Students should practice these Audit Strategy, Audit Planning and Audit Programme – CA Inter Audit MCQ based on the latest syllabus.

Audit Strategy, Audit Planning and Audit Programme – CA Inter Audit MCQ

Question 1.
The auditor’s responsibility to plan an audit of financial statements is dealt by:
(a) SA 200
(b) SA 210
(c) SA 300
(d) SA 315
Answer:
(c) SA 300

Question 2.
As per SA 300, the audit plan shall include a description of:
(a) The nature, timing and extent of planned risk assessment procedures, as determined under SA 315
(b) The nature, timing and extent of planned further audit procedures at the assertion level, as deter-mined under SA 330
(c) Other planned audit procedures that are required to be carried out so that the engagement complies with SAs
(d) All of the Above
Answer:
(d) All of the Above

Question 3.
Which of the following is correct?
(a) SA 315 has a purpose to establish standards to form procedures to be followed to have an understanding of the entity and its environment
(b) Establishing an overall audit strategy that sets the scope, timing and direction of the audit, and that guides the development of the audit plan is prerogative of the management
(c) Planning is a discrete phase of an audit
(d) There is no relation between Audit Plans and knowledge of the client’s business
Answer:
(a) SA 315 has a purpose to establish standards to form procedures to be followed to have an understanding of the entity and its environment

Question 4.
Which of the following is not a part of audit planning activity?
(a) Determining the nature, timing and extent of risk assessment procedures
(b) Determining the nature, timing and extent of Substantive procedures
(c) Understanding of terms of audit engagement with the client
(d) None of the above
Answer:
(c) Understanding of terms of audit engagement with the client

Question 5.
Planning is _______ of an audit that often begins shortly after (or in connection with) the completion of the previous audit and continues until the completion of the current audit engagement:
(a) continuous process
(b) discreet process
(c) neither continuous nor discreet process
(d) continuous and discreet process
Answer:
(a) continuous process

Question 6.
Planning an audit involves establishing the overall audit strategy for the engagement and
(a) developing an audit plan
(b) developing an audit program
(c) developing detailed strategy
(d) any of the above
Answer:
(a) developing an audit plan

Question 7.
When planning the audit, the auditor
(a) considers what would make the financial information materially misstated
(b) need not consider what would make the financial information materially misstated
(c) need not consider what would make the financial information materially misstated at planning stage
(d) needs to consider what would make the financial information materially misstated while conducting audit only
Answer:
(a) considers what would make the financial information materially misstated

Question 8.
Planning is not a discrete phase of an audit but rather a continuous process. It often begins shortly after and continues until the completion of the current audit engagement
(a) commencement of new accounting year
(b) completion of previous audit
(c) receiving letter of appointment
(d) None of the above
Answer:
(b) completion of previous audit

Question 9.
The audit plan is _______ detailed than the overall audit strategy
(a) less
(b) more
(c) equal
(d) none of the above
Answer:
(b) more

Question 10.
Which of the following is not an example of audit documentation:
(a) Summary of discussions with the entity’s key decision makers
(b) Auditor’s report on the entity’s financial statements
(c) Agreements with management or TCWG regarding the scope or changes in scope of services
(d) None of the above
Answer:
(d) None of the above

Question 11.
Which of the following audit staff is most likely to be heavily involved in the planning of the audit, evaluation of the results and determination of the audit opinion?
(a) in-charge auditor
(b) manager
(c) partner
(d) supervisor
Answer:
(a) in-charge auditor

Question 12.
Nature and extent of planning is affected by:
(a) size and complexity of the auditee
(b) past experience
(c) change in circumstances
(d) all of the above
Answer:
(d) all of the above

Question 13.
Once the overall audit strategy has been established, can be developed to address the various matters identified in the overall audit strategy, taking into account the need to achieve the audit objectives through the efficient use of the auditor’s resources
(a) audit strategy
(b) audit plan
(c) audit plan and audit strategy
(d) audit note book
Answer:
(b) audit plan

Question 14.
Audit strategy is concerned with designing optimised that seek to achieve the necessary audit assurance at the lowest cost within the constraints of the information available
(a) audit procedures.
(b) audit techniques
(c) audit approaches
(d) audit programme
Answer:
(c) audit approaches

Question 15.
Process of establishing the overall audit strategy assists the auditor to determine, subject to the completion of the auditor’s assessment procedures, such matters as:
(a) Nature, timing and extent of risk assessment procedures
(b) Nature, timing and extent of Substantive procedures
(c) Management of resources as to engagement team members
(d) Understanding of terms of audit engagement with the client
Answer:
(c) Management of resources as to engagement team members

Question 16.
As per SA 300, the auditor shall establish an overall audit strategy that sets the scope, timing and direction of the audit, and that guides the development of the audit plan. In establishing the overall audit strategy, the auditor shall:
(a) Set the materiality levels for the audit purpose
(b) Develop the detailed audit programme
(c) Identify the characteristics of the engagement that define its scope
(d) All of the above
Answer:
(c) Identify the characteristics of the engagement that define its scope

Question 17.
Which of the following is not correct?
(a) Audit strategy and audit plan are inter-related to each other because change in one would result into change in the other
(b) The audit plan is prepared before the audit strategy
(c) The audit plan contains more details than the overall audit strategy
(d) Audit strategy provides the guidelines for developing the audit plan
Answer:
(b) The audit plan is prepared before the audit strategy

Question 18.
The overall audit strategy and the audit plan remain the responsibility
(a) auditor’s
(b) management’s
(c) those charged with governance
(d) all of the above
Answer:
(a) auditor’s

Question 19.
The auditor shall update and change the overall audit strategy and the audit plan as necessary during the course of the audit. The auditor may need to modify the overall audit strategy and audit plan as a result of:
(a) unexpected events
(b) changes in conditions
(c) the audit evidence obtained from the results of audit procedures
(d) any of the above
Answer:
(d) any of the above

Question 20.
Which of the following is incorrect?
(a) A well designed and drafted audit plan and audit strategy which takes care of all the uncertainties and conditions, need not be changed during the course of audit
(b) Planning is not a discrete phase of an audit, but rather a continual and iterative process
(c) SA 315 has a purpose to establish standards to form procedures to be followed to have an understanding of the entity and its environment
(d) Both (b) and (c)
Answer:
(a) A well designed and drafted audit plan and audit strategy which takes care of all the uncertainties and conditions, need not be changed during the course of audit

Question 21.
With reference to SA 300, the auditor shall document
(a) the overall audit strategy
(b) the audit plan
(c) any significant changes made during the audit engagement to the overall audit strategy or the audit plan, and the reasons for such changes
(d) all of the above
Answer:
(d) all of the above

Question 22.
For the purpose of programme construction, which ofthe following points should be kept in mind:
(a) Be within the scope and limitation ofthe assignment
(b) Determine the evidence reasonably available and identify the best evidence for derivingthe necessary assurance
(c) Only those techniques and procedures which are useful in accomplishing the verification purpose should be applied
(d) All of the above
Answer:
(d) All of the above

Question 23.
The auditor’s determination of materiality is a matter of _______, and is affected by the auditor’s perception of the financial information needs of users of the F.S.
(a) professional competence
(b) professional judgment
(c) professional skepticism
(d) professional behaviour
Answer:
(b) professional judgment

Question 24.
The concept of materiality is applied by the auditor in the audit & in evaluating the effect of identified misstatements on audit and of uncorrected misstatements, if any, on the F. S. and in forming the opinion in auditor’s report
(a) planning
(b) performing
(c) planning and performing
(d) planning or performing
Answer:
(c) planning and performing

Question 25.
Performance materiality means the amount or amounts set by the auditor at, materiality for the financial statements as a whole, to reduce to an appropriately low level, the probability that the aggregate of uncorrected and undetected mis¬statements, exceeds materiality for the financial statements as a whole
(a) less than
(b) more than
(c) par with the
(d) none of the above
Answer:
(a) less than

Question 26.
When establishing the overall audit strategy, the auditor shall determine materiality for the
(a) financial statements as a whole
(b) particular classes of transactions, account balances or disclosures
(c) both (a) and (b)
(d) either (c) or (b)
Answer:
(a) financial statements as a whole

Question 27.
Determining materiality involves the exercise of professional judgment. A percentage is often applied to a chosen benchmark as a starting point in determining materiality for the financial statements as a whole. Factors that may affect the identification of an appropriate benchmark include the following:
(a) Elements of the audit report
(b) Nature of audit assignment
(c) Competency of Engagement team members
(d) Relative Volatility of the benchmark
Answer:
(d) Relative Volatility of the benchmark

Question 28.
SA 320 on “Materiality in Planning and Performing an Audit” requires that an auditor should consider materiality and its relationship with while conducting an audit
(o) Audit Plan
(b) Audit Strategy
(c) Audit Risk
(d) Audit Programme
Answer:
(c) Audit Risk

Question 29.
Which of the following is not correct?
(a) Materiality and audit risk are considered throughout the audit
(b) A discussion present in the FRF provides a reference to the auditor in determining materiality for the audit
(c) Auditor’s assessment of materiality and audit risk remains same at the time of initially planning of the audit as against at the time of evaluating the results of audit procedures
(d) The auditor’s determination of materiality is a matter of professional judgment, and is affected by the auditor’s perception of the financial information needs of users of the F.S.
Answer:
(c) Auditor’s assessment of materiality and audit risk remains same at the time of initially planning of the audit as against at the time of evaluating the results of audit procedures

Question 30.
Determining a percentage to be applied to a chosen benchmark (in relation to materiality) involves the exercise of
(a) Independence
(b) Professional Judgment
(c) Professional skepticism
(d) All of the above
Answer:
(b) Professional Judgment

Question 31.
Planning an audit involves
(a) establishing the overall audit strategy for the engagement and developing an audit plan.
(b) establishing the overall audit plan for the engagement and developing an audit strategy.
(c) establishing the overall audit plan for the engagement
(d) developing an audit strategy.
Answer:
(a) establishing the overall audit strategy for the engagement and developing an audit plan.

Question 32.
As per SA 300,
(a) planning is not a continual and iterative phase of an audit, but rather a discrete process
(b) planning is not a discrete phase of an audit, but rather a continual and iterative process
(c) planning is not continual and iterative process
(d) planning is not a discrete phase of an audit
Answer:
(b) planning is not a discrete phase of an audit, but rather a continual and iterative process

Question 33.
SA 320 on “Materiality in Planningand Performing an Audit” requires that an auditor
(a) should not consider materiality and its relationship with audit risk while conducting an audit.
(b) should consider materiality and its relationship with audit risk while conducting an audit.
(c) should not consider materiality but should consider its relationship with audit risk while conducting an audit.
(d) should consider materiality but need not consider its relationship with audit risk while conducting an audit.
Answer:
(b) should consider materiality and its relationship with audit risk while conducting an audit.

Question 34.
When planning the audit,
(a) the auditor considers what would make the financial information materially misstated.
(b) the auditor need not consider what would make the financial information materially misstated.
(c) the auditor need not consider what would make the financial information materially misstated at planning stage.
(d) the auditor needs to consider what would make the financial information materially misstated while conducting audit only.
Answer:
(a) the auditor considers what would make the financial information materially misstated.

Question 35.
With reference to SA 300, the auditor shall document:
(a) The overall audit strategy
(b) The audit plan
(c) Any significant changes made during the audit en-gagement to the overall audit strategy or the audit plan, and the reasons for such changes.
(d) All of the above
Answer:
(d) All of the above

Question 36.
Determining a percentage to be applied to a chosen benchmark (in relation to materiality) involves the exercise of
(a) Independence
(b) Professional Judgment
(c) Professional skepticism
(d) All of the above
Answer:
(b) Professional Judgment

Question 37.
The auditor shall update and change _______ as necessary during the course of the audit.
(a) overall strategy
(b) the overall audit strategy and the audit plan
(c) audit plan
(d) audit program
Answer:
(b) the overall audit strategy and the audit plan

Question 38.
The concept of materiality is applied by the auditor:
(a) in planning and performing the audit
(b) in evaluating the effect of identified misstatements on the audit
(c) both in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit
(d) none of the above is correct
Answer:
(c) both in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit