Free Auditing MCQs with Answers
162 Auditing MCQs from Accounting, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
Last updated
162 questions · page 3 of 9
- A. The quantity of evidence collected
- B. The relevance and reliability of evidence
- C. The cost of obtaining the evidence
- D. The time spent examining the evidence
Explanation: Appropriateness concerns the quality of audit evidence, especially its relevance and reliability.
Correct answer: The relevance and reliability of evidence- A. To prepare the client’s financial statements
- B. To determine the audit’s scope, timing, and direction
- C. To replace the client’s internal control system
- D. To guarantee that all fraud will be detected
Explanation: An audit plan sets the overall scope, timing, and direction of the audit.
Correct answer: To determine the audit’s scope, timing, and direction- A. Inspecting board meeting minutes
- B. Recalculating depreciation using asset records
- C. Confirming balances with trade creditors
- D. Observing the physical inventory count
Explanation: Recalculation independently checks the mathematical accuracy of an amount recorded in the accounts.
Correct answer: Recalculating depreciation using asset records- A. To list the detailed audit procedures to be performed
- B. To record the company’s accounting policies
- C. To summarise the auditor’s final opinion
- D. To approve the client’s annual budget
Explanation: An audit programme contains the detailed procedures and tests planned for particular audit areas.
Correct answer: To list the detailed audit procedures to be performed- A. Ignore it if the accounts balance
- B. Communicate it to those charged with governance
- C. Transfer responsibility to the cashier
- D. Remove the related transaction from the accounts
Explanation: Significant control deficiencies should be communicated to management or those charged with governance, depending on their nature and…
Correct answer: Communicate it to those charged with governance- A. Fraud affects only cash transactions
- B. Error always causes a material misstatement
- C. Fraud involves an intentional act or omission
- D. Error is committed only by senior management
Explanation: Fraud involves deliberate deception or concealment, while error results from an unintentional mistake or omission.
Correct answer: Fraud involves an intentional act or omission- A. Reducing audit risk through a responsive procedure
- B. Preparing the financial statements for management
- C. Testing the auditor’s independence
- D. Replacing the entity’s control environment
Explanation: The auditor responds to higher assessed risk by designing more effective or extensive substantive procedures.
Correct answer: Reducing audit risk through a responsive procedure- A. The auditor’s personal investment plan
- B. Recommendations concerning control weaknesses
- C. A guarantee of future business profits
- D. The approved schedule of employee holidays
Explanation: A management letter commonly communicates control weaknesses and practical recommendations for improvement.
Correct answer: Recommendations concerning control weaknesses- A. It always changes an unmodified opinion to an adverse opinion
- B. It highlights a matter properly presented in the financial statements
- C. It replaces the auditor’s basis for opinion paragraph
- D. It is used whenever the auditor lacks independence
Explanation: An emphasis of matter paragraph draws attention to an important matter already properly presented or disclosed in the financial…
Correct answer: It highlights a matter properly presented in the financial statements- A. The count is conducted according to stated procedures
- B. All purchases were paid before year-end
- C. Every supplier balance is correctly confirmed
- D. The entity has recorded every sales invoice
Explanation: Attending a physical inventory count allows the auditor to observe the counting process and assess compliance with management’s…
Correct answer: The count is conducted according to stated procedures- A. internal audit
- B. external audit
- C. functional audit
- D. treasury audit
Explanation: Internal audit is conducted within an organization to review records, controls, and reporting processes for reliability and integrity.
Correct answer: internal audit- A. back-flush trails
- B. audit trails
- C. trigger trails
- D. lead manufacturing trailsHire An Accountant
Explanation: An audit trail allows transactions and resource usage to be traced through the stages of a production or accounting system.
Correct answer: audit trails- A. Reporting the financial information
- B. Examination of financial statements
- C. Preparation financial statements
- D. maintaining the ledger records
Explanation: Auditing involves the independent examination and evaluation of financial statements and supporting evidence before an opinion is…
Correct answer: Examination of financial statements- A. Financial information
- B. Non-financial information
- C. Both (a) and (b)
- D. None of theseCompare Credit Cards
Explanation: A financial audit primarily examines financial information, especially the financial statements, to provide an opinion on whether they are…
Correct answer: Financial information- A. Profit making entity
- B. Non-profit making entity
- C. Corporate entity only
- D. Any entity
Explanation: An audit engagement may be performed for any suitable entity, including profit-making companies, nonprofit organizations and other…
Correct answer: Any entity- A. Standards on Auditing
- B. Standard on Quality Control
- C. Standards on Review Engagement
- D. Standards on Assurance EngagementHire An Accountant
Explanation: Standards on Auditing, Review Engagements and Assurance Engagements govern types of professional engagements.
Correct answer: Standard on Quality Control- A. Unqualified opinion
- B. Qualified opinion
- C. Adverse opinion
- D. Disclaimer of opinion.
- E. All of above
Explanation: Unqualified, qualified, adverse and disclaimer of opinion are the principal forms of audit opinion or report conclusion.
Correct answer: All of above- A. Obtain the client's permission to communicate with the existing auditor
- B. Obtain the existing auditor's working papers
- C. Obtain a copy of the company's most recent board minutes
- D. Obtain a copy of the existing auditor's letter of engagement Hire An Accountant
Explanation: Before accepting a new audit, the proposed auditor should obtain the client's permission to communicate with the existing auditor and seek…
Correct answer: Obtain the client's permission to communicate with the existing auditor- A. Taking management decisions
- B. Preparation of accounting records
- C. Preparing tax computations
- D. Advising on weaknesses in the internal control systems
Explanation: Auditors may provide accounting, tax and internal-control services within applicable safeguards, but management decisions must remain with…
Correct answer: Taking management decisions- A. 1, 2 and 3 only
- B. 1, 3 and 4 only
- C. 2, 3 and 4 only
- D. 1, 2 and 4 only
Explanation: The fundamental principles include professional competence and due care, integrity and objectivity.
Correct answer: 1, 3 and 4 only