Audit Report – CA Inter Audit MCQ

Students should practice these Audit Report – CA Inter Audit MCQ based on the latest syllabus.

Audit Report – CA Inter Audit MCQ

Question 1.
A statement as to auditor’s believing that the audit evidence, we have obtained is sufficient and appropriate to provide a basis for their opinion is mentioned in which section of the auditor’s report?
(a) Opinion
(b) Basis for Opinion
(c) Management’s responsibility
(d) Auditor’s responsibility
Answer:
(b) Basis for Opinion

Question 2.
As per Standards on Auditing, the auditor shall date the report no earlier than the date:
(a) the audit opinion is submitted for issue among stakeholders
(b) the auditor has obtained sufficient appropriate audit evidence on which to base the auditor’s opinion on the financial statements
(c) the opinion is presented to management
(d) that management takes responsibility for the financial statements
Answer:
(b) the auditor has obtained sufficient appropriate audit evidence on which to base the auditor’s opinion on the financial statements

Question 3.
In an auditor’s report on financial statements an unmodified opinion is issued when the auditor is satisfied in all material respects that:
(a) the view presented by the financial information as a whole is consistent with the auditor’s knowledge of the business of the entity
(b) there are no disagreements with management
(c) the audit has been conducted in accordance with Standards on Auditing
(d) internal controls are consistent in design and op-eration
Answer:
(b) there are no disagreements with management

Question 4.
Which of the following topics are not covered in the ‘Auditor Responsibilities’ paragraphs?
(a) a statement that the standards require that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement
(b) wording indicating that the audit evidence is sufficient to provide the basis for the audit opinion
(c) reference to the financial accounting standards followed in conducting the audit
(d) a statement that the standards require that the auditor comply with ethical requirements
Answer:
(c) reference to the financial accounting standards followed in conducting the audit

Audit Report – CA Inter Audit MCQ

Question 5.
Based on SA 700, there are at least two circumstances where the auditor may not be able to express an unmodified opinion:
(a) limitation of scope and fraud
(b) disagreement with management or inconsistent application of accounting standards
(c) disagreement with management and limitation of scope
(d) disagreement with management and fraud
Answer:
(c) disagreement with management and limitation of scope

Question 6.
Which of the following is not a section of the SA 700 auditor’s unmodified (unqualified) opinion?
(a) Management’s responsibility for the financial statements
(b) Opinion
(c) Report on other audit activities
(d) Auditor’s responsibility
Answer:
(c) Report on other audit activities

Question 7.
In audit report, a description that audit was per-formed in accordance with Standards on Auditing is given in which section?
(a) Management’s responsibility
(b) Opinion
(c) Basis for Opinion Section
(d) Auditor’s responsibility
Answer:
(c) Basis for Opinion Section

Question 8.
As per SA 700 “Forming an Opinion and Reporting on Financial Statements” when expressing an unmodified opinion on financial statements prepared in accordance with a fair presentation framework, the auditor’s opinion shall, unless otherwise required by law or regulation, use which of the following phrase:
(a) In our opinion, the accompanying financial statements present fairly, in all material respects, […] in accordance with [the applicable financial reporting framework].
(b) In our opinion, the accompanying financial statements give a true and fair view of […] in accordance with [the applicable financial reporting framework].
(c) In our opinion, the accompanying financial statements are prepared, in all material respects, in accordance with [the applicable financial reporting framework].
(d) Either (a) or (b).
Answer:
(d) Either (a) or (b).

Question 9.
As per SA 700 “Forming an Opinion and Reporting on Financial Statements” when expressing an unmodified opinion on financial statements prepared in accordance with a Compliance framework, the auditor’s opinion shall, unless otherwise required by law or regulation, use which of the followingphrase:
(a) In our opinion, the accompanying financial statements present fairly, in all material respects, […] in accordance with [the applicable financial reporting framework].
(b) In our opinion, the accompanying financial statements give a true and fair view of […] in accordance with [the applicable financial reporting framework].
(c) In our opinion, the accompanying financial statements are prepared, in all material respects, in accordance with [the applicable financial reporting framework],
(d) Either (a) or (b).
Answer:
(c) In our opinion, the accompanying financial statements are prepared, in all material respects, in accordance with [the applicable financial reporting framework],

Question 10.
As per SA 700 “Formingan Opinion and Reporting on Financial Statements”, the description of the auditor’s responsibilities for the audit of the financial statements shall be included:
(a) Within the body of the auditor’s report.
(b) Within an appendix to the auditor’s report, in which case the auditor’s report shall include a reference to the location of the appendix.
(c) By a specific reference within the auditor’s report to the location of such a description on a website of an appropriate authority, where law, regulation or the national auditing standards expressly permit the auditor to do so.
(d) Any of the above.
Answer:
(d) Any of the above.

Question 11.
Communicating key audit matters in the auditor’s report is
(a) not a substitute for disclosures in the financial statements that the applicable FRF requires man-agement to make, or that are otherwise necessary to achieve fair presentation.
(b) a substitute for the auditor expressing a modified opinion when required by the circumstances of a specific audit engagement in accordance with SA 705.
(c) a substitute for reporting in accordance with SA 570 when a material uncertainty exists relating to events or conditions that may cast significant doubt on an entity’s ability to continue as a going concern.
(d) a separate opinion on individual matters.
Answer:
(a) not a substitute for disclosures in the financial statements that the applicable FRF requires man-agement to make, or that are otherwise necessary to achieve fair presentation.

Question 12.
Key Audit Matters are to be communicated in Auditor’s Report
(a) as a substitute for disclosure’s in the Financial Statement
(b) as substitute for Auditor Expressing a modified opinion in the Financial Statement
(c) as a separate opinion on Individual Matters
(d) when auditor is required by law or regulation to communicate key audit matters in the auditor’s Report
Answer:
(d) when auditor is required by law or regulation to communicate key audit matters in the auditor’s Report

Audit Report – CA Inter Audit MCQ

Question 13.
When auditor is unable to obtain sufficient and appropriate audit evidence that financial statement on which to base the opinion and the auditor concludes that possible effects of the financial statement can be both Material and Pervasive. Then the Key Matters to be included in the Auditor’s Report should
(a) disclose that no sufficient & appropriate evidence is obtained
(b) auditor is prohibited in communicating key audit matters in the auditor’s report i.e., no disclosure is required
(c) disclose that financial statement doesn’t present a true and fair view
(d) both (a) & (c)
Answer:
(b) auditor is prohibited in communicating key audit matters in the auditor’s report i.e., no disclosure is required

Question 14.
As per SA 701 “Communicating Key Audit Matters in the Independent Auditor’s Report” communicating key audit matters in the auditor’s report is in the context of the auditor having formed an opinion on the financial statements as a whole Communicating key audit matters in the auditor’s report can be considered as a substitute for
(a) disclosures in the financial statements that the applicable financial reporting framework requires management to make, or that are otherwise necessary to achieve fair presentation
(b) the auditor expressing a modified opinion when required by the circumstances of a specific audit engagement in accordance with SA 705 (Revised]
(c) reporting in accordance with SA 570 (Revised) when a material uncertainty exists relating to events or conditions that may cast significant doubt on an entity’s ability to continue as a going concern
(d) none of the above
Answer:
(d) none of the above

Question 15.
A matter giving rise to a modified opinion in accordance with SA 705 (Revised), or a material uncertainty related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with SA 570 (Revised), are by their nature key audit matters.
In relation to this statement, select the appropriate answer:
(a) Such matters shall not be described in the Key Audit Matters section of the auditor’s report and the requirements as stated in SA 701 do not apply
(b) Such matters shall only be described in the Key Audit Matters section of the auditor’s report and the requirements as stated in SA 701 shall apply
(c) Such matters shall be described in the Key Audit Matters section of the auditor’s report and the requirements as stated in SA 701 shall apply in addition to the requirements of SA 570 or SA 705, as the case may be
(d) Such Matters shall be described in Emphasis of matter Para
Answer:
(a) Such matters shall not be described in the Key Audit Matters section of the auditor’s report and the requirements as stated in SA 701 do not apply

Question 16.
As per SA 701 “Communicating Key Audit Matters in the Independent Auditor’s Report’’ Key audit matters are
(a) Those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the prior period. Key audit matters are selected from matters communicated with those charged with governance
(b) Those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period.
Key audit matters are selected from matters communicated with Central Government
(c) Those matters that, in the management judgment, were of most significance in the audit of the financial statements ofthe current period. Key audit matters are selected from matters communicated with those charged with governance
(d) Those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period.
Key audit matters are selected from matters communicated with those charged with governance
Answer:
(d) Those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period.
Key audit matters are selected from matters communicated with those charged with governance

Question 17.
As per SA 701 “Communicating Key AuditMatters in the Independent Auditor’s Report”, the auditor shall describe each key audit matter in the auditor’s report. However, in some situations, such matters need not be communicated. Identify the situation:
(a) Law or regulation precludes public disclosure about the matter.
(b) TCWG has not given their consent for public disclosure.
(c) Management is not willing for public disclosure of the matters.
(d) Both (a) and (b).
Answer:
(a) Law or regulation precludes public disclosure about the matter.

Question 18.
As per SA 701 “Communicating Key AuditMatters in the Independent Auditor’s Report”, the auditor shall determine, from the matters communicated with those charged with governance, those matters that required significant auditor attention in performing the audit. In making this determination, the auditor shall take into account:
(a) Areas of lower assessed risk of material misstatement
(b) significant risks identified during the audit of previous year
(c) Significant auditor judgments relating to areas in the business operations that involved significant management judgment
(d) effect on the audit of significant events or transactions that occurred during the period
Answer:
(d) effect on the audit of significant events or transactions that occurred during the period

Question 19.
If the auditor determines, depending on the facts and circumstances of the entity and the audit, that there are no key audit matters to communicate or that the only key audit matters communicated are those matters that give rise to modified opinion, the auditor shall include a statement to this effect in a separate section of the auditor’s report under the heading “Key Audit Matters”. In which of the circumstance, the requirement so mentioned above will apply:
(a) the auditor determines that there are no key audit matters
(b) the auditor determines in accordance with SA 701 that a key audit matter will not be communicated in the auditor’s report and no other matters have been determined to be key audit matters
(c) the only matters determined to be key audit matters are those communicated in accordance SA 570 or SA 705
(d) all of the above
Answer:
(d) all of the above

Audit Report – CA Inter Audit MCQ

Question 20.
Which of the following is not a type of audit opinion?
(a) Disclaimer
(b) Adverse
(c) Reserved
(d) Qualified
Answer:
(c) Reserved

Question 21.
What type of opinion is issued when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements?
(a) Qualified
(b) Reserved
(c) Disclaimer
(d) Adverse
Answer:
(d) Adverse

Question 22.
When an auditor expresses an adverse opinion, the opinion paragraph should include
(a) A direct reference to a separate paragraph disclosing the basis for the opinion
(b) The substantive reasons for the financial statements being misleading
(c) The principal effects of the departure from generally accepted accounting principles
(d) A description of the uncertainty or scope limitation that prevents an unmodified opinion
Answer:
(a) A direct reference to a separate paragraph disclosing the basis for the opinion

Question 23.
The auditor shall disclaim an opinion when the following conditions occur except:
(a) it is not possible to form an opinion on the financial statements due to the potential interaction of the uncertainties and their possible cumulative effect on the financial statements
(b) the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive
(c) the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive
(d) the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion
Answer:
(b) the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive

Question 24.
When the auditor modifies the opinion on the financial statements, the auditor shall include a paragraph in the auditor’s report. All of the following are true of this paragraph except:
(a) it should draw the financial statement users’ attention to matters presented or disclosed in the financial statements that are of such importance that they are fundamental to users’ understanding of the financial statements
(b) the auditor shall place this paragraph immediately after the opinion paragraph in the auditor’s report
(c) the paragraph should provide a description of the matter giving rise to the modification
(d) the auditor shall use the heading ‘basis for qualified opinion,’ ‘basis for adverse opinion’ or ‘basis for disclaimer of Opinion,’ as appropriate
Answer:
(a) it should draw the financial statement users’ attention to matters presented or disclosed in the financial statements that are of such importance that they are fundamental to users’ understanding of the financial statements

Question 25.
XYZ Limited received a grant of ₹ 25 lakhs under the Government’s Subsidy Scheme, for acquiring an imported machinery for setting up new plant. The entire grant received is credited to Profit and Loss Account. While preparing the audit report, the auditor needs to:
(a) qualify the report stating the fact that the income has been overstated to the extent of the amount of grant net of proportionate credit that would have been worked out
(b) qualify the report stating the fact that the income has been understated to the extent of the amount of grant net of proportionate debit that would have been worked out
(c) express unmodified opinion as Accounting Standard-12 allow the recognition of grant received as income
(d) None of the above
Answer:
(a) qualify the report stating the fact that the income has been overstated to the extent of the amount of grant net of proportionate credit that would have been worked out

Question 26.
An auditor concludes that a client’s illegal act, which has a material effect on the financial state-ments, has not been properly accounted for or dis-closed. Depending on the materiality of the effect on the financial statements, the auditor should express either
(a) Unqualified opinion with a separate explanatory paragraph or a qualified opinion
(b) Adverse opinion or a disclaimer of opinion
(c) Disclaimer of opinion or an unqualified opinion with a separate explanatory paragraph
(d) Qualified opinion or an adverse opinion
Answer:
(d) Qualified opinion or an adverse opinion

Question 27.
When an auditor qualifies an opinion because of inadequate disclosure, the auditor should describe the nature of the omission in a basis for qualification paragraph and modify the

Introductory paragraph Auditor re­sponsibility paragraphs Opinion paragraph
(a) No No Yes
(b) Yes No No
(c) Yes Yes No
(d) No Yes Yes

Answer:
(a)

Question 28.
Wipro Ltd. has branches all over the India. Suddenly due to floods in Kerala, all the Records of Wipro Ltd. at its Kerala branch were destroyed due to Floods. No documents were made available. The turnover of Wipro Ltd. (all over India) was ₹ 100 Crore. If turnover from Kerala Branch alone was ? 2 5 Lakhs and the Company does not disclose the same in Financial Statements. There are no alternative checks that could be applied except External Party Confirmations. As an auditor of Wipro what would be your opinion on the Financial Statements
(a) Unmodified Opinion with Emphasis on Matter that the books of the Kerala Branch have been destroyed
(b) Modified Opinion – Adverse Opinion
(c) Modified Opinion – Disclaimer of Opinion
(d) Modified Opinion – Qualified Opinion
Answer:
(d) Modified Opinion – Qualified Opinion

Audit Report – CA Inter Audit MCQ

Question 29.
Wipro Ltd. has branches all over the India. Suddenly due to floods in Kerala, all the Records of Wipro Ltd. at its Kerala branch were destroyed due to Floods. No documents were made available. The turnover of Wipro Ltd. (all over India) was ? 100 Crore. If turnover from Kerala Branch alone was ? 60 Crores and the Company has disclosed the same in Financial Statements as notes to accounts. There are no alternative checks that could be applied except External Party Confirmations. As an auditor of Wipro what would be your opinion on the Financial Statements
(a) Unmodified Opinion with EOM that the books of the Kerala Branch have been destroyed
(b) Adverse Opinion
(c) Disclaimer of Opinion
(d) Qualified Opinion
Answer:
(c) Disclaimer of Opinion

Question 30.
Ordinarily, an auditor may include an emphasis of a matter paragraph:
(a) when limitation in scope is not so material as to re-quire an adverse opinion or a disclaimer of opinion
(b) to highlight an immaterial matter regarding a going concern problem
(c) when the effect of a disagreement with management is material and pervasive to the financial statements
(d) if there is a significant uncertainty, the resolution of which is dependent upon future events
Answer:
(d) if there is a significant uncertainty, the resolution of which is dependent upon future events

Question 31.
Wipro Ltd. has branches all over the India. : Suddenly due to floods in Kerala, all the Records of Wipro Ltd. at its Kerala branch were destroyed due to Floods. No documents were made available. The turnover of Wipro Ltd. (all over India) was ₹ 100 Crore. If turnover from Kerala Branch alone was ₹ 2 5 Lakhs and the Company has disclosed the same in Financial Statements as notes to accounts. There are no alternative checks that could be applied except External Party Confirmations. As an auditor of Wipro what would be your opinion on the Financial Statements
(a) Unmodified Opinion with Emphasis on Matter that the books of the Kerala Branch have been destroyed
(b) Modified Opinion – Adverse Opinion
(c) Modified Opinion – Disclaimer of Opinion
(d) Modified Opinion – Qualified Opinion
Answer:
(a) Unmodified Opinion with Emphasis on Matter that the books of the Kerala Branch have been destroyed

Question 32.
As per SA 706 “Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report” Emphasis of Matter paragraph may be defined as:
(a) A paragraph included in the auditor’s report that refers to a matter appropriately presented or disclosed in the director’s report that, in the auditor’s judgment, is of such importance that it is fundamental to users’ understanding of the financial statements
(b) A paragraph included in the auditor’s report that refers to a matter other than those presented or disclosed in the financial statements that, in the auditor’s judgment, is relevant to users’ under-standing of the audit, the auditor’s responsibilities or the auditor’s report
(c) A paragraph included in the auditor’s report that refers to a matter appropriately presented or disclosed in the financial statements that, in the auditor’s judgment, is of such importance that it is fundamental to users’ understanding of the auditor’s report
(d) A paragraph included in the auditor’s report that refers to a matter appropriately presented or disclosed in the financial statements that, in the auditor’s judgment, is of such importance that it is fundamental to users’ understanding of the financial statements
Answer:
(d) A paragraph included in the auditor’s report that refers to a matter appropriately presented or disclosed in the financial statements that, in the auditor’s judgment, is of such importance that it is fundamental to users’ understanding of the financial statements

Question 33.
Which of the following is not an example of uncertainties that might be emphasised in an emphasis of a matter paragraph?
(a) Matters affecting the comparability of financial statements with those of previous years
(b) The existence of related party transactions
(c) Important accounting matters occurring subsequent to the balance sheet date
(d) Internal control deficiencies
Answer:
(d) Internal control deficiencies

Question 34.
An auditor would express an unmodified opinion and add an emphasis-of-matter paragraph for and Other Matter Paragraphs in the Independen t Auditor’s Report” Other Matter Para may be defined as:

an unjustified ac­counting change a material weakness in the internal control
(a) No Yes
(b) Yes No
(c) Yes Yes
(d) No No

Answer:
(a)

Question 35.
As per SA 706 “Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independen t Auditor’s Report” Other Matter Para may be defined as:
(a) A paragraph included in the auditor’s report that refers to a matter appropriately presented or disclosed in the financial statements that, in the auditor’s judgment, is of such importance that it is fundamental to users’ understanding of the financial statements
(b) A paragraph included in the auditor’s report that refers to a matter other than those presented or disclosed in the financial statements that, in the auditor’s judgment, is relevant to users’ understanding of the audit, the auditor’s responsibilities or the auditor’s report
(c) A paragraph included in the auditor’s report that refers to a matter presented or disclosed in the financial statements that, in the auditor’s judgment, is relevant to users’ understanding of the audit, the auditor’s responsibilities or the auditor’s report
(d) A paragraph included in the auditor’s report that refers to a matter other than those presented or disclosed in the financial statements that, in the auditor’s judgment, is relevant to users’ understanding of the financial statements
Answer:
(b) A paragraph included in the auditor’s report that refers to a matter other than those presented or disclosed in the financial statements that, in the auditor’s judgment, is relevant to users’ understanding of the audit, the auditor’s responsibilities or the auditor’s report

Audit Report – CA Inter Audit MCQ

Question 36.
As per SA 706 “Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report” an Emphasis of Matter paragraph is a substitute for:
(a) A modified opinion in accordance with SA 705 (Revised) when required by the circumstances of a specific audit engagement;
(b) Disclosures in the financial statements that the applicable financial reporting framework requires management to make, or that are otherwise necessary to achieve fair presentation; or
(c) Reporting in accordance with SA 570 (Revised) when a material uncertainty exists relating to events or conditions that may cast significant doubt on an entity’s ability to continue as a going concern
(d) None of the above
Answer:
(d) None of the above

Question 37.
If the prior period financial statements were not audited, the auditor shall state in the auditor’s report thatthe corresponding figures are unaudited. Such statement is incorporated in:
(a) Basis for Opinion Section
(b) Key Audit Matter
(c) Other Matter Paragraph
(d) Emphasis of Matter Paragraph
Answer:
(c) Other Matter Paragraph

Question 38.
Comparative information where amounts and other disclosures for the prior period are included as an integral part of the current period financial statements, and are intended to be read only in revelation to the amounts and other disclosures relating to the current period is known as:
(a) Comparative financial information
(b) Corresponding Figures
(c) Comparative financial statements
(d) Common Size financial statements
Answer:
(b) Corresponding Figures

Question 39.
If the auditor obtains audit evidence that a material misstatement exists in the prior period financial statements on which an unmodified opinion has been previously issued, the auditor shall verify whether the misstatement has been dealt with as required under the applicable financial reporting framework and, if that is not the case, the auditor shall
(a) express an unmodified opinion in the auditor’s report on the current period financial statements
(b) express a qualified opinion in the auditor’s report on the currentperiod financial statements, modified with respect to the corresponding figures included therein
(c) express an adverse opinion in the auditor’s report on the currentperiod financial statements, modified with respect to the corresponding figures included therein
(d) express a qualified opinion or an adverse opinion in the auditor’s report on the current period financial statements, modified with respect to the corresponding figures included therein
Answer:
(d) express a qualified opinion or an adverse opinion in the auditor’s report on the current period financial statements, modified with respect to the corresponding figures included therein

Question 40.
If the prior period financial statements were not audited; the auditor shall state in _____ in the auditor’s report that the corresponding figures are unaudited
(a) Key Audit Matter
(b) Emphasis of Matter paragraph
(c) Other Matter Paragraph
(d) Basis for Opinion Section
Answer:
(c) Other Matter Paragraph

Question 41.
A company did not disclose accounting policies required to be disclosed under Schedule III or any other provisions of the Companies Act, 2013, the auditor should issue-
(a) a qualified opinion
(b) an adverse opinion
(c) a disclaimer of opinion
(d) emphasis of matter paragraph.
Answer:
(a) a qualified opinion

Question 42.
An Audit report is:
(a) an opinion drawn on the entity’s financial statements to make sure that the records are true and correct representation of the transactions they claim to represent.
(b) an opinion drawn on the entity’s books of account to make sure that the records are true and fair representation of the transactions they claim to represent.
(c) an opinion drawn on the entity’s financial statements to make sure that the records are true and fair representation of the transactions they claim to represent.
(d) an opinion drawn on the entity’s books of account to make sure that the records are true and correct representation of the transactions they claim to represent.
Answer:
(c) an opinion drawn on the entity’s financial statements to make sure that the records are true and fair representation of the transactions they claim to represent.

Question 43.
Which of the following is not a Specific Evaluations by the Auditor?
(a) The financial statements adequately disclose the significant accounting policies selected and applied.
(b) The accounting policies selected and applied are consistent with the applicable financial reporting framework and are appropriate.
(c) The accounting estimates made by management are reasonable.
(d) The sufficient appropriate audit evidence has been obtained.
Answer:
(d) The sufficient appropriate audit evidence has been obtained.

Question 44.
Which of the following is correct?
(a) The auditor shall express a qualified opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.
(b) The auditor shall express a disclaimer opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.
(c) The auditor shall express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.
(d) The auditor shall express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements.
Answer:
(c) The auditor shall express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements.

Question 45.
Which of the following is correct?
(a) When reporting on prior period financial statements in connection with the current period’s audit, if the auditor’s opinion on such prior period financial statements differs from the opinion the auditor previously expressed, the auditor need not disclose the substantive reasons for the different opinion.
(b) When reporting on prior period financial statements in connection with the current period’s audit, if the auditor’s opinion on such prior period financial statements differs from the opinion the auditor previously expressed, the auditor shall disclose the substantive reasons for the different opinion in an Other Matter paragraph in accordance with
(c) When reporting on prior period financial statements in connection with the current period’s audit, if the auditor’s opinion on such prior period financial statements differs from the opinion the auditor previously expressed, the auditor shall disclose the substantive reasons for the different opinion in an emphasis of Matter paragraph in accordance with SA 706.
(d) When reporting on prior period financial statements in connection with the current period’s audit, if the auditor’s opinion on such prior period financial statements differs from the opinion the auditor previously expressed, the auditor shall disclose the substantive reasons for the different opinion in an Other Matter paragraph or emphasis of matter paragraph in accordance with SA 706.
Answer:
(b) When reporting on prior period financial statements in connection with the current period’s audit, if the auditor’s opinion on such prior period financial statements differs from the opinion the auditor previously expressed, the auditor shall disclose the substantive reasons for the different opinion in an Other Matter paragraph in accordance with

Audit Report – CA Inter Audit MCQ

Question 46.
Which of the following is incorrect?
(a) Communicating key audit matters in the auditor’s report is not a substitute for disclosures in the financial statements that the applicable financial reporting framework requires management to make, or that are otherwise necessary to achieve fair presentation.
(b) Communicating key audit matters in the auditor’s report is not a substitute for the auditor expressing a modified opinion when required by the circumstances of a specific audit engagement in accordance with SA 705 (Revised],
(c) Communicating key audit matters in the auditor’s report is not a substitute for reporting in accordance with SA 570 when a material uncertainty exists relating to events or conditions that may cast significant doubt on an entity’s ability to continue as a going concern.
(d) Communicating key audit matters in the auditor’s report is a substitute for the auditor expressing a modified opinion when required by the circumstances of a specific audit engagement in accordance with SA 705 (Revised],
Answer:
(d) Communicating key audit matters in the auditor’s report is a substitute for the auditor expressing a modified opinion when required by the circumstances of a specific audit engagement in accordance with SA 705 (Revised],

Question 47.
CA. Goofy has been appointed as an auditor for audit of a complete set of financial statements of Dippy Ltd., a listed company. The financial statements of the company are prepared by the management in accordance with the Accounting Standards prescribed under section 133 of the Companies Act, 2013. However, the inventories are misstated which is deemed to be materia! but not pervasive to the financial statements, Based on the audit evidences obtained, CA. Goofy has concluded that a material uncertainty does not exist related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern in accordance with SA 570. Further, CA. Goofy is also aware of the fact that a qualified opinion would be appropriate due to a material misstatement of the Financial Statements. State what phrases should the auditor use while drafting such opinion paragraph?
(a) In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid financial statements present fairly, in all material respects, or give a true and fair view in conformity with the applicable financial reporting framework.
(b) In our opinion and to the best of our information and according to the explanations given to us, with the foregoing explanation, the aforesaid financial statements present fairly, in all material respects, or give a true and fair view in conformity with the applicable financial reporting framework.
(c) In our opinion and to the best of our information and according to the explanations given to us, subject to the misstatement regarding inventories, the aforesaid financial statements present fairly, in all material respects, or give a true and fair view in conformity with the applicable financial reporting framework.
(d) In our opinion and to the best of our information and according to the explanations given to us, with the explanation described in the Basis for Qualified Opinion section of our report, the aforesaid financial statements present fairly, in all material respects, or give a true and fair view in conformity with the applicable financial reporting framework.
Answer:
(a) In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid financial statements present fairly, in all material respects, or give a true and fair view in conformity with the applicable financial reporting framework.

Question 48.
Which of the following is not correct:
(a) SA 700- Forming an Opinion and Reporting on Financial Statements
(b) SA 705- Modified Opinion
(c) SA 701- Communicating Key Audit Matters
(d) SA 706-ComparatiVe Information
Answer:
(d) SA 706-ComparatiVe Information

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