Question 1

Which of the following is considered when finalizing an audit team?
A)Team size
B)Orientation of the team members
C)Presence of conflict of interest
D)Skillset of each member
E)All of the above

Accepted Answer

Team size, orientation of the team members, presence of any conflict of interest, and the skillset of each member are factors to consider when finalizing an audit.

Question 2

Which of the following is attributed to giving integral role to the internal audit committees?
A)IFRS
B)Sarbanes-Oxley Act
C)ISA
D)IAS

Accepted Answer

The afore-mentioned are all international accounting and auditing standards. However, it is the Sarbanes-Oxley Act that places emphasis on the role of audit committees. The SOX Act placed the audit committees at the forefront in terms of fraud examination and investigation.

Question 3

When does maintaining an audit trail become imperative during litigation?
A)Fact documentation testimony
B)Fact witness testimony
C)Fact plaintiff testimony
D)Bare fact testimony

Accepted Answer

When there is a case of maintaining an audit trail during litigation, fact witness testimony is imperative. All others are not part of the litigation process, and hence, aren't considered for maintaining the audit trail

Question 4

If an underpayment of tax liability is established, then the fine imposed is based on:
A)The amount of tax left unpaid
B)The entire tax liability is considered for such purposes
C)The underpayment of tax
D)One-fourth of the amount underpaid

Accepted Answer

In the case of underpayment, the entire tax liability is considered when imposing fines.

Question 5

Tax fraud cases are difficult to unearth because:
A)It involves money
B)It takes much time to settle the case
C)It is difficult to prove and establish the essence of tax evasion and fraud
D)Court is too busy with other criminal cases

Accepted Answer

Tax fraud cases differ from other criminal cases, as there are no established facts. To prove an individual is involved in tax evasion is a difficult task, and requires establishing various facts. This is the reason such cases are treated under a separate tax court.

Question 6

The difference between tax avoidance and tax evasion is:
A)Tax avoidance is permissible by law, whereas, tax evasion is a crime
B)Tax avoidance is punishable, whereas, tax evasion is allowed
C)Tax avoidance is manipulation of laws, whereas, tax evasion is lawful
D)Tax avoidance at a larger level refers to tax evasion

Accepted Answer

It is important for practitioners to be knowledgeable about what constitutes as tax avoidance and tax evasion. Tax avoidance is permissible by law, whereas, tax evasion is a crime as per the court of law.

Quiz 2: Taxation and Auditing for Jims Jeans and Beyond

Which of the following is considered when finalizing an audit team?

Which of the following is attributed to giving integral role to the internal audit committees?

When does maintaining an audit trail become imperative during litigation?

If an underpayment of tax liability is established, then the fine imposed is based on:

Tax fraud cases are difficult to unearth because:

The difference between tax avoidance and tax evasion is: