Question 1

Which of the following statements are true?
A)The Union and State Governments follow cash based accounting while Corporations and autonomous bodies mainly follow accrual based accounting
B)The Union and State Governments follow accrual based accounting while Corporations and autonomous bodies mainly follow cash based accounting
C)The Union and State Governments and Corporations and autonomous bodies follow accrual based accounting
D)The Union and State Governments and Corporations and autonomous bodies follow cash based accounting

Accepted Answer

The Union and State Governments typically use cash based accounting, which records transactions when cash is either received or paid out. In contrast, corporations and autonomous bodies often use accrual based accounting, which records revenues and expenses when they are earned or incurred, regardless of when the cash transaction occurs.

Question 2

In the context of Government Accounts in India, the key feeder systems include:
A)Treasuries and Sub-Treasuries
B)Pay and Accounts Offices
C)Forest Divisions
D)All of the above

Accepted Answer

In the context of Government Accounts in India, the key feeder systems include Treasuries and Sub-Treasuries, Pay and Accounts Offices, and Forest Divisions, among others. These entities are responsible for the collection, disbursement, and accounting of government finances, thus playing a crucial role in the financial management system of the government.

Question 3

In the context of Government Accounts in India, the key feeder systems aslo include State Bank of India or any other public sector bank transacting Government Business on behalf of Reserve Bank of India

Accepted Answer

The State Bank of India and other public sector banks act as key feeder systems for Government Accounts in India by transacting government business on behalf of the Reserve Bank of India, facilitating the management and operation of government financial transactions.

Question 4

Which of the following statements is false?
A)Planning materiality may be set at a lower level than reporting materiality
B)It is easier to plan for errors material by nature
C)At the planning stage, the audit team is concerned primarily with materiality by value
D)Materiality by context is easy to assess at the planning stage

Accepted Answer

Materiality by context involves assessing the importance of information considering the surrounding circumstances, which can be complex and challenging to evaluate at the planning stage of an audit. This is because the auditor may not yet have a full understanding of all the contextual factors that could influence the materiality of certain information.

Question 5

Misclassification of revenue expenditure resulting in a saving in a grant when in fact there has been an excess is an example of.
A)Materiality by value
B)Materiality by context
C)Materiality by nature
D)All of the above

Accepted Answer

Misclassification of revenue expenditure in this context affects the understanding of the financial position and performance, making it material by context rather than by value or nature. It's the significance of the misclassification in its context, particularly in relation to the grant, that makes it material.

Question 6

The risks identified from top down review of entities and which may affect a number of different account areas are called
A)Entity Risks
B)Accounting Risks
C)Inherent Risks
D)Account Area Risks

Accepted Answer

Entity risks are those that arise from the overall operations and environment in which an entity operates, potentially affecting multiple account areas.

Question 7

The process for identifying material risk factors has ____ key stages
A)Four
B)Five
C)Six
D)Seven

Accepted Answer

The process for identifying material risk factors typically involves six key stages: establishing the context, risk identification, risk analysis, risk evaluation, risk treatment, and monitoring and review.

Question 8

The three levels of substantive procedures that can be performed in decreasing order of assurance required are:
A)Standard, Focused, Minimum
B)Focused, Standard, Minimum
C)Maximum, Standard, Minimum
D)Minimum, Standard, Focused

Accepted Answer

The answer of The three levels of substantive procedures that...

Question 9

The extent of audit procedures and the the level of assurance required are
A)Directly related
B)Indirectly related
C)none
D)All of the above

Accepted Answer

The extent of audit procedures is directly related to the level of assurance required. The higher the level of assurance needed, the more extensive the audit procedures must be to reduce audit risk to an acceptably low level.

Question 10

The document that presents an analysis of the main audit areas and a summary of the key planning decisions is called
A)Audit memorandun
B)Audit execution memorandum
C)Audit Note
D)Audit Planning memorandum

Accepted Answer

The Audit Planning Memorandum is the document that outlines the main audit areas and summarizes the key planning decisions, serving as a guide for the audit process.

Question 11

Instructions to audit team members on the performance of chosen audit procedures are contained in the
A)Plan Document
B)Audit Planning memorandum
C)Detailed Audit Programme
D)None of these

Accepted Answer

Instructions to audit team members on the performance of chosen audit procedures are contained in the Detailed Audit Programme. This document outlines the specific steps and procedures the audit team should follow during the audit process.

Question 12

These are performed if the audit team identifies a risk that could lead to potential material misstatement and where no reliance can be placed on mitigating controls to address the risk
A)Focused Subtantive Procedures
B)Standard Substantive Procedures
C)Minimum Substantive Procedures
D)all of the above

Accepted Answer

Focused Substantive Procedures are specifically designed to address areas where there is a higher risk of material misstatement and where reliance on controls is not sufficient. These procedures are tailored to the identified risks to ensure that the financial statements are free from material misstatement.

Question 13

These are performed if the audit team has not identified risks that could lead to material misstatement and no reliance is planned to be placed on controls.
A)Focused Subtantive Procedures
B)Standard Substantive Procedures
C)Minimum Substantive Procedures
D)all of the above

Accepted Answer

Standard Substantive Procedures are performed when no specific risks are identified and no reliance on controls is planned, ensuring that the financial statements are free from material misstatement.

Question 14

These are Performed if the audit team plans to take assurance from mitigating controls or from other controls .
A)Focused Subtantive Procedures
B)Standard Substantive Procedures
C)Minimum Substantive Procedures
D)all of the above

Accepted Answer

The answer of These are Performed if the audit team...

Question 15

Analytical Procedures are unlikely to be used when these are performed.
A)Focused Subtantive Procedures
B)Standard Substantive Procedures
C)Minimum Substantive Procedures
D)all of the above

Accepted Answer

The answer of Analytical Procedures are unlikely to be used...

Question 16

Which of the following statements is false?
A)Documentary evidence is more reliable than oral evidence.
B)Evidence, of which the auditor has direct personal knowledge, is the most reliable evidence.
C)Independent evidence obtained from external sources is more reliable than internal evidence.
D)Visual evidence is highly reliable for confirming the ownership of the assets and their value.

Accepted Answer

Visual evidence, such as photographs or videos, can confirm the existence of assets but does not necessarily provide reliable information about their ownership or value. Ownership needs to be confirmed through legal documents, and value is determined through appraisals or financial records, not visual inspection.

Question 17

Which of the following statements is True?
A)Oral evidence must be considered as the least reliable.
B)Photocopies are as reliable as the originals.
C)Evidence, which is accepted by the auditee entity, is not always reliable.
D)The auditor may gain increased assurance even when audit evidence obtained from different sources is not consistent.

Accepted Answer

The answer of Which of the following statements is True?
A)Oral...

Question 18

Which of the following is False?
A)A systematic error is one which will only occur in defined circumstances
B)A systematic error affects only a proportion of the population
C)A random error is one which coul
D)have also occurred in any of the tr

Accepted Answer

The answer of Which of the following is False?
A)A systematic...

Question 19

Which of the following is True?
A)A systematic error should be extrapolated over the entire population
B)A random error is to be extrapolated over a defined subset of population
C)Both A & B
D)None of these

Accepted Answer

Both systematic and random errors are types of errors in measurements or observations. Systematic error affects the accuracy of measurements and is consistent and repeatable, affecting all measurements in the same way. It is not correct to say it should be extrapolated over the entire population, as it suggests spreading the error rather than correcting or accounting for it. Random error affects the precision of measurements, varies unpredictably, and does not consistently skew data in one direction. It is not something that can be extrapolated over a defined subset of the population, as its nature is inherently unpredictable and varies from one measurement to another. Therefore, both statements A and B are incorrect, making D the correct choice.

Question 20

The audit working papers contain
A)the details of the audit procedures undertaken
B)conclusions drawn and the implications for the audit opinion
C)the record of the reasoning on all significant matters where the members of the audit teams have exercised judgment
D)all of the above

Accepted Answer

Audit working papers include details of audit procedures, conclusions and implications for the audit opinion, and records of reasoning on significant matters where judgment was exercised.

Quiz 3: Government Accounts and Audit Procedures

Which of the following statements are true?

In the context of Government Accounts in India, the key feeder systems include:

In the context of Government Accounts in India, the key feeder systems aslo include State Bank of India or any other public sector bank transacting Government Business on behalf of Reserve Bank of India

Which of the following statements is false?

Misclassification of revenue expenditure resulting in a saving in a grant when in fact there has been an excess is an example of.

The risks identified from top down review of entities and which may affect a number of different account areas are called

The process for identifying material risk factors has ____ key stages

The three levels of substantive procedures that can be performed in decreasing order of assurance required are:

The extent of audit procedures and the the level of assurance required are

The document that presents an analysis of the main audit areas and a summary of the key planning decisions is called

Instructions to audit team members on the performance of chosen audit procedures are contained in the

These are performed if the audit team identifies a risk that could lead to potential material misstatement and where no reliance can be placed on mitigating controls to address the risk

These are performed if the audit team has not identified risks that could lead to material misstatement and no reliance is planned to be placed on controls.

These are Performed if the audit team plans to take assurance from mitigating controls or from other controls .

Analytical Procedures are unlikely to be used when these are performed.

Which of the following statements is false?

Which of the following statements is True?

Which of the following is False?

Which of the following is True?

The audit working papers contain