Concept Of True And Fair(Auditing ) Questions and answers for exam Preparation

Question 1. Audit risk can be reduced to zero.

True
False

Explanation:-

Answer: Option B. -> False

Question 2. Auditor shall be independent of auditee only in terms of financial interest in
auditee.

True
False

Explanation:-

Answer: Option B. -> False

Question 3. The audit risk, for the purpose of Standards on Auditing, includes risk that the
auditor may express an opinion that the financial statements are materially
misstated when they are not.

True
False

Explanation:-

Answer: Option B. -> False

Question 4. An internal control which is well designed and operating would eliminate the risk of
material misstatement in the financial statements.

True
False

Explanation:-

Answer: Option B. -> False

Question 5. As per Standards on Auditing, the auditor is expected to be an expert in the
authentication of documents.

True
False

Explanation:-

Answer: Option B. -> False

Question 6. Material misstatements in the financial statements may not be detected, even
though the audit is properly planned and performed in accordance with Standards
on Auditing.

True
False

Explanation:-

Answer: Option A. -> True

Question 7. The purpose of audit of financial statements in context of SA 200 is:

Compliance with regulatory requirements of Companies Act 2013, SEBI and other regulators;
Enhance the degree of confidence of intended users of financial statements;
Prevent or detect the fraud or error;
Enable management of the company to understand the financial position of the company.

Explanation:-

Answer: Option B. -> Enhance the degree of confidence of intended users of financial statements;

Question 8. Professional judgement and professional skepticism shall be exercised by the
auditor during:

Identifying and assessing the risk of material misstatement
While forming an opinion based on conclusion drawn
While obtaining sufficient and appropriate audit evidence
All of the above

Explanation:-

Answer: Option D. -> All of the above

Question 9. Auditor’s opinion on the financial statement provides:

True and fair view
True and correct view
List of frauds and misstatements
All of the above

Explanation:-

Answer: Option A. -> True and fair view

Question 10. The fair presentation financial reporting framework, under which the financial
statements are prepared, refers to:

Compliance with the requirements of the framework;
Compliance with the requirements of the framework and explicitly acknowledges that for fair presentation, it may be necessary for management to provide disclosures, beyond or may depart from, the requirement of framework;
Both (a) and (b)
None of the above

Explanation:-

Answer: Option B. -> Compliance with the requirements of the framework and explicitly acknowledges that for fair presentation, it may be necessary for management to provide disclosures, beyond or may depart from, the requirement of framework;