Tools of Auditing MCQ Quiz in मराठी - Objective Question with Answer for Tools of Auditing - मोफत PDF डाउनलोड करा

 The incorrect statement is Trade creditors do not rely on financial audit.

Important Points

The opinion of the auditor assures the owners about the reliability of the financial statements.

• This Statement is true. 
• The primary purpose of an external financial audit is to provide assurance to the owners (shareholders) of the company about the reliability and accuracy of the financial statements.
• The auditor's opinion confirms whether the financial statements are prepared in accordance with accounting principles and whether they present a true and fair view of the company's financial position and performance.

Bank will place greater reliance on financial statements if they have been audited.

• This Statement is true.
• Banks and other lenders place significant reliance on audited financial statements when making lending decisions.
• An audited financial statement provides an independent and credible assessment of the company's financial health and performance, reducing the risk for the bank when considering loan applications.

Trade creditors do not rely on financial audit.

• This Statement is false. 
• Trade creditors, such as suppliers and vendors, may also rely on financial audits to assess the creditworthiness and financial stability of their customers (the companies they are dealing with).
• An audited financial statement provides valuable information about the company's ability to meet its financial obligations and can impact trade credit terms.

The need for a financial audit arises as the control of the company is vested in the hands of the management of the company.

• This Statement is true. 
• The need for a financial audit arises because the financial statements are prepared and presented by the company's management, and there is a potential conflict of interest.
• An independent audit helps to enhance the credibility and reliability of the financial statements by providing an unbiased assessment.

The correct answer is Substantive tests designed to study relationships between financial and nonfinancial.

Key Points

Analytical Procedure: 

• The evaluation of financial information using trends, ratios, or the rationality of data in connection to other financial and non-financial data are known as analytical techniques.
• Auditors analyse the data in this situation to see if it agrees with other pertinent information and if the variation is within their expectations.

 Important Points

• At the planning stage, auditors must employ analytical methods as risk assessment procedures to understand the client and its business environment.
• They might thus help them determine the nature, timing, and scope of the audit procedures to address the risks of significant misstatements by pointing out high-risk areas that they are unaware of.
• For example, by comparing the current period or the industry average, auditors may utilise analytical processes to examine the relationship between sales and cost of goods sold. This would aid them in determining the likelihood of fraud or serious error affecting the sales statistics in the financial accounts.
• An essential step in the auditing process is the analysis of financial data through the investigation of tenable connections between financial and nonfinancial information.
• Planning analytical procedures might be done along with conducting substantive tests or as part of the audit's overall assessment.

Hence, it can be concluded that the correct answer is option 3. 

The correct answer is - Board of Directors

Key Points

• Internal Auditor
  • An internal auditor is appointed by the Board of Directors of a company.
  • The internal auditor’s role is to provide an independent and objective evaluation of the company’s financial and operational activities.
  • They help in improving the effectiveness of risk management, control, and governance processes.
  • Internal auditors often report directly to the audit committee of the board of directors.

Additional Information

• Shareholders
  • Shareholders typically do not appoint internal auditors; they may appoint external auditors during the Annual General Meeting (AGM).
  • External auditors are responsible for auditing the financial statements of the company to provide an opinion on their accuracy.
• Control Government
  • The government does not appoint internal auditors; however, regulatory bodies may set standards and regulations that companies must follow.
  • Government bodies may conduct their own audits or inspections for regulatory compliance.
• Company Secretary
  • The company secretary is responsible for ensuring that the company complies with statutory and regulatory requirements.
  • They do not appoint internal auditors but may work closely with them to ensure compliance and good governance.

The correct answer is 1) Statutory Auditor.

Key Points

• When the Statutory Auditor relies on the work of Internal Auditors, the ultimate responsibility for errors or omissions in the audit report lies with the Statutory Auditor.
• The Statutory Auditor is the external auditor appointed to conduct an independent examination of the company's financial statements and express an opinion on their fairness and compliance with accounting principles and applicable laws.
• While the Statutory Auditor may use the work performed by Internal Auditors as a basis for their audit, they are not relieved of their responsibility to exercise professional judgment and perform their own audit procedures.
• The Statutory Auditor is required to assess the work of Internal Auditors, determine its adequacy and appropriateness, and corroborate the results with additional evidence as necessary.

 The incorrect statement is Trade creditors do not rely on financial audit.

Important Points

The opinion of the auditor assures the owners about the reliability of the financial statements.

• This Statement is true. 
• The primary purpose of an external financial audit is to provide assurance to the owners (shareholders) of the company about the reliability and accuracy of the financial statements.
• The auditor's opinion confirms whether the financial statements are prepared in accordance with accounting principles and whether they present a true and fair view of the company's financial position and performance.

Bank will place greater reliance on financial statements if they have been audited.

• This Statement is true.
• Banks and other lenders place significant reliance on audited financial statements when making lending decisions.
• An audited financial statement provides an independent and credible assessment of the company's financial health and performance, reducing the risk for the bank when considering loan applications.

Trade creditors do not rely on financial audit.

• This Statement is false. 
• Trade creditors, such as suppliers and vendors, may also rely on financial audits to assess the creditworthiness and financial stability of their customers (the companies they are dealing with).
• An audited financial statement provides valuable information about the company's ability to meet its financial obligations and can impact trade credit terms.

The need for a financial audit arises as the control of the company is vested in the hands of the management of the company.

• This Statement is true. 
• The need for a financial audit arises because the financial statements are prepared and presented by the company's management, and there is a potential conflict of interest.
• An independent audit helps to enhance the credibility and reliability of the financial statements by providing an unbiased assessment.