Showing posts with label CPD-II (Paper-2). Show all posts

09 December 2020

📘 Regulation of Audit & Accounts, 2007-100 MCQs (CPD – Paper II)

Posted by Bhupendra Lad with No comments

📘 Regulation of Audit & Accounts, 2007-100 MCQs

(CPD – Paper II)

🔹 Q1. Regulation on Audit and Accounts was made under which section of the C&AG’s (DPC) Act, 1971?

A. Section 20
B. Section 21
C. Section 23
D. Section 24
Answer: C

🔹 Q2. Regulation on Audit and Accounts was issued in the year:

A. 2005
B. 2007
C. 2008
D. 2009
Answer: B

🔹 Q3. Regulation applies to:

A. IA&AD staff
B. Ministries/Departments
C. Bodies under C&AG audit
D. All of the above
Answer: D

🔹 Q4. “Audit Department” means:

Offices of IA&AD under C&AG responsible for audit.

🔹 Q5. “Audit Board” means:

Board constituted by C&AG for performance audit of CPSUs.

🔹 Q6. “Audit entity” refers to:

Any entity subject to audit by C&AG.

🔹 Q7. “Audit mandate” means:

Authority of C&AG under Constitution and Act.

🔹 Q8. “Audit memorandum” is:

A communication issued during audit for information/clarification.

🔹 Q9. “Audit note” is:

A note containing audit results based on available data.

🔹 Q10. “Audit office” means:

An office of C&AG responsible for audit.

🔹 Q11. Audit report of C&AG refers to:

Reports under Article 151 or relevant Acts.

🔹 Q12. “Audit review committee” is:

Committee for performance audit of State PSUs.

🔹 Q13. Auditing standards are:

Standards issued by C&AG.

🔹 Q14. “Accounts office” means:

Office responsible for compilation of accounts.

🔹 Q15. “Entitlement” includes:

Pay, PF, pension-related functions.

🔹 Q16. Government company is defined under:

Section 617 of Companies Act, 1956.

🔹 Q17. Deemed Government Company is defined under:

Section 619B of Companies Act, 1956.

🔹 Q18. Inspection report is:

Report containing audit results of an office.

🔹 Q19. Major irregularity includes:

Fraud, corruption, or serious financial irregularities.

🔹 Q20. Separate audit report is:

Report on accounts of a body or authority.

🔹 Q21. C&AG’s authority to inspect accounts is under:

A. Section 13
B. Section 14
C. Section 18
D. Section 19
Answer: C

🔹 Q22. Powers under Section 18 include:

A. Inspection of records
B. Calling information
C. Asking questions
D. All of the above
Answer: D

🔹 Q23. Auditors should not be members of management committees:

A. True
B. False
Answer: A

🔹 Q24. Scope of audit is determined under:

A. Section 10
B. Section 13
C. Section 19A
D. Section 23
Answer: B

🔹 Q25. C&AG is sole authority for audit scope:

A. True
B. False
Answer: A

🔹 Q26. Types of audit include:

A. Financial
B. Compliance
C. Performance
D. All of the above
Answer: D

🔹 Q27. Power to dispense detailed audit is under:

A. Section 22
B. Section 23
C. Section 24
D. Section 25
Answer: B

🔹 Q28. Audit can be conducted:

A. Audit office
B. Auditee office
C. Site of records
D. All
Answer: D

🔹 Q29. Special audit request approval by:

A. Cabinet Secretary
B. Secretary
C. Minister
D. None
Answer: C

🔹 Q30. Auditing standards apply to:

A. Auditor
B. Audit department
C. Auditee
D. All
Answer: C (as per given key)

🔹 Q31. Auditing standards include:

A. Basic postulates
B. General standards
C. Field standards
D. All
Answer: D

🔹 Q32. C&AG audits accounts of:

A. Union
B. States
C. UTs
D. All
Answer: D

🔹 Q33. C&AG certifies only appropriation accounts:

A. True
B. False
Answer: A

🔹 Q34. Excess/savings shown in:

A. Appropriation accounts
B. Finance accounts
C. Both
D. None
Answer: C

🔹 Q35. Time for re-appropriation statement submission:

A. 15 days
B. 1 month
C. 2 months
D. 3 months
Answer: B

🔹 Q36. Reasons for excess/shortfall sent to:

A. Audit office
B. Accounts office
C. Both
D. None
Answer: C

🔹 Q37. Audit of expenditure from Consolidated Fund under:

A. Section 13
B. Section 14
C. Section 15
D. Section 16
Answer: A

🔹 Q38. Audit of contingency fund derived from:

A. Sec 2(e)
B. Sec 13
C. Sec 2(e) r/w Sec 13
D. None
Answer: C

🔹 Q39. Audit of receipts under:

A. Section 13
B. Section 14
C. Section 15
D. Section 16
Answer: C

🔹 Q40. Audit of stores and stock (Union) under:

A. Section 15
B. Section 16
C. Section 17
D. Section 18
Answer: C

🔹 Q41. Audit of stores (UT with legislature):

A. Sec 17
B. Sec 17 r/w 2(e)
C. Sec 19
D. Sec 19 r/w 2(e)
Answer: B

🔹 Q42. Accounts of stores kept as per C&AG rules:

A. True
B. False
Answer: A

🔹 Q43. Audit of stores includes procurement, custody, verification etc.:

A. True
B. False
Answer: A

🔹 Q44. Entry conference held with:

A. Chief Secretary
B. Governor
C. Department Secretary
D. Additional Secretary
Answer: C

🔹 Q45. Entry conference includes scope, objectives, timeline:

A. True
B. False
Answer: A

🔹 Q46. Audit of bodies governed by:

A. Sec 14,15,20
B. Sec 14,15,19
C. Sec 14,15,19,19A,20
D. Sec 14,15,19,20
Answer: D

🔹 Q47. “Body” includes NGO, club, society etc.:

A. True
B. False
Answer: A

🔹 Q48. Sec 18 provisions not applicable to bodies:

A. True
B. False
Answer: B

🔹 Q49. Audit under Sec 14(1) requires:

A. ₹25 lakh
B. 75% funding
C. Both
D. None
Answer: C

🔹 Q50. Audit under Sec 14(2) requires:

A. ₹25 lakh
B. ₹50 lakh
C. ₹1 crore
D. ₹5 crore
Answer: C

December 09, 2020

CPD, CPD-II (Paper-2), SAS-Group-II

26 September 2020

📗Basic concept of Economics, Demand and Supply (Paper-C4)-100 MCQ

Posted by Bhupendra Lad with No comments

📗Basic concept of Economics, Demand and Supply (Paper-C4)-100 MCQ

1. Which of the following best defines scarcity?
A. Unlimited wants with limited resources
B. Limited wants with unlimited resources
C. Unlimited resources
D. No wants
Answer: A

2. Opportunity cost is:
A. Total cost of production
B. Cost of next best alternative foregone
C. Accounting cost
D. Fixed cost
Answer: B

3. Marginal utility refers to:
A. Total satisfaction
B. Additional satisfaction from one more unit
C. Average satisfaction
D. Minimum satisfaction
Answer: B

4. Law of diminishing marginal utility implies:
A. Utility increases constantly
B. Utility decreases after a point
C. Utility is constant
D. Utility becomes negative always
Answer: B

5. Demand is defined as:
A. Desire backed by willingness and ability to pay
B. Desire only
C. Need only
D. Supply of goods
Answer: A

6. Law of demand states:
A. Price and demand move together
B. Price and demand move inversely
C. No relation
D. Demand depends only on income
Answer: B

7. Giffen goods violate:
A. Law of supply
B. Law of demand
C. Law of diminishing returns
D. Law of utility
Answer: B

8. Inferior goods have:
A. Positive income effect
B. Negative income effect
C. No income effect
D. Infinite elasticity
Answer: B

9. Substitute goods have:
A. Positive cross elasticity
B. Negative cross elasticity
C. Zero elasticity
D. Infinite elasticity
Answer: A

10. Complementary goods have:
A. Positive cross elasticity
B. Negative cross elasticity
C. Zero cross elasticity
D. Infinite elasticity
Answer: B

11. Price elasticity of demand is:
A. Ratio of price to demand
B. Ratio of % change in demand to % change in price
C. Ratio of income to demand
D. Ratio of supply to demand
Answer: B

12. Perfectly inelastic demand has elasticity:
A. 0
B. 1
C. ∞
D. -1
Answer: A

13. Perfectly elastic demand has elasticity:
A. 0
B. 1
C. ∞
D. -1
Answer: C

14. Unitary elastic demand means elasticity is:
A. 0
B. 1
C. >1
D. <1
Answer: B

15. Demand curve slopes downward due to:
A. Law of supply
B. Income effect & substitution effect
C. Production cost
D. Government policy
Answer: B

16. Change in demand vs change in quantity demanded differs due to:
A. Price change only
B. Non-price factors
C. Supply changes
D. Taxation
Answer: B

17. Increase in demand shifts curve:
A. Left
B. Right
C. Up
D. Down
Answer: B

18. Contraction of demand occurs due to:
A. Increase in income
B. Increase in price
C. Decrease in price
D. Change in taste
Answer: B

19. Supply means:
A. Desire to sell
B. Quantity seller is willing and able to sell
C. Stock available
D. Production capacity
Answer: B

20. Law of supply states:
A. Inverse relation
B. Direct relation
C. No relation
D. Random relation
Answer: B

21. Supply curve slopes upward due to:
A. Law of diminishing returns
B. Law of increasing returns
C. Consumer behavior
D. Government policy
Answer: A

22. Change in supply is caused by:
A. Price of commodity
B. Technology
C. Quantity demanded
D. Demand curve
Answer: B

23. Increase in supply shifts curve:
A. Left
B. Right
C. Up
D. Down
Answer: B

24. Market equilibrium occurs when:
A. Demand > Supply
B. Supply > Demand
C. Demand = Supply
D. Demand is zero
Answer: C

25. Excess demand leads to:
A. Price fall
B. Price rise
C. No change
D. Supply decrease
Answer: B

26. Excess supply leads to:
A. Price rise
B. Price fall
C. No change
D. Demand rise
Answer: B

27. Price ceiling causes:
A. Surplus
B. Shortage
C. Equilibrium
D. Inflation
Answer: B

28. Price floor causes:
A. Shortage
B. Surplus
C. No effect
D. Equilibrium
Answer: B

29. Elasticity depends on:
A. Nature of goods
B. Income
C. Time period
D. All of the above
Answer: D

30. Luxury goods have:
A. Elastic demand
B. Inelastic demand
C. Zero elasticity
D. Negative elasticity
Answer: A

31. Necessities have:
A. Elastic demand
B. Inelastic demand
C. Infinite demand
D. Zero demand
Answer: B

32. Cross elasticity measures:
A. Income effect
B. Relationship between two goods
C. Supply changes
D. Price control
Answer: B

33. Income elasticity measures:
A. Price vs demand
B. Income vs demand
C. Supply vs income
D. Demand vs supply
Answer: B

34. If income rises and demand falls, good is:
A. Normal
B. Inferior
C. Luxury
D. Substitute
Answer: B

35. Total utility is:
A. Sum of marginal utilities
B. Average utility
C. Minimum utility
D. Fixed utility
Answer: A

36. Marginal utility becomes zero when:
A. Total utility maximum
B. Total utility minimum
C. Total utility constant
D. Total utility decreasing
Answer: A

37. Indifference curve is:
A. Convex to origin
B. Concave
C. Straight line
D. Horizontal
Answer: A

38. Budget line shows:
A. Preferences
B. Income constraint
C. Utility
D. Demand
Answer: B

39. Consumer equilibrium occurs when:
A. MUx = MUy
B. MUx/Px = MUy/Py
C. Px = Py
D. Income = price
Answer: B

40. Production possibility curve shows:
A. Demand
B. Supply
C. Trade-offs
D. Utility
Answer: C

41. PPC is concave due to:
A. Constant cost
B. Increasing opportunity cost
C. Decreasing cost
D. Zero cost
Answer: B

42. Microeconomics deals with:
A. Entire economy
B. Individual units
C. National income
D. Inflation
Answer: B

43. Macroeconomics deals with:
A. Individual firms
B. Aggregate economy
C. Utility
D. Demand only
Answer: B

44. Normal goods have:
A. Negative income elasticity
B. Positive income elasticity
C. Zero elasticity
D. Infinite elasticity
Answer: B

45. If demand is perfectly elastic, demand curve is:
A. Vertical
B. Horizontal
C. Upward
D. Downward
Answer: B

46. If demand is perfectly inelastic, curve is:
A. Horizontal
B. Vertical
C. Downward
D. Upward
Answer: B

47. Short run supply is influenced by:
A. Fixed factors
B. Variable factors
C. Technology
D. Government policy
Answer: A

48. Long run supply allows:
A. Fixed inputs
B. All inputs variable
C. No production
D. Only labor
Answer: B

49. Law of diminishing returns applies to:
A. Short run
B. Long run
C. Demand
D. Utility
Answer: A

50. Marginal cost is:
A. Total cost
B. Additional cost of one unit
C. Fixed cost
D. Average cost
Answer: B

51. Average cost is:
A. TC/Q
B. MC/Q
C. FC/Q
D. VC/Q
Answer: A

52. Fixed cost remains:
A. Variable
B. Constant
C. Increasing
D. Decreasing
Answer: B

53. Variable cost changes with:
A. Output
B. Time
C. Government
D. Price
Answer: A

54. Market demand is:
A. Individual demand
B. Sum of individual demands
C. Supply
D. Utility
Answer: B

55. Market supply is:
A. Individual supply
B. Sum of supplies
C. Demand
D. Price
Answer: B

56. Law of supply holds true under:
A. Ceteris paribus
B. Perfect competition
C. Monopoly
D. Oligopoly
Answer: A

57. Ceteris paribus means:
A. All variables change
B. Other things constant
C. Price fixed
D. Demand fixed
Answer: B

58. Demand schedule shows:
A. Income vs demand
B. Price vs quantity
C. Supply vs demand
D. Utility vs price
Answer: B

59. Supply schedule shows:
A. Price vs quantity supplied
B. Income vs supply
C. Demand vs price
D. Utility vs supply
Answer: A

60. Elasticity >1 means:
A. Inelastic
B. Elastic
C. Unitary
D. Perfect
Answer: B

61. Elasticity <1 means:
A. Elastic
B. Inelastic
C. Perfect
D. Unitary
Answer: B

62. Price effect combines:
A. Income & substitution effects
B. Demand & supply
C. Utility & cost
D. None
Answer: A

63. Substitution effect arises due to:
A. Income change
B. Relative price change
C. Utility change
D. Supply change
Answer: B

64. Income effect arises due to:
A. Price change
B. Purchasing power change
C. Demand change
D. Supply change
Answer: B

65. Veblen goods exhibit:
A. Normal demand
B. Higher demand at higher price
C. Lower demand at higher price
D. Constant demand
Answer: B

66. Derived demand refers to:
A. Consumer goods
B. Demand for inputs
C. Luxury goods
D. Inferior goods
Answer: B

67. Composite demand refers to:
A. Single use
B. Multiple uses
C. Luxury use
D. Inferior use
Answer: B

68. Joint demand refers to:
A. Substitute goods
B. Complementary goods
C. Inferior goods
D. Luxury goods
Answer: B

69. Expansion of demand occurs due to:
A. Price fall
B. Income rise
C. Taste change
D. Supply increase
Answer: A

70. Increase in supply due to better technology shifts curve:
A. Left
B. Right
C. Up
D. Down
Answer: B

71. Contraction of supply occurs due to:
A. Price rise
B. Price fall
C. Technology
D. Tax
Answer: B

72. Indirect tax increases:
A. Supply
B. Cost
C. Demand
D. Utility
Answer: B

73. Subsidy shifts supply curve:
A. Left
B. Right
C. Up
D. Down
Answer: B

74. Equilibrium price is determined by:
A. Demand only
B. Supply only
C. Interaction of demand & supply
D. Government only
Answer: C

75. If demand increases and supply constant, price:
A. Falls
B. Rises
C. Constant
D. Zero
Answer: B

76. If supply increases and demand constant, price:
A. Rises
B. Falls
C. Constant
D. Infinite
Answer: B

77. Elastic supply means:
A. Quantity responds strongly
B. Quantity fixed
C. No change
D. Negative change
Answer: A

78. Perfectly inelastic supply curve is:
A. Horizontal
B. Vertical
C. Downward
D. Upward
Answer: B

79. Perfectly elastic supply curve is:
A. Vertical
B. Horizontal
C. Downward
D. Upward
Answer: B

80. Time period affects:
A. Demand
B. Supply elasticity
C. Utility
D. Income
Answer: B

81. Short run supply is:
A. More elastic
B. Less elastic
C. Perfect
D. Zero
Answer: B

82. Long run supply is:
A. Less elastic
B. More elastic
C. Zero
D. Negative
Answer: B

83. Scarcity leads to:
A. Choice
B. No choice
C. Free goods
D. Abundance
Answer: A

84. Free goods have:
A. Price
B. No price
C. High demand
D. Limited supply
Answer: B

85. Economic goods are:
A. Free
B. Scarce
C. Unlimited
D. Zero cost
Answer: B

86. Utility is:
A. Satisfaction
B. Cost
C. Revenue
D. Profit
Answer: A

87. Cardinal utility measures utility in:
A. Numbers
B. Rankings
C. Graphs
D. Ratios
Answer: A

88. Ordinal utility measures:
A. Exact numbers
B. Order of preference
C. Cost
D. Supply
Answer: B

89. Indifference curve never:
A. Intersects
B. Slopes downward
C. Convex
D. Shows utility
Answer: A

90. Higher indifference curve shows:
A. Lower satisfaction
B. Higher satisfaction
C. Same satisfaction
D. No satisfaction
Answer: B

91. Budget line slope is:
A. Px/Py
B. Py/Px
C. Income/Px
D. Income/Py
Answer: A

92. Consumer surplus is:
A. Price paid
B. Utility received minus price
C. Cost
D. Revenue
Answer: B

93. Producer surplus is:
A. Cost minus price
B. Price minus cost
C. Demand
D. Utility
Answer: B

94. Market failure occurs when:
A. Efficient allocation
B. Inefficient allocation
C. High demand
D. High supply
Answer: B

95. Invisible hand concept by:
A. Keynes
B. Adam Smith
C. Marshall
D. Ricardo
Answer: B

96. Elasticity depends on time because:
A. Preferences change
B. Adjustment possible
C. Income changes
D. Supply fixed
Answer: B

97. Demand curve becomes flatter when:
A. Elastic demand
B. Inelastic demand
C. Zero demand
D. Perfect demand
Answer: A

98. Steep demand curve indicates:
A. Elastic
B. Inelastic
C. Perfect
D. Unitary
Answer: B

99. If price elasticity = 0.5, demand is:
A. Elastic
B. Inelastic
C. Unitary
D. Perfect
Answer: B

100. Central problem of economy arises due to:
A. Abundance
B. Scarcity
C. Equality
D. Inflation
Answer: B

September 26, 2020

CPD, CPD-II (Paper-2)

06 December 2018

MCQ- Evaluation of Internal Control (PC-22)

Posted by Bhupendra Lad with No comments

Evaluation of Internal Control (PC-22)

Q-1		One of the following is not an objective of Internal Control
	(a)	Safeguarding the assets of the organization
	(b)	Verifying the accuracy and reliability of its accounting data
	(c)	Promoting staff efficiency
	(d)	Fostering and encouraging adherence to the prescribed managerial policies

Q-2		In recent years, the relevance and objectives of Internal Accounting Controls, have expanded far beyond the traditional ambit of protection against theft and fraud, well into the areas of -----------, ---------and -------- --------- of the organisation
	(a)	economy, effectiveness and operational efficiency
	(b)	effectiveness, accountability and operational efficiency
	(c)	effectiveness, reasonability and operational efficiency
	(d)	effectiveness, accountability and fair accounting

Q-3		Viewed in the Indian context, the Government in consultation with the Institute of Chartered Accountants of India, issued the Manufacturing and Other Companies (Auditors' Report) Order, 1975, (Order) for
	(a)	guidance in framing such evaluation
	(b)	finalization of accountability issues for such evaluation
	(c)	rationalization of the requirements for such evaluation
	(d)	rationalization of the guidelines for such evaluation

Q-4		A system of internal control recognizes the basic principle that it should be as --------as is practical and feasible, for individuals to be dishonest or careless. Such a premise is indeed not based on a cynical view of human nature in general, but rather on the realistic assumption that there could be a few persons who would be dishonest or careless if it is easy for them to be so.
	(a)	easy
	(b)	complex
	(c)	difficult
	(d)	informal

Q-5		Apart from the prevention and detection of fraud, internal controls should reflect the strength of the overall --------- ------------ in an organization as also the accuracy of its financial and operational records.
	(a)	financial accuracy
	(b)	accounting environment
	(c)	Accounting reforms
	(d)	financial environment

Q-6		The two dimensions of internal controls are..
	(a)	1)Administrative Control and 2) Accounting Control
	(b)	1)Administrative Control and 2) Accounting reforms
	(c)	1)Accounting accuracy and 2) Administrative Control
	(d)	1)Accounting Control and 2)Administrative reforms

Q-7		Accounting controls comprise the plan of organization , procedures and records that are concerned with safeguarding of assets and the reliability of financial records designed to provide reasonable ---------- that the transactions are recorded and executed in accordance with the general and /or specific authorization of the Management,
	(a)	guaranty
	(b)	justification
	(c)	safeguarding
	(d)	assurance

Q-8		Preparation and maintenance of accountal of assets should be in conformity with the generally accepted accounting principles and any other criteria applicable to such statements are….
	(a)	accountability for the physical verification of assets
	(b)	Management's authorization of access to assets
	(c)	proper maintenance of accountal of assets
	(d)	All of the above

Q-9		(A) The distinction between the Administrative Control and Accounting Control requires considerable dexterity as these two are very often inter-related. (B) Needless to say that the distinction should not be artificially made and administrative controls generally have a nexus with the accounting controls even if the linkage is indirect.
	(a)	Only (A) is correct
	(b)	Only (B) is correct
	(c)	Both (A) and (B) are correct
	(d)	None of the above

Q-10		Adequacy of the accounting systems is the responsibility of the Management, the Statutory Auditor is usually assigned the specific responsibility for reviewing the …..
	(a)	Accounting Systems and its related internal controls
	(b)	Internal controls of accounting system and monitoring their operations.
	(c)	Both (a) and (b)
	(d)	None of the above

Q-11		Review of non-financial and operating information includes
	(a)	Detailed testing of transactions, procedures and balances
	(b)	Identification, measurement, classification
	(c)	Both (a) and (b)
	(d)	Examination of the economy, efficiency and effectiveness of operations

Q-12		Before an evaluation is undertaken the auditor should determine :- (A) The degree of reliance that can be placed on the various systems and procedures in existence. (B) The nature, extent and timing of substantive audit tests to be applied.
	(a)	Only (A)
	(b)	Only (B)
	(c)	Both (A) and (B)
	(d)	None of the above

Q-13		Following is not an advantage of internal control
	(a)	Enables Government Audit to review the comprehensiveness in specific terms, of the evaluation conducted by the Statutory Auditor
	(b)	Facilitates acquisition of an in-depth knowledge and understanding of the systems and procedures, actually in operation.
	(c)	Enables the Statutory Auditor in the determination of the degree of effectiveness of Internal Audit in the auditee organization.
	(d)	Highlights areas of weakness in the operating systems, for suitable remedial action to be taken by the Chartered Accountants.

Q-14		The System of Internal Control is the plan of organization and all the methods and procedures adopted by the Management of an entity to assist in achieving management's objective of ensuring, as far as practicable, the orderly and efficient conduct of business, including. The system of internal control extends beyond those matters which relate directly to the functions of the accounting system. The internal audit functions constitute a separate component of internal control established with the objective of determining whether other internal controls are well designed and properly operated".
	(a)	adherence to Management policies, the safeguarding of assets, prevention and detection of fraud and error, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information
	(b)
	(c)
	(d)

Q-15		There is a distinction between the concepts of 'control environment' and 'control procedures'. The control environment refers to the overall attitude, awareness and actions of the Management regarding control and its role and importance in the entity. Whereas Control procedures encompass policies and procedures established by the Management, in order to provide for the attainment of certain objectives. Which one is not the part of “Control Environment”
	(a)	The organizational structure and methods of assigning authority and responsibility.
	(b)	Management's control system (including internal audit functions)
	(c)	The functions of the Board of Directors, personnel policies, procedures and external influences.
	(d)	Maintenance of control accounts and Trial Balances.

Q-16		There is a distinction between the concepts of 'control environment' and 'control procedures'. The control environment refers to the overall attitude, awareness and actions of the Management regarding control and its role and importance in the entity. Whereas Control procedures encompass policies and procedures established by the Management, in order to provide for the attainment of certain objectives. Which one is not the part of “Control Environment”
	(a)	Management's control system (including internal audit functions)
	(b)	System of operation of accounting procedures for ascertainment of accurate of accurate and reliable accounting data.
	(c)	Existence of an effective system for the efficient operation of the asset and a well regulated system for safeguarding of assets.
	(d)	System of managerial review of the work allocated to various individuals in the organisation.

Q-17		Evaluation of internal control systems can be done in a variety of ways. It would be reasonable to expect that the desired degree of documentation would be in proportion with the size and activities of the organisation. Only three among the following are the general methods adopted, single out the inappropriate method
	(a)	Appraisal by workflow,
	(b)	Appraisal by duties,
	(c)	Appraisal by questionnaire
	(d)	Appraisal by objectives

Q-18		The challenges faced by the Auditor are considerable in an environment where the use of the computer in data processing operations is on the increase. Thus it is possible that while in a manual system, incompatible functions such as the authority to initiate and execute a transaction and the recording of the transaction , are assigned to different departments or to different individuals within the accounting department, in a computerized environment, these incompatible functions may be consolidated within the EDP department. Please select, which among the following is not inappropriate alternative controls
	(a)	Organization controls with appropriate segregation of duties within the EDP Department.
	(b)	Sound personnel practices with effective control over the quality of work.
	(c)	Standard operating procedures for ensuring high quality processing and limiting the possibility of errors as also the unauthorized use of files, programs and reports.
	(d)	None of the above

Q-19		Evaluation of Internal Controls by the questionnaire methods (used in conjunction with other methods.) is __ _______ and ______ ____for documented evidence of such review having actually taken place.
	(a)	A complex and undesirable medium
	(b)	a convenient and efficient medium
	(c)	A convenient but complex medium
	(d)	None of the above

Q-20		A standard Internal Control Questionnaire has therefore, been prepared and presented by the
	(a)	Research Committee of Comptroller and Auditor General of India.
	(b)	Research Committee of ASOSAI
	(c)	Research Committee of Chartered Accountants of India.
	(d)	Research Committee of INTOSAI

Q-21		The questions are so framed that most of the answers can be given by "Yes" or "No" or "Not applicable". Affirmative answers generally indicate good internal controls while negative answers indicate weaknesses. The Auditors may obtain answers to the questions by adopting following methods
	(a)	Answers could be compiled by the auditor on the basis of his observations and personal interaction with the auditee.
	(b)	Alternatively, the questionnaire may be given to auditee who could furnish answers on separate sheets. The advantage of this method is that the auditee would have an opportunity to review his own systems of internal control through the mere process of answering the questionnaire.
	(c)	The auditor should then conduct a test check in order to ascertain the accuracy of the replies and the actual operation of the system.
	(d)	All of the above

Q-22		The Systems Control Evaluation (SCE) based on the questions and answers exercise, is thus designed to identify the controls in the system which would satisfy the general audit objectives. Having identified the controls, the auditor assesses the adequacy of the process. He would necessarily be required to adopt a critical approach attempting to:-
	(a)	envisage situations in which they might fail to operate and consequently result in the occurrence of an error or fraud
	(b)	the auditor should also consider how promptly errors could be identified and the their impact on the financial statements, in the event of their remaining undetected
	(c)	the auditor should then formulate his assessment based upon the suggested guidelines and'categorise the assessment of internal controls.
	(d)	All of the above

Q-23		It is generally accepted that internal control procedures can provide reasonable and in no case, absolute assurance, that the objectives of such controls relating to accounting systems are achieved. This could be due to the possible existence of certain inherent limitations including :-
	(a)	The potential for human error due to carelessness, distractions, errors of judgment and misinterpretation of instruction.
	(b)	The possibility of circumvention of controls through collusion with parties outside the entity or with employees of the entity, (e.g. a lack of segregation of duties between computer programmers and computer operations).
	(c)	Only (a)
	(d)	Both (a) and (b)

Q-24		Despite the existence of certain possible inherent weaknesses that would exist in almost every system, howsoever perfect in design, the corrective action taken for rectification by the Management and its periodic assessment
	(a)	through the Systems Control Evaluation method adopted in Systems Based Audit
	(b)	Fulfillment of the principal objectives of establishing and effectively operating Internal Control Procedures.
	(c)	Only (a)
	(d)	Both (a) and (b)

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December 06, 2018

CPD-II (Paper-2), SAS-Group-II

09 December 2020