Auditing Standards issued by the CAG of India
1. All officers and staff of the Department are
expected to abide by these Auditing Standards and apply them conscientiously in
auditing for achieving the mission of promoting _____.
A. accountability
B. transparency
C. good governance
D. all of the above
2. The CAG’s Auditing Standard constitute the
framework which set out the professional standards for _______.
A. the organization
B. its personnel – the individual auditors
C. both
D. none
3. Which of the following statements is not
correct?
A. These standards establish the norms which are
applicable to all public sector audit engagements, irrespective of their form
or context.
B. These standards incorporate the Prerequisites
for the functioning of Supreme Audit Institutions and Fundamental Auditing
Principles of the International Standards of Supreme Audit Institutions, which
have been suitably adapted with due consideration of the audit mandate and
rules applicable to SAI India.
C. These standards determine the audit procedures
that shall be applied in audit and constitute the criteria or benchmark against
which the quality of audit results is evaluated.
D. none of the above
4. Duties and powers of CAG in relation to the
accounts of the Union and the States etc. are envisaged in Article _______.
Reports of the CAG in
relation to accounts of Union, State etc. are envisaged in Article _____.
Net proceeds of any tax
or duty shall be ascertained and certified by CAG as per Article _____.
A. 149;151;279
B. 151;149;279
C. 151:279:149
D. 279;151;149
5. The _______ Schedule of the Constitution of
India envisages audit of accounts of District and Regional Councils of
autonomous regions.
A. fourth
B. fifth
C. sixth
D. seventh
6. The general provisions relating to audit are
elaborated in Sections _____and ____ of the DPC Act.
A. 10 to 20 and 23
B. 13 to 21 and 24
C. 14 to 23 and 27
D. 15 to 24 and 28
7. To fulfill its mandate, SAI India undertakes
A. financial audit
B. compliance audit
C. performance audit
D. combination of such audits
E. all of the above
8. The pre-requisites constitute the principles
that are essential for ______.
A. the functioning of SAI, India
B. proper practice of public sector auditing within
the SAI.
C. both
D. none
9. The pre-requisites for functioning SAI, India
includes ______.
A. Independence
B. Accountability and Transparency
C. Ethics
D. Quality Assurance
E. All of the above
10. An adequate degree of independence from _____ branch of the
Government is essential for the conduct of audit and for the credibility
of its results.
A. Legislative
B. Executive
C. both
D. none
11. While conforming to the Constitutional provisions and laws enacted
by the legislatures, SAI India has the functional and organizational autonomy
required for carrying out its mandate and is free from direction or
interference from the Legislature or the Executive in the:
A. selection of audit issues
B. Planning, programing, conduct, reporting and
follow up of audits
C. organization and management of its office.
D. all of the above
12. The DPC Act empowers SAI India to inspect any office of accounts
under the control of the Executive and to require the production of all
necessary documents and information necessary for the proper discharge of its
statutory responsibilities.
A. true
B. false
13. _________ refers to the legal and reporting framework,
organizational structure, strategy, procedures and actions to ensure that the
SAI meets its legal obligations with regard to its audit mandate and reporting
and that the SAI and its personnel can be held responsible for their actions
A. Accountability
B. Transparency
C. Ethics
D. Independence
14. _________ refers to the SAI’s timely, reliable, clear and relevant
public reporting on its status, mandate, strategy, activities and performance
as also of the audit findings, conclusions and public access to information
about the SAI.
A. Accountability
B. Transparency
C. Ethics
D. Independence
15. The ________ of SAI India shall be in public domain.
A. mandate
B. mission
C. responsibilities
D. all of the above
16. While conducting its audits, SAI India shall communicate the
criteria on which opinions would be based to the auditable entities and keep
them informed about the ___________ as part of the reporting process.
A. audit objectives
B. methodology and findings
C. the scope of audits undertaken
D. all of the above
17. Public sector auditing can be described as a systematic process of
objectively obtaining and evaluating evidence to determine whether information
or actual conditions conform to established criteria.
A. true
B. false
18. Public sector auditing is essential in that it provides
legislature and oversight bodies, those charged with governance and the general
public with
A. information
B. independent and objective assessments concerning
the stewardship
C. performance of public sector policies,
programmes or operation
D. all of the above
19. Public sector auditing contributes to good governance by:
A. providing the intended users with independent,
objective and reliable information, conclusions or opinions based on sufficient
and appropriate evidence relating to public sector entities
B. enhancing accountability and transparency,
encouraging continuous improvement and sustained confidence in the appropriate
use of public funds and assets and the performance of public administration
C. reinforcing the effectiveness of those bodies
that exercise general monitoring and corrective functions over public sector
and those responsible for the management of publicly funded activities
D. creating incentives for change by providing
knowledge, comprehensive analysis and well-founded recommendations for
improvement.
E. all of the above
20. Public sector refers to the sector that is controlled by
__________.
A. Central Government
B. State Government
C. Local Government
D. all of the above
21. _______ focuses on determining whether an entity’s financial
information is presented in accordance with the applicable financial reporting
and regulatory framework. This is accomplished by obtaining sufficient and
appropriate audit evidence to enable the auditor to express an opinion as to
whether the financial information is free from material misstatement due to
fraud or error.
A. Financial audit
B. Compliance audit
C. Performance audit
D. all of the above
22. __________focuses on whether a particular subject matter is in
compliance with the criteria. It is performed by assessing
whether activities, financial transactions and information are, in all
material aspects, in compliance with the applicable authorities which include
the Constitution, Acts, Laws, rules and regulations, budgetary resolutions,
policy, contracts, agreements, established codes, sanctions, supply orders,
agreed terms or the general principles governing sound public sector financial
management and the conduct of public officials.
A. Financial audit
B. Compliance audit
C. Performance audit
D. all of the above
23. _________ focuses on whether interventions, programmes and
institutions are performing in accordance with the principles of economy,
efficiency and effectiveness and whether there is room for improvement.
Performance is examined against suitable criteria and the causes of deviations
from those criteria or other problems are analyzed. The aim is to answer key
audit questions and to provide recommendations for improvement.
A. Financial audit
B. Compliance audit
C. Performance audit
D. all of the above
24. The basic elements of Public sector audit are……
A. The three parties the auditor, the responsible
party and intended users
B. Subject matter, criteria and subject matter
information
C. Types of engagement
D. all of the above
25. Public sector audits involve at least which of the following
parties:
A. The auditor,
B. The responsible party and
C. Intended users.
D. All the above
26. In Public Sector audit _____ would be the responsible parties.
A. the auditable entities
B. those charged with the governance of the
auditable entities
C. both
D. none
27. __________ are the individuals, organizations or classes thereof
for whom the auditor prepares the audit report.
A. The responsible parties
B. The intended users
C. both
D. none
28. The Intended users may include
A. Individuals, organizations or classes thereof
for whom the auditor prepares the audit report.
B. Legislative or oversight bodies, those charged
with governance or the general public.
C. The Parliament or the Legislature which
represents the citizens by determining the priorities of public finance,
purpose and content of public spending and income
D. All the above
29. ______ refers to the information, condition or activity that is
measured or evaluated against certain criteria. It can take many forms and have
different characteristics depending on the audit objective.
A. Subject matter
B. Criteria
C. Subject matter information
D. none of the above
30. An appropriate subject matter is/are
A. identifiable and
B. capable of consistent evaluation or measurement
against the criteria,
C. such that it can be subjected to procedures for
gathering sufficient and appropriate audit evidence to support the audit
opinion or conclusion
D. all the above
31. _________are the benchmarks used to evaluate the subject matter.
A. Criteria
B. Subject Matter Information
C. Indicators
D. none of the above
32. __________refers to the outcome of evaluating or measuring the
subject matter against the criteria. It can take many forms and have different
characteristics depending on the audit objective and audit scope.
A. Criteria
B. Subject matter
C. Subject Matter Information
D. none of the above
33. In __________ engagements, the responsible party measures the
subject matter against the criteria and presents the subject matter
information, on which the auditor then gathers sufficient and appropriate audit
evidence to provide a reasonable basis for expressing a conclusion.
A. attestation
B. direct reporting
C. both
D. none
34. In ________engagements, it is the auditor who measures or
evaluates the subject matter against the criteria
A. attestation
B. direct reporting
C. both
D. none
35. _____________ are always attestation engagements, as they are
based on financial information presented by the responsible party.
A. financial audit
B. performance audit
C. compliance audit
D. all of the above
36. ________audit is generally direct reporting engagement.
A. financial audit
B. performance audit
C. compliance audit
D. only ‘b’ and ‘c’
37. Most of the audit evidence obtained by the auditor will be
persuasive rather than conclusive.
A. true
B. false
38. In reasonable assurance the audit conclusion is expressed ______
either explicitly or in other forms conveying the necessary degree of
confidence.
A. negatively
B. neutrally
C. positively
D. none
39. A limited assurance conveys the limited nature of the assurance
provided and the audit conclusion is expressed in a ______ manner stating that
based on the procedures performed, nothing has come to the auditor’s attention
to cause the auditor to believe that the subject matter is not in compliance
with the applicable criteria.
A. positive
B. neutral
C. negative
D. none
40. The principles to be observed by all individual auditors are
categorized into _____ distinct groups.
A. two
B. three
C. four
D. five
41. _________ relate to the basic audit concepts, which shall be
considered by auditors prior to commencement and at more than one point during
the audit process.
A. General principles
B. Principles related to the audit process
C. both
D. none
42. Auditors shall maintain appropriate professional behaviour by
applying _____ throughout the audit
A. professional scepticism
B. professional judgment
C. due care
D. all of the above
43. ___________ refers to maintaining professional distance, an alert
and questioning attitude when assessing the sufficiency and appropriateness of
evidence obtained throughout the audit. It also entails remaining open-minded
and receptive to all views and arguments.
A. professional scepticism
B. professional judgment
C. due care
D. all of the above
44. _________ implies the application of collective knowledge, skills
and experience to the audit process.
A. professional scepticism
B. professional judgment
C. due care
D. all of the above
45. ___________ denotes that auditors shall plan and conduct audits in
a diligent(careful) manner. Auditors shall avoid any conduct that might
discredit their work.
A. professional scepticism
B. professional judgment
C. due care
D. all of the above
46. Quality control procedures shall cover matters such as __________.
A. the direction, review and supervision of the
audit process
B. the need for consultation in order to reach
decisions on difficult or contentious matter
C. both
D. none
47. SAI, India has the sole responsibility for any audit opinion or
report it might produce on the subject matter and that responsibility is not
reduced by its use of work done by other parties.
A. true
B. false
48. Which of the following statements is not correct?
A. The audit risk is the risk that the audit report
may be inappropriate.
B. The auditor performs procedures to reduce or
manage the risk of reaching inappropriate conclusions, recognising that the
limitations inherent to all audits mean that an audit can never provide
absolute certainty of the condition of the subject matter.
C. When the objective is to provide reasonable
assurance, the auditor shall reduce audit risk to an acceptably low level given
the circumstances of the audit.
D. The audit may also aim to provide limited assurance,
in which case the acceptable risk that criteria are not complied with is
greater than in a reasonable assurance audit.
E. none of the above
49. Materiality is not relevant in all audits.
A. true
B. false
50. A matter can be judged material if knowledge of it would be likely
to influence the decisions of the intended users.
A. true
B. false
51. Materiality is often considered in terms of value, but it also has
________.
A. quantitative aspects
B. qualitative aspects
C. both
D. none
52. A matter may be material because of the context in which it
occurs.
A. true
B. false
53. Materiality shall be considered for the purpose of _______ though
the materiality levels could differ for each of the processes.
A. planning
B. evaluating the evidence obtained
C. reporting
D. all of the above
54. Materiality considerations may include _________.
A. stakeholder concerns
B. public interest
C. regulatory requirements and consequences for
society
D. all of the above
55. Auditors shall prepare audit documentation that is sufficiently
detailed to provide
A. a clear understanding of the work performed
B. evidence obtained
C. conclusions reached
D. all of the above
56. According to the auditing standards the materiality is NOT decided
by
A. The value of the transaction
B. The nature of the item of transaction
C. The context in which the transaction occurs
D. The year in which the transaction is made
57. Adequate documentation is important to
A. confirm and support the auditor’s opinion and
reports
B. serve as evidence of the auditor’s compliance
with auditing standards
C. provide evidence of work done for future
reference
D. All of the above
58. Audit documentation shall include an________.
A. audit strategy
B. audit plan
C. both
D. only ‘a’
59. It is not essential that the entity being audited be kept informed
of all matters relating to the audit.
A. true
B. false
60. In case of an entrusted audit, there is a need for arriving at an
agreement on the terms of audit with the auditable entity.
A. true
B. false
61. Under audit planning, important information like _______ shall be
firmed up before audit is carried out.
A. the subject, scope and objectives of audit
B. access to data
C. the audit process
D. roles and responsibilities of different parties
to the engagement
E. all of the above
62. The nature of the risks identified will not vary according to the
audit objectives.
A. true
B. false
63. In a problem analysis the auditor shall consider ______.
A. actual indications of problems
B. deviations from what should be or is expected
C. both
D. none
64. To facilitate the process of risk assessment or problem analysis
data from multiple sources may be collated and combined to gain insights and
discern patterns.
A. true
B. false
65. The primary responsibility for the prevention and detection of
fraud rests with _______.
A. the entity’s management
B. those charged with governance
C. audit team
D. both ‘a’ and ‘b’
66. ________means limiting opportunities for fraud to take place.
A. fraud prevention
B. fraud deterrence
C. fraud limiting
D. none of the above
67. ___________ means dissuading(discouraging) individuals from
committing fraud because of the likelihood of detection.
A. fraud prevention
B. fraud dissuading
C. fraud deterrence
D. none
68. Planning for a specific audit includes _________.
A. strategic aspects
B. operational aspects
C. both
D. none
69. Strategically, audit planning shall define _________.
A. the audit scope
B. the audit objectives
C. the audit approach
D. all of the above
70. The __________ refer to what the audit is intended to accomplish.
A. scope
B. objective
C. approach
D. none of the above
71. The ______ relates to the subject matter and the criteria which
the auditors will use to assess and report on the subject matter and is
directly related to the objectives.
A. scope
B. objective
C. approach
D. criteria
72. The _________ will describe the nature and extent of the
procedures to be used for gathering audit evidence.
A. approach
B. scope
C. objective
D. evidence
73. Which of the following statement is not correct?
A. Operationally, planning entails setting a
timetable for audit and defining the nature, timing and extent of the audit
procedures.
B. During planning, auditors shall assign the
members of their team as appropriate and identify other resources that may be
required, such as subject experts.
C. Audit planning shall be responsive to
significant changes in circumstances and conditions.
D. Audit planning is not an iterative process that
takes place throughout the audit.
74. Under audit planning the choice of procedures will depend on the
risk assessment or problem analysis.
A. true
B. false
75. Audit evidence is any information used by the auditor to determine
whether the subject matter complies with the applicable criteria.
A. true
B. false
76. Methods of obtaining audit evidence can include _______.
A. inspection and observation
B. inquiry and confirmation
C. recalculation and re-performance
D. analytical procedures and other research
techniques.
E. all of the above
77. Evidence shall be both sufficient (quantity) to persuade a
knowledgeable person that the findings are reasonable, and appropriate
(quality) – i.e. relevant, valid and reliable
A. true
B. false
78. The quantity of evidence required depends on
A. the risk of material misstatement or
non-compliance of the subject matter information (the greater the risk, the
more evidence is likely to be required)
B. the quality of such evidence (the higher the
quality, the less may be required).
C. both
D. none
79. The reliability of evidence is not influenced by its source and
nature.
A. true
B. false
80. Evidence is more reliable when it is obtained from sources
external to the responsible party.
A. true
B. false
81. Evidence that is generated internally is not reliable when the
related controls are effective.
A. true
B. false
82. Evidence obtained directly by the auditor (for example, through
observation of the application of a control) is more reliable than evidence
obtained indirectly or by inference (for example, through inquiry into the
application of a control).
A. true
B. false
83. Evidence is more reliable when it exists in documentary form,
whether paper, electronic, or other media (for example, a simultaneous written
record of a meeting is more reliable than a subsequent oral report of what was
discussed).
A. true
B. false
84. Which of the following statement is not correct?
A. After completing the audit procedures, the
auditor will review the audit documentation in order to determine whether the
subject matter has been sufficiently and appropriately audited.
B. Before drawing conclusions, the auditor
reconsiders the initial assessment of risk and materiality in the light of the
evidence collected and determines whether additional audit procedures need to
be performed.
C. The auditor shall evaluate the audit evidence
with a view to obtaining audit findings.
D. When evaluating the audit evidence and assessing
materiality of findings the auditor shall take both quantitative and
qualitative factors into consideration.
E. Based on the findings, the auditor shall
exercise professional judgement to reach a conclusion on the subject matter or
subject matter information.
F. none of the above
85. The audit process involves preparing a report to communicate the
results of the audit to _______.
A. stakeholders
B. others responsible for governance
C. the general public
D. all of the above
86. Which of the following statement is correct?
A. Audit reports shall be easy to understand, free
from vagueness or ambiguity and complete.
B. Audit reports shall be objective and fair, only
including information which is supported by sufficient and appropriate audit
evidence and ensuring that findings are put into perspective and context.
C. The form and content of a report will depend on
the nature of the audit, the intended users, the applicable standards and legal
requirements. The reports can appear in short form or long form.
D. All of the above
87. Long-form reports generally describe in detail _______ including
potential consequences and constructive recommendations to enable remedial
action.
A. the audit scope
B. audit findings
C. audit conclusion
D. all of the above
88. In an attestation engagement the report is generally referred to
as the Auditor’s Report.
A. true
B. false
89. A modified opinion or conclusion may be_____ (except for) – where
the auditor disagrees with, or is unable to obtain sufficient and appropriate
audit evidence about certain items in the subject matter which are, or could
be, material but not pervasive.
A. qualified
B. adverse
C. disclaimed
D. none
90. A modified opinion or conclusion may be _____ where the auditor,
having obtained sufficient and appropriate audit evidence, concludes that
deviations or misstatements, whether individually or in the aggregate, are both
material and pervasive.
A. qualified
B. disclaimed
C. adverse
D. none
1 Comments
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