Amity B. Com. 4 Sem Auditing

Amity B. Com. 4 Sem Auditing
Q1. Differentiate between auditing and accountancy.
Q2. Write the preliminary steps before commencing a Company Audit.
Q3. Define basic principle of governing audit.
Q4. What is continuous audit and what are the precautions should be taken to avoid the disadvantages of continuous audit?
Q5. Write short note on any three of the following.
a) Internal check
b) Verification and valuation of asset and liabilities
c) Sundry Creditors
d) Impairment of asset
e) Audit planning
Q6. Write types of audit.
Q7. Discuss the advantages of internal audit and also its limitations.
Q8. Discuss the advantages and disadvantages of internal check.

Case Detail :
Read the case and answer the following questions:

An XYZ Real Estate Ltd. is a company offering estate agency services to the public through a network of branches all over the country. The board consists of six people, a part-time chairman, a chief executive, two other full time executives and two representatives of the owners. The company is jointly owned by a foreign bank and the City Property Group. The company has an internal audit department consisting of Sanjeev is a young chartered accountant and Rajeev who is an accounting expert. They have also a secretary, Ritwika. They report their activities monthly in detail to the audit committees of the foreign bank and the City Property Group.

Q1. What work would the internal audit department do?
Q2. In what ways may the external auditors place reliance on their work?
Q3. Draw up a checklist, which the external auditor could use to assess the internal auditors as potentially being capable of producing work on which the external auditors may rely.

1. The main object of an audit is ___
2. The title of AAS2 issued by Council of ICAI is ___
3. Both auditing and accounting are concerned with financial statements. Which of the following:
4. Audit of banks is an example of –
5. Concurrent audit is a part of
6. In India, balance sheet audit is synonymous to
7. Audit in depth is synonymous for
8. Balance sheet audit includes verification of_
9. Which of the following affects audit effectiveness?
10. Which of the following Auditing Assurance Standard deals with Audit Planning
11. Audit programme is prepared by
12. The auditor’s permanent working paper file should not normally, include
13. For what minimum period should audit working papers be retained by audit firm?
14. Which of the following is not true with regard to verification of assets?
15. Which of the following statements is not true ?
16. Which of the following is not a proper third party to hold investments on behalf of the client?
17. Which of the following would give the assurance that debtors mentioned on the date of balance sheet actually exist?
18. Which of the following is not an inherent limitation of internal control system?
19. An auditor should study and evaluate internal controls to
20. XYZ Ltd. Conducts quarterly review of operations. It discovers that unrest in a south east Asian country may affect the supply of raw materials to it the next quarter. This is an example of :
21. The definition of auditing states that the auditor
22. Various types of quality audits are:
23. When the auditor is an employee of the organization being audited (auditee), the audit is classified as an …….. quality audit.
24. The most comprehensive type of audit is the ……… system audit, which examines suitability and effectiveness of the system as a whole.
25. Each of the three parties involved in an audit ……………………. plays a role that contributes to its success.
26. An audit is usually conducted in three steps:
(1) A pre-examination or opening meeting with the auditee marks the beginning of the process.
(2) involves a suitability audit of the documented procedures against the selected reference standard.
(3) the auditor examines in depth the implementation of the quality system.
27. The audit final report should include, at a minimum, the following:
(choose the one NOT required)
1. Type of audit conducted
2. Characteristics of audit
3. Identification of involved parties: auditor, auditee, and third party
4. Audit team members
5. Critical nonconformities and other observations
6. Audit standards and reference documents used
7. Determination of proper corrective action(s)
8. Duration of audit
28. The time required and costs involved in an external audit are much higher as compared to internal audits.
29. Audit is a fact-finding process that compares actual results with ………………….
30. The ……… is also expected to provide the resources needed and select staff members to accompany the auditors.
31. For the benefit of the organisation, quality auditing should only report non-conformances and corrective actions, but should not highlight areas of good practice.
32. How many principles are listed in AAS1 which govern auditor’s professional obligation?
33. An auditor assesses control risk because it
34. The most difficult type of misstatement to detect fraud is based on:
35. Which of the following statements is correct concerning the required documentation in working papers of fraud risk assessment undertaken by the auditor?
36. Which of the following is the most appropriate potential reaction of the auditor to his assessment that the risk of material misstatement due to fraud is high in relation to existence of inventory?
37. Which of the following is not likely to be a fraud risk factor relating to management’s characteristics
38. The term ‘scope of an audit’ refers to the audit procedures deemed necessary in the circumstances:
39. Bookkeeping as a support mechanism for the determination of ______, or as a decision support system for achieving ______, was basically unknown in ancient cultures like the Mesopotamian, Egyptian, Greek or Roman.
40. Which of the following is not a benefit of international auditing standards?

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