AAC/AUDIT/SAAMARTHYA2.
0/SEP2025/001
INTER AUDIT TEST: Module 1
Max M.70 M
Time: 2 hrs. 15 min
1. MULTIPLE CHOICE QUESTIONS (2M×15)
Q-1. While auditing TEN Ltd. CA Avi divided whole population of trade receivables balances to be tested
in few separate groups and started taking sample from each of them. He treated each group as if it was
a separate population. He decided the trade receivables balances of YEN ltd. For the FY 2022-23 into
groups on the basis of professional judgement as follows:
S. No Particulars
1 Balances in excess of Rs. 1000000
2 Balances in the range of Rs. 775001 to Rs. 1000000
3 Balances in the range of Rs. 550001 to Rs. 775000
4 Balances in the range of Rs. 225001 to Rs. 550000
5 Balances Rs. 225000 and below
From above mentioned groups CA Avi picked up different percentage of items for examination from
each of the groups, for example from the top group i.e. balances in excess of Rs. 1000000, he selected
all the items to be examined; from second group he opted 25% of the items to be examined and so on.
Which of the following method of sample selection is he following?
(a) Systematic
(b) Stratified
(c) Section
(d) Selection Sampling
Q-2. The notes to the Account statement of ASD Ltd. Shows the breakup of accounts payable for the
financial Year 2022-23 as follows:
Accounts Payable Amount (in Rs.)
Mr. Rabbit 1,20,000
Mr. Horse 40,000
Mr. Lion 14,56,000
Total 16,16,000
Ca Sandy, the auditor of ASD Ltd. Wants to investigate the valuation of accounts payable of MR. Lion.
Which of the following procedures is more fitted & reliable to be followed to get reliable evidence for
the existence of such balance AS ON 31ST MARCH 2023?
(a) inspect each & every journal entry passed in the books of ASD Ltd.
(b) Ask ASD Ltd. To provide the details of payment made during the year 2022-23
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(C) Inspect the invoices issued by Mr. Lion and the payments made.
(d) Interrogate the cash manager of ASD Ltd.
Q-3. Determining a percentage to be applied to a chosen benchmark (in relation to materiality) involves
the exercise of:
(a) Independence (b) professional judgement (c) professional scepticism (d) All of the above
Q-4. Audit programme Analyses, Issues memoranda, Summaries of significant matters are example of
(a) Audit documentation (b) Audit Evidence (c) Audit file (d) Final Audit File
Q-5. Accordinf to SA 210, The Auditor shall agree the terms of the Audit engagement:
(a) with management & TCWG, as appropriate (b) with management (c) with TCWG
(d) with Management or TCWG, as appropriate
Q-6. Audit Evidence is necessary to support the auditor’s opinion and report. It is __________ in nature
and is primarily obtained from audit procedures performed during the course of the Audit.
(a) Cumulative (b) regressive (c) Selective (d) Objective
Q-7., Loan or guarantee to or from the concerned client is an example of:
(a) Self-review threats (b) Self- interest threats (c) Advocacy threats (d) Intimidation threats
Q-8. Coyote Ltd. Is dealing in trading of electronic goods. Huge inventory (approx. 60%) of the company
is lying on consignment (i.e. under the custody of third party). CA Star, the auditor of the company,
wants to obtain sufficient appropriate evidence regarding existence & condition of the inventory lying
on consignment. Thus, he requested and obtained confirmation from the third party as to the quantities
and condition of the inventory held on the behalf of the entity. However, it raised doubts about the
integrity and objectivity of the third party. Which of the following other audit procedures may be
performed by CA Star to obtain evidence regarding existence and condition of inventory under the
custody of third party?
(a) Attend third party’s physical counting of inventory
(b) Arrange for another auditor to attend third party’s physical counting of inventory
(c) inspect warehouse receipts regarding inventory held by third parties
(d) All of the above
Q-9. ______________ refers to a difference between the amount, classification, presentation or
disclosure of a reported financial statement item and the amount of classification , presentation or
disclosure that is required for the item to be in accordance with the applicable FRF
(a)Misstatement (b)Error (c) Fraud (d) Any of the above
Q-10. Who is mainly responsible for implementation of IFC in a company?
(a) Auditors (b) Directors (c) Employees (d) Regulators
Q-11. Which of the following is not an analytical procedure?
(a) Tracing of purchases recurred in the purchase book to purchase invoices.
(b) Comparing aggregate wages paid to number of employees
(c) Comparing the actual cost with standard cost
(d) All of them are analytical procedures
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Q-12. Auditor’s judgement as to sufficiency may be affected by which factor:
(a) Materiality
(b) Ris of Material misstatement
(c) Size and characteristics of population
(d) All of the above
Q-13. The auditor’s ___________ safeguards the auditor’s ability to form an audit opinion without being
affected by any influences:
(a) Objectivity
(b) Independence
(c) Confidentiality
(d) Integrity
Q-14. While auditing the accounts of Apple Ltd. CA Orange, the auditor of the company came across
certain account payable balances for which direct confirmation procedures need to be applied. thus, for
the period ending 31st Mar 2023, he sent positive confirmation request wherein trade payables are
requested to respond whether or not they are in agreement with balance shown. The auditor received
all the confirmation replies from the trade payables on time as correct except from five of them. What
other option the auditor is left with regard to trade payables from which no reply for confirmation
request is received?
(a) Perform additional testing which may include agreeing the balance to subsequent cash paid
(b) Accept the balances as it is assuming other replies against received confirmation requests being
correct
(c) Accept the balances as it assuming that the trade payables must have replied in case of any
discrepancies.
(d) None of the above
Q-15. Lack of Audit trail is a challenge in:
(a) Conventional accounting
(b) Computerised accounting
(c) Batch processing
(d) None of the above
Q-16. A firm of father and son is receiving Rs. 2 lacs towards job done for XYZ Ltd. During the year
ended 31st march. The total job work charges paid by XYZ Ltd during the year are over Rs. 50 Lacs. The
father is the managing director of XYZ Ltd., having substantial holding. The managing director told the
auditor that since he is not involved in the activities of the firm and since the amount paid to it is
insignificant, there is no need to disclose the transaction. He further contented that such a payment
made in the last year was not disclosed. Is the managing director right in his approach? (4M)
Q-17. All deviations or mis statements will not affect audit opinion. Comment.
Explain the concept of “anomaly” and the Auditors duties in that regard, under SA 530.
(2M)
Q-18. Discuss the principles in assessing reliability of audit evidence. (3M)
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The new audit trainee of your firm of auditors has asked you to advise him on the reliability of the
following type of third-party evidence-
i. Valuation of land & building by a valuer
ii. Replies to a debtor’s circularization
iii. Letter received from bank towards closing balances in account.
Q-19. Mr. Z was appointed as the auditor of M/S Mango Ltd. And intents to apply the concept of
materiality for the financial statements as a whole. please guide him as to the factors that may affect
the identification of an appropriate benchmark for the purpose. (4M)
Q-20. What are the objectives of the auditor under SA 315? (4M)
Q-21. A CA in practice issued a certificate showing original cost of plant and machinery installed in
premises of a client for Rs. 9 crores to save some regulatory fees of the client. However, the original cost
of plant and machinery was Rs.15 crore as per records of the client. Which fundamental principle
governing professional ethics is violated in this case? (4M)
Q-22- Mr. Z, A chartered Accountant receives received about 45% of his total audit fees from a single
client. Discuss how it could affect independence of CA as auditor of client. What type of threats referred
to as? (3M)
Q-23. P an Auditor, decides not to send a new engagement letter to G Ltd every year, whether he is right
in his approach? When sending New Engagement Letter, would be appropriate? (3M)
Q-24. Explain the types of control in an automated environment. (3M)
Q-25. Preliminary engagement activities include certain activities to be performed by an auditor while
planning an audit. Discuss such activities briefly. How performing such activities assists an auditor?
(3M)
Q-26. CA Kanika audited books of accounts of Engineering Ltd. for the financial year 2022-2023.
The auditor used an audit procedure according to which all the documents and records maintained
by the company were checked in detail to obtain audit evidence. Explain the audit procedure used
by the auditor. Comment on reliability of audit evidence obtained by performing such an audit
procedure in some situations. (4M)
Q-27. Discussing meaning of completion memorandum, elaborate upon its importance. (3M)
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