.
a. Statement I is correct. Statement II is incorrect.
b. Both Statements I and II are correct.
c. Both Statements I and II are incorrect.
d. Statement I is incorrect. Statement II is correct.
(5 * 1 MARKS = 5)
QUESTION : 2
State with reasons whether following statements are Correct or Incorrect
1. Lalji Bhai has purchased shares of a company listed on NSE. The audited financial
statements of the company provide picture of healthy financial performance having
robust turnover, low debt and good profits. On above basis, he is absolutely satisfied that
money invested by him is safe and there is no chance of losing his money. Do audited
results and audit reports of companies provide such assurance to investors like Lalji Bhai?
Is thinking of Lalji Bhai correct?.
2. An assurance engagement relates to providing assurance about historical financial
information only..
3. The basic objective of audit does not change with reference to nature, size or form of an
entity.
4. The auditor is not expected to, and cannot, reduce audit risk to zero and cannot therefore
obtain absolute assurance that the financial statements are free from material
misstatement due to fraud or error.
(4 * 2 MARKS = 8)
QUESTION : 3
An audit is distinct from investigation. However, it is quite possible that sometimes
investigation results from the prima facie findings of the auditor. Discuss.
(5 MARKS)
QUESTION : 4
An assurance engagement involves a three party relationship. Discuss meaning of three
parties in such an engagement.
(3 MARKS)
QUESTION : 5
“Choosing of appropriate accounting policies in relation to accounting issues is responsibility
of management”. Do you agree? Discuss duty of auditor, if any, in relation to accounting
policies.
(5 MARKS)
QUESTION : 6
Assurance engagements are not restricted to audit of financial statements alone. Discuss with
example.
(5 MARKS)
QUESTION : 7
There are practical and legal limitations on the auditor’s ability to obtain audit evidence.
Explain with examples.

(5 MARKS)
QUESTION : 8
Why Audit is needed ? write benefits of Audit ?

(4 MARKS)

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