{"id":14230,"date":"2024-04-15T10:58:26","date_gmt":"2024-04-15T05:28:26","guid":{"rendered":"https:\/\/gstguntur.com\/?p=14230"},"modified":"2024-04-16T16:06:40","modified_gmt":"2024-04-16T10:36:40","slug":"risk-assessment-and-internal-control-ca-inter-audit-mcq","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/risk-assessment-and-internal-control-ca-inter-audit-mcq\/","title":{"rendered":"Risk Assessment and Internal Control \u2013 CA Inter Audit MCQ"},"content":{"rendered":"

Students should practice these Risk Assessment and Internal Control \u2013 CA Inter Audit MCQ<\/a> based on the latest syllabus.<\/p>\n

Risk Assessment and Internal Control \u2013 CA Inter Audit MCQ<\/h1>\n

Question 1.
\nThe risk that a misstatement that could occur in an assertion about a class of transaction, account balance or disclosure and that could be material, either individually or when aggregated with other misstatements, will not be prevented, or detected and corrected, on a timely basis by the entity\u2019s internal control is known as:
\n(a) Inherent Risk
\n(b) Control Risk
\n(c) Risk of Material Misstatement
\n(d) Detection Risk
\nAnswer:
\n(b) Control Risk<\/p>\n

Question 2.
\nRisk arises to inherent limitations of control is known as:
\n(a) Inherent Risk
\n(b) Control Risk
\n(c) Risk of Material Misstatements
\n(d) Detection Risk
\nAnswer:
\n(b) Control Risk<\/p>\n

Question 3.
\nRisks of material misstatement at the overall financial statement level refer to risks of material misstatement
\n(a) that relate pervasively to the financial statements as a whole and potentially affect many assertions
\n(b) are assessed in order to determine the NTE of fur-ther audit procedures necessary to obtain sufficient appropriate audit evidence
\n(c) that material misstatement will not be prevented or detected and corrected on a timely basis by the internal control system
\n(d) both (a) and (b)
\nAnswer:
\n(a) that relate pervasively to the financial statements as a whole and potentially affect many assertions<\/p>\n

\"Risk<\/p>\n

Question 4.
\nWhen inherent and control risks are high, acceptable detection risk needs to be
\n(a) low to reduce audit risk to an acceptably high level
\n(b) high to reduce audit risk to an acceptably high level
\n(c) low to reduce audit risk to an acceptably low level
\n(d) high to reduce audit risk to an acceptably low level
\nAnswer:
\n(c) low to reduce audit risk to an acceptably low level<\/p>\n

Question 5.
\nWhich of the following statement is correct?
\n(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
\n(b) Risk of material misstatement may be defined as the risk that the financial statements are materially misstated subsequent to audit.
\n(c) Internal control can provide absolute assurance
\n(d) Inherent and Control Risk, and detection risk have same meaning
\nAnswer:
\n(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<\/p>\n

Question 6.
\nWhich of the following is not a component of Risk Assessment Procedures?
\n(a) Inquiries of management, and of others within the entity
\n(b) Analytical procedures
\n(c) Observation and inspection
\n(d) Reperformance
\nAnswer:
\n(d) Reperformance<\/p>\n

Question 7.
\nRisk arises on account of judgment on part of auditor, test nature of audit and nature of audit evidences collected:
\n(a) Inherent Risk
\n(b) Control Risk
\n(c) Risk of Material Misstatements
\n(d) Detection Risk
\nAnswer:
\n(d) Detection Risk<\/p>\n

Question 8.
\nProcedures performed to obtain an understanding of the entity and its environment, including the entity’s internal control, to identify and assess the risks of material misstatement, whether due to fraud or error, at the financial statement and assertion levels are known as:
\n(a) Risk Assessment procedures
\n(b) Compliance procedures
\n(c) Substantive procedure
\n(d) Substantive Analytical procedures
\nAnswer:
\n(a) Risk Assessment procedures<\/p>\n

\"Risk<\/p>\n

Question 9.
\nComponents of risk of material misstatement at the assertion level are:
\n(a) Inherent risk and detection risk
\n(b) inherent risk and control risk
\n(c) Control risk and detection risk
\n(d) Inherent risk, control risk and detection risk
\nAnswer:
\n(b) inherent risk and control risk<\/p>\n

Question 10.
\nAudit risk is a function of the
\n(a) Risks of material misstatement and detection risk.
\n(b) Audit risk and detection risk.
\n(c) Control risk and detection risk.
\n(d) Inherent risk and detection risk
\nAnswer:
\n(a) Risks of material misstatement and detection risk.<\/p>\n

Question 11.
\nRisk of material misstatement may be defined as the risk that the financial statements are materially misstated _________
\n(a) after audit,
\n(b) during audit.
\n(c) prior to audit.
\n(d) All of the above
\nAnswer:
\n(c) prior to audit.<\/p>\n

Question 12.
\nThe assessment of risks is a matter
\n(a) capable of precise measurement rather than matter of professional judgment,
\n(b) of professional judgment, rather than a matter capable of precise measurement.
\n(c) of professional judgment as well as capable of precise measurement sometimes.
\n(d) none of the above
\nAnswer:
\n(b) of professional judgment, rather than a matter capable of precise measurement.<\/p>\n

Question 13.
\nWhich of the following is not an assertion about presentation and disclosure?
\n(a) Occurrence and rights and obligations
\n(b) Completeness
\n(c) Classification and understandability
\n(d) Existence
\nAnswer:
\n(d) Existence<\/p>\n

Question 14.
\nWhich of the following Assertion is not related to assertion about presentation and disclosure:
\n(a) Occurrence and rights and obligations
\n(b) Completeness
\n(c) Classification and understandability
\n(d) Valuation and allocation
\nAnswer:
\n(d) Valuation and allocation<\/p>\n

Question 15.
\nAssertions used by the auditor to consider the different types of potential misstatements in relation to transactions occurred during the year include:
\n(a) Occurrence, completeness, accuracy and cut-off
\n(b) Existence, completeness, valuation and allocation
\n(c) Occurrence, completeness, understandability and classification
\n(d) Valuation, measurement, rights and obligations.
\nAnswer:
\n(a) Occurrence, completeness, accuracy and cut-off<\/p>\n

Question 16.
\nAH of the following are components of internal control except:
\n(a) Management Reports
\n(b) Risk Assessment Process
\n(c) Monitoring
\n(d) The Information System
\nAnswer:
\n(a) Management Reports<\/p>\n

\"Risk<\/p>\n

Question 17.
\nImplementation of a control means that the control exists and that:
\n(a) all necessary personnel are trained to operate the control
\n(b) the entity is using it
\n(c) the control was properly designed
\n(d) the control is documented
\nAnswer:
\n(b) the entity is using it<\/p>\n

Question 18.
\nProcess to assess the effectiveness of internal control performance over time is known as:
\n(a) Entity risk assessment process
\n(b) Risk assessment process of statutory auditor
\n(c) Control activities relevant to audit
\n(d) Monitoring of controls
\nAnswer:
\n(d) Monitoring of controls<\/p>\n

Question 19.
\nPolicies and procedures that help ensure that management directives are carried out are known as:
\n(a) Control Environment
\n(b) Entity risk assessment process
\n(c) Information System
\n(d) Control activities relevant to audit
\nAnswer:
\n(d) Control activities relevant to audit<\/p>\n

Question 20.
\nWhich of the following is not a component of internal control system?
\n(a) Control Environment
\n(b) Risk assessment process of statutory auditor
\n(c) Information System
\n(d) Control activities relevant to audit
\nAnswer:
\n(b) Risk assessment process of statutory auditor<\/p>\n

Question 21.
\nA graphic presentation of internal controls in the organisation and is normally drawn up to show the controls in each section or sub-section is known as:
\n(a) Narrative Records
\n(b) Check List
\n(c) Internal Control Questionnaire
\n(d) Flowchart
\nAnswer:
\n(d) Flowchart<\/p>\n

Question 22.
\nA series of instructions and\/or questions which a member of the auditing staff must follow and\/or answer, is known as:
\n(a) Narrative Records
\n(b) Check List
\n(c) Internal Control Questionnaire
\n(d) Flowchart
\nAnswer:
\n(b) Check List<\/p>\n

Question 23.
\nThe auditor\u2019s primary consideration is whether, and how, a specific control prevents, or detects and corrects, material misstatements:
\n(a) in classes of transactions
\n(b) in account balances
\n(c) in disclosures
\n(d) in classes of transactions, account balances or disclosures
\nAnswer:
\n(d) in classes of transactions, account balances or disclosures<\/p>\n

Question 24.
\nAll of the following are sub-systems (contents) of an entity’s information system except:
\n(a) Computer systems software
\n(b) Production system
\n(c) Personnel information
\n(d) Customer and vendor records
\nAnswer:
\n(c) Personnel information<\/p>\n

Question 25.
\nKey components to assess and evaluate the control environment includes:
\n(a) Enterprise Risk management
\n(b) SegregationofjobresponsibilitiesandjobRotation in Sensitive Areas
\n(c) IT Based Controls
\n(d) All of the above
\nAnswer:
\n(d) All of the above<\/p>\n

Question 26.
\nWhich of the following makes for an effective control environment with regards to commitment to competence?
\n(a) assure independence from management
\n(b) increase interaction between senior management and operating management
\n(c) reduce pressure to meet unrealistic performance targets
\n(d) its culture is one in which quality and competence are openly valued
\nAnswer:
\n(d) its culture is one in which quality and competence are openly valued<\/p>\n

\"Risk<\/p>\n

Question 27.
\nNew life Hospital is a multi-specialty hospital which has been facing a lot of pilferage and troubles regardingtheir inventory maintenance and control.
\nOn investigation into the matter it was found that the person in charge of inventory inflow and outflow from the store house is also responsible for purchases and maintaining inventory records. According to you, which basic system control has been violated
\n(a) Internal Audit
\n(b) Internal Check
\n(c) Monitoring
\n(d) Risk assessment
\nAnswer:
\n(b) Internal Check<\/p>\n

Question 28.
\nBecause the assessment of the risk of material misstatement takes account of internal control,
\n(a) The extent of substantive procedures may need to be increased irrespective of the results from tests of controls.
\n(b) The extent of substantive procedures may need to be increased when the results from tests of controls are satisfactory.
\n(c) The extent of substantive procedures may need to be decreased when the results from tests of controls are unsatisfactory.
\n(d) The extent of substantive procedures may need to be increased when the results from tests of controls are unsatisfactory
\nAnswer:
\n(d) The extent of substantive procedures may need to be increased when the results from tests of controls are unsatisfactory<\/p>\n

Question 29.
\nWhen deviations from controls upon which the auditor intends to rely are detected,
\n(a) The auditor shall not make any inquiries to understand these matters and their potential consequences
\n(b) The auditor shall make specific inquiries to understand these matters and their potential consequences
\n(c) The auditor shall make general inquiries to understand these matters and their potential consequences
\n(d) The auditor shall make both general as well as specific inquiries to understand these matters and their potential consequences
\nAnswer:
\n(b) The auditor shall make specific inquiries to understand these matters and their potential consequences<\/p>\n

Question 30.
\nWhen more persuasive audit evidence is needed regarding the effectiveness of a control,
\n(a) It may be appropriate to increase the extent of testing of the control and reduce the extent of the degree of reliance on controls
\n(b) It may be appropriate to decrease the extent of testing of the control as well as the degree of reliance on controls
\n(c) It may be appropriate to decrease the extent of testing of the control and increase the extent of the degree of reliance on controls
\n(d) It may be appropriate to increase the extent of testing of the control as well as the degree of reliance on controls
\nAnswer:
\n(d) It may be appropriate to increase the extent of testing of the control as well as the degree of reliance on controls<\/p>\n

Question 31.
\nAn independent management function, which involves a continuous and critical appraisal of the functioning of an entity with a view to suggest improvements thereto and add value to and strengthen the overall governance mechanism of the entity is known as:
\n(a) Internal Control
\n(b) Internal Audit
\n(c) Internal Check
\n(d) Risk assessment process
\nAnswer:
\n(b) Internal Audit<\/p>\n

Question 32.
\nWhich of the below mentioned standard prescribes the auditors requirements while using the work of internal auditors:
\n(a) SA 299
\n(b) SA 600
\n(c) SA 610
\n(d) SA 620
\nAnswer:
\n(c) SA 610<\/p>\n

Question 33.
\nInternal Auditor shall be
\n(a) a practicing chartered accountant
\n(b) a practicing cost accountant.
\n(c) an employee of the company
\n(d) either be a chartered accountant (whether in Practice or not) or a cost accountant, or such other professional as may be decided by the Board
\nAnswer:
\n(d) either be a chartered accountant (whether in Practice or not) or a cost accountant, or such other professional as may be decided by the Board<\/p>\n

Question 34.
\nWhich of the following company is required to have internal audit system as per Sec. 138 of Companies Act, 2013:
\n(a) Unlisted public company having paid up equity share capital of 50 crore rupees or more during the preceding financial year.
\n(b) Unlisted public company having paid up equity share capital of 50 crore rupees or more during the current financial year.
\n(c) Unlisted public company having paid up share capital of 50 crore rupees or more during the preceding financial year.
\n(d) Unlisted public company having paid up share capital of 50 crore rupees or more during the current financial year.
\nAnswer:
\n(c) Unlisted public company having paid up share capital of 50 crore rupees or more during the preceding financial year.<\/p>\n

\"Risk<\/p>\n

Question 35.
\nThe objectives and scope of internal audit functions typically include designed to evaluate and improve the effectiveness of the entity’s governance processes, risk management and internal control
\n(a) assurance activities only
\n(b) consulting activities only
\n(c) assurance and consulting activities
\n(d) risk management activities
\nAnswer:
\n(c) assurance and consulting activities<\/p>\n

Question 36.
\nScope of Internal Audit is:
\n(a) restricted to financial statements
\n(b) not restricted to financial statements, but also extends to the task review of all operations of the enterprise
\n(c) not restricted to financial statements, but also ex-tends to take upon the function of the operational manager
\n(d) not restricted to financial statements, but also ex-tends to statutory reporting under Section 143(3) of Companies Act, 2013
\nAnswer:
\n(b) not restricted to financial statements, but also extends to the task review of all operations of the enterprise<\/p>\n

Question 37.
\nWhich ofthe following public unlisted companies, required to appoint an internal auditor?
\n(a) Companies having paid up equity capital and re-serves of \u20b9 50 cr. or above during the preceding financial year
\n(b) Companies having turnover of \u20b9 200 cr. or more during the current financial year
\n(c) Companies having outstandingloans or borrowings from banks, financial institutions and directors exceeding ? 100 Cr. or more at any point of time during the preceding financial year
\n(d) None of the above
\nAnswer:
\n(d) None of the above<\/p>\n

Question 38.
\nWhich of the following private companies, required to appoint an internal auditor?
\n(a) Companies having paid up capital \u20b9 50 cr. or above during the preceding financial year
\n(b) Companies having turnover of \u20b9 200 cr. or more during the preceding financial year
\n(c) Companies having outstanding loans or borrowings from banks, financial institutions and directors exceeding \u20b9 100 Cr. or more at any point of time during the preceding financial year
\n(d) Both (b) and (c)
\nAnswer:
\n(b) Companies having turnover of \u20b9 200 cr. or more during the preceding financial year<\/p>\n

Question 39.
\nWhich ofthe following companies is notrequired to appoint an internal auditor?
\n(a) Public companies having its securities listed on Main Board of Stock Exchange
\n(b) Public companies having its securities listed on ITP
\n(c) Unlisted Public companies having paid up share capital of \u20b9 50 crores or above during the preceding financial year
\n(d) Private companies having paid up share capital of \u20b9 50 crores or above during the preceding financial year
\nAnswer:
\n(d) Private companies having paid up share capital of \u20b9 50 crores or above during the preceding financial year<\/p>\n

Question 40.
\nWhich of the following companies is required to appoint an internal auditor?
\n(a) Private companies having paid up share capital of \u20b9 40 crores during the preceding financial year
\n(b) Private companies having turnover of \u20b9 120 cr. during the preceding financial year
\n(c) Private companies having outstanding loans or borrowings from banks or financial institutions was \u20b9 105 Cr. attheend of preceding financial year.
\n(d) None of the above
\nAnswer:
\n(c) Private companies having outstanding loans or borrowings from banks or financial institutions was \u20b9 105 Cr. attheend of preceding financial year.<\/p>\n

Question 41.
\nWhen more persuasive audit evidence is needed regarding the effectiveness of a control,
\n(a) it may be appropriate to increase the extent of testing of the control and reduce the extent of the degree of reliance on controls.
\n(b) it maybe appropriate to decrease the extent of testing of the control as well as the degree of reliance on controls.
\n(c) it may be appropriate to decrease the extent of testing of the control and increase the extent of the degree of reliance on controls.
\n(d) it may be appropriate to increase the extent of testing of the control as well as the degree of reliance on controls.
\nAnswer:
\n(d) it may be appropriate to increase the extent of testing of the control as well as the degree of reliance on controls.<\/p>\n

Question 42.
\nWhen deviations from controls upon which the auditor intends to rely are detected,
\n(a) the auditor shall not make any inquiries to under-stand these matters and their potential consequences
\n(b) the auditor shall make specific inquiries to under-stand these matters and their potential consequences
\n(c) the auditor shall make general inquiries to under-stand these matters and their potential consequences
\n(d) the auditor shall make both general as well as specific inquiries to understand these matters and their potential consequences
\nAnswer:
\n(b) the auditor shall make specific inquiries to under-stand these matters and their potential consequences<\/p>\n

\"Risk<\/p>\n

Question 43.
\nRisk of material misstatement may be defined as the risk
\n(a) that the financial statements are materially mis-stated after audit.
\n(b) that the financial statements are materially mis-stated during audit.
\n(c) that the financial statements are materially mis-stated prior to audit.
\n(d) All of the above
\nAnswer:
\n(c) that the financial statements are materially mis-stated prior to audit.<\/p>\n

Question 44.
\nThe assessment of the risks of material misstatement may be expressed in
\n(a) quantitative terms, such as in percentages, or in non-quantitative terms.
\n(b) quantitative terms, such as in percentages,
\n(c) non-quantitative terms.
\n(d) none of the above
\nAnswer:
\n(a) quantitative terms, such as in percentages, or in non-quantitative terms.<\/p>\n

Question 45.
\nSA 315 establishes requirements and provides guidance on identifying and assessing the risks of material misstatement
\n(a) at the financial statement levels only.
\n(b) at the assertion levels only.
\n(c) at the financial statement and assertion levels.
\n(d) at the financial statement or assertion levels.
\nAnswer:
\n(c) at the financial statement and assertion levels.<\/p>\n

Question 46.
\nSA 315 establishes requirements and provides guidance on identifying and assessing the risks of material misstatement
\n(a) at the financial statement levels only.
\n(b) at the assertion levels only.
\n(c) at the financial statement and assertion levels.
\n(d) at the financial statement or assertion levels.
\nAnswer:
\n(c) at the financial statement and assertion levels.<\/p>\n

Question 47.
\nThe risks of material misstatement at the assertion level consist of two components:
\n(a) Inherent risk and detection risk
\n(b) Control risk and detection risk
\n(c) Audit risk and detection risk
\n(d) Inherent risk and control risk
\nAnswer:
\n(d) Inherent risk and control risk<\/p>\n

Question 48.
\nThe Guidance Note on Audit of Internal Financial Controls over Financial Reporting has been issued by?
\n(a) ICAI
\n(b) SEBI
\n(c) MCA
\n(d) RBI
\nAnswer:
\n(a) ICAI<\/p>\n

Question 49.
\nAudit risk is a function of the
\n(a) risks of material misstatement and detection risk.
\n(b) audit risk and detection risk.
\n(c) control risk and detection risk.
\n(d) inherent risk and detection risk.
\nAnswer:
\n(a) risks of material misstatement and detection risk.<\/p>\n

\"Risk<\/p>\n

Question 50.
\nRisk of material misstatement may be defined as the risk
\n(a) that the financial statements are materially mis-stated after audit.
\n(b) that the financial statements are materially mis-stated during audit.
\n(c) that the financial statements are materially mis-stated prior to audit.
\n(d) All of the above
\nAnswer:
\n(c) that the financial statements are materially mis-stated prior to audit.<\/p>\n","protected":false},"excerpt":{"rendered":"

Students should practice these Risk Assessment and Internal Control \u2013 CA Inter Audit MCQ based on the latest syllabus. Risk Assessment and Internal Control \u2013 CA Inter Audit MCQ Question 1. The risk that a misstatement that could occur in an assertion about a class of transaction, account balance or disclosure and that could be …<\/p>\n

Risk Assessment and Internal Control \u2013 CA Inter Audit MCQ<\/span> Read More »<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[167],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/14230"}],"collection":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/comments?post=14230"}],"version-history":[{"count":2,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/14230\/revisions"}],"predecessor-version":[{"id":14248,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/14230\/revisions\/14248"}],"wp:attachment":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/media?parent=14230"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/categories?post=14230"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/tags?post=14230"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}