{"id":8611,"date":"2024-02-24T15:42:45","date_gmt":"2024-02-24T10:12:45","guid":{"rendered":"https:\/\/gstguntur.com\/?p=8611"},"modified":"2024-02-26T09:43:23","modified_gmt":"2024-02-26T04:13:23","slug":"types-of-auditing-cs-foundation-fundamentals-of-auditing-notes","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/types-of-auditing-cs-foundation-fundamentals-of-auditing-notes\/","title":{"rendered":"Types of Auditing \u2013 CS Foundation Fundamentals of Auditing Notes"},"content":{"rendered":"

Go through this Types of Auditing – CS Foundation Fundamentals of Accounting and Auditing Notes<\/a> will help students in revising the entire subject quickly.<\/p>\n

Audit:<\/p>\n

    \n
  1. Financial Audit, Secretarial Audit, Cost Audit, Tax Audit, Bank Audit, Govt. Audit, Audit of Co-operative Society, Trust, Insurance, Partnership Firm, management and etc.<\/li>\n
  2. In new Companies Act, 2013 attempt has been made to cover each aspect of corporate functioning under audit by prescribing various types of audit like internal and secretarial audit.<\/li>\n
  3. Traditionally auditing was limited to finance audit and internal audit.<\/li>\n
  4. Over the years, many other fields of auditing have been evolved.<\/li>\n<\/ol>\n

    Types of Audit depends upon various factors:<\/p>\n

      \n
    1. Nature of work undertaken<\/li>\n
    2. approach used for conducting Audit<\/li>\n
    3. organization structure<\/li>\n
    4. legal requirement etc.<\/li>\n<\/ol>\n

      Categories of Audits:<\/p>\n

        \n
      1. Audit required by law.<\/li>\n
      2. Voluntary audit.<\/li>\n<\/ol>\n

        Audit required by Law:
        \nAudits which have been made mandatory by a statute comes under the category of audit required by law.
        \nExample – Audit of companies, banking companies, co-operative societies, trusts etc.<\/p>\n

        Voluntary Audit:
        \nWhen there is no statutory obligation to conduct audit, still the audit is carried out, it is known as voluntary audit. The main purpose of this type of audit is to keep a check on the accounting records or other areas.
        \nExample – Audit of sole proprietorship concern, audit of partnership firm etc.<\/p>\n

        Types of Audit:
        \nBased on the scope and area of work, audits can be of the following types:<\/p>\n

          \n
        1. Internal audit.<\/li>\n
        2. Financial audit.<\/li>\n
        3. Secretarial audit.<\/li>\n
        4. Cost audit<\/li>\n
        5. Tax audit.<\/li>\n
        6. Bank audit.<\/li>\n
        7. Co-operative societies audit.<\/li>\n
        8. Trust audit.<\/li>\n
        9. Insurance audit.<\/li>\n
        10. Partnership audit.<\/li>\n
        11. Sole proprietorship audit.<\/li>\n
        12. Government audit.<\/li>\n
        13. Management audit.<\/li>\n
        14. Functional audit.<\/li>\n
        15. Proprietary audit.<\/li>\n
        16. Efficiency audit.<\/li>\n<\/ol>\n

          Internal Audit:<\/p>\n

            \n
          • Section 138 of the Companies Act, 2013 contains provision regarding internal Audit.<\/li>\n
          • As per Companies Act, 2013 certain class or classes of company as may be prescribed shall appoint an internal auditor.<\/li>\n
          • Walter B. Meigs, \u201cInternal auditing consist of a continuous critical reviews of financial and operating activities by a staff of auditors functioning as full time salaried employees.\u201d<\/li>\n
          • It refers to the analysis and evaluation of business operations done by the staff and employees.
            \nit is a type of control which functions by measuring and evaluating the effectiveness of other types of control.<\/li>\n
          • Internai auditor is appointed by the management.<\/li>\n
          • It is a continuous process and carried out throughout the year.<\/li>\n
          • It is not mandatory but is recommended for evaluating the effectiveness of internal control, soundness of financial system, etc.<\/li>\n
          • Internal audit report has no such prescribed format and the report is submitted to the management.<\/li>\n<\/ul>\n

            Scope of audit is defined by the management –
            \n(a) Every listed company<\/p>\n

            (b) Every unlisted company having<\/p>\n

              \n
            • Paid up share capital \u20b9 50 crore or more.<\/li>\n
            • Turnover \u20b9 200 crore or more.<\/li>\n
            • Outstanding Loan or borrowings from banks or Public financial institutions exceeding \u20b9 100 crore or more at any, point of time during the preceding financial year.<\/li>\n
            • Outstanding deposit \u20b9 25 crore or more.<\/li>\n<\/ul>\n

              (c) Every Private Company<\/p>\n

                \n
              • Turnover \u20b9 200 crore or more<\/li>\n
              • Outstanding Loan, borrowing etc. exceeding \u20b9 100 crore or more at any point of time during the preceding financial year.<\/li>\n<\/ul>\n

                Objectives:<\/p>\n

                  \n
                1. Exercising proper control over business activities so as to ensure maximum efficiency.<\/li>\n
                2. Evaluation of accounting system and checking proper authority for transactions.<\/li>\n
                3. Helps the management in removing weaknesses of the organisation.<\/li>\n
                4. Review the working of the business.<\/li>\n
                5. Protection of assets.<\/li>\n
                6. Evaluation of internal check system.<\/li>\n
                7. Detection of errors in accounting records.<\/li>\n
                8. Determination of liability of employees.<\/li>\n
                9. Helping the external auditor.<\/li>\n
                10. Checking performance appraisals.<\/li>\n
                11. Providing suggestions to the management for improvement of system.<\/li>\n
                12. Proper use of resources.<\/li>\n
                13. To ensure that proper accounting policies have been followed.<\/li>\n
                14. Seek new ideas<\/li>\n
                15. Detect Fraud<\/li>\n<\/ol>\n

                  Internal Check:
                  \nThese are the checks on day-to-day transactions which operate continuously as part of routine system whereby the work of one person is checked by another.<\/p>\n

                  Benefits:<\/p>\n

                    \n
                  1. Proper accounting system is achieved.<\/li>\n
                  2. It facilitate better management by proper internal control, internal check and internal audit.<\/li>\n
                  3. Reviewing the progress of business concern.<\/li>\n
                  4. Exercising effective control over business activities.<\/li>\n
                  5. Preventing occurrence of errors\/frauds.<\/li>\n
                  6. Safeguarding assets.<\/li>\n
                  7. It helps to apply division of labour.<\/li>\n
                  8. It helps to establish the performance standards\/ fixing responsibility.<\/li>\n
                  9. It helps the external auditor.<\/li>\n
                  10. Enables proper use of resources.<\/li>\n
                  11. Improves performance of business and employees.<\/li>\n
                  12. Helpful to investigate into the business matters at the request of management or owner.<\/li>\n<\/ol>\n

                    Limitations:<\/p>\n

                      \n
                    1. Shortage of audit staff.<\/li>\n
                    2. There is a time gap between recording and checking entries because auditing can start only after accounting ends.<\/li>\n
                    3. Some errors may remain undetected.<\/li>\n
                    4. Management may not be responsive to the auditors.<\/li>\n
                    5. If the duties are not properly divided among the audit staff, benefits of internal audit cannot be attained.<\/li>\n<\/ol>\n

                      Nutshell:
                      \nAudit of the internal control system established by the management is known as the internal audit.<\/p>\n

                      Financial Audit:<\/p>\n

                        \n
                      1. Statutory audit is also called financial audit.<\/li>\n
                      2. Financial audit refers to the audit of financial statements.<\/li>\n
                      3. Need for financial Audit arises as control is vested in hands of management and financial statement are prepared by the management.<\/li>\n
                      4. It is done to ensure that the financial statements depicts a true and fair picture.<\/li>\n
                      5. An independent auditor (external auditor) is appointed to conduct the audit.<\/li>\n
                      6. Audited financial statements are more reliable.<\/li>\n
                      7. Section 139(1) of the Companies Act, 2013 contains provisions regarding the appointment of the auditor.<\/li>\n
                      8. Sections 139 to 147 under chapter X of the Companies Act, 2013 contains provisions regarding statutory audit and auditors.<\/li>\n<\/ol>\n

                        Secretarial Audit:
                        \nA Company Secretary in Practice has been assigned the role of Secretarial Audit under Section 2(2) (c) (v) of the CS Act, 1980.<\/p>\n

                          \n
                        1. It is also known as compliance audit.<\/li>\n
                        2. Helps to detect non-compliance and to take corrective measures.<\/li>\n
                        3. This is done to ensure that all legal and other compliance’s have been adhered to by the company.<\/li>\n
                        4. Secretarial audit is an effective tool for corporate compliance management.<\/li>\n
                        5. This type of audit is performed by practicing company secretaries.<\/li>\n
                        6. Secretarial audit helps a company to strengthen its compliance mechanism.<\/li>\n
                        7. It is generally carried out periodically (quarterly\/half yearly).<\/li>\n
                        8. Section 204 of Companies Act, 2013 provides that every listed company and a company belonging to other class shall annex with its Board\u2019s Report, a Secretarial Audit Report given by practicing CS.<\/li>\n<\/ol>\n

                          As per Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, other class of companies for the purpose of Section 204 of the Companies Act, 2013 include:<\/p>\n

                            \n
                          • Every public company having a paid-up share capital of fifty crore rupees or more; or<\/li>\n
                          • Every public company having a turnover of two hundred fifty crore rupees or more; or<\/li>\n<\/ul>\n

                            The secretarial auditor will submit his report in form MR – 3.<\/p>\n

                            Cost Audit:
                            \nThe \u201cInstitute of Cost Accountants of India” defines Cost audit as \u201ca system
                            \nof audit introduced by the Government of India for the review, examination and appraisal of cost accounting records and attendant information, required to be maintained by specified industries.\u201d According to CIMA, London, cost audit is \u201cthe verification of the correctness of cost accounts and of adherence to the Cost Accounting plan.\u201d<\/p>\n

                              \n
                            • Cost audit refers to the audit of costing records of an entity.<\/li>\n
                            • It is an audit introduced by the Government of India for review, examination and appraisal of cost accounting records.<\/li>\n
                            • Section 148 of Companies Act, 2013 contains separate provisions on cost audit.<\/li>\n
                            • Central Government may direct, by an order to the prescribed class of companies to maintain the cost records.<\/li>\n
                            • Section 148 of the Act contains provisions regarding cost audit and contains that a cost audit wherever conducted is in addition to statutory audit conducted under Section 143.<\/li>\n
                            • Central Government by order, may direct for the audit of cost records of class of companies having net worth or turnover of such amount as may be prescribed.<\/li>\n
                            • It shall be conducted by a cost accountant in practice who shall be appointed by the board within 180 days from commencement of every financial year.<\/li>\n
                            • Person appointed under Section 139 as an auditor of a company i.e. a financial auditor shall not be appointed as a cost auditor of the same company.<\/li>\n
                            • Such audit shall be in addition to the audit conducted under Section 143 i.e. statutory or Financial Audit.
                              \nCost audit report shall be submitted by the cost accountant to the board of directors of the company within 180 days from close of financial year.<\/li>\n
                            • Company shall within 30 days from the date of receipt of the copy of the cost audit report furnish CG such report with full information and explanation.<\/li>\n
                            • CG can call for further information or explanation from the company if necessary.
                              \nCost records include: Cost accounts, cost reports, cost statements, cost data, cost techniques etc.<\/li>\n<\/ul>\n

                              Cost Audit is mandatory for:<\/p>\n\n\n\n\n\n
                              Industry<\/td>\nCriteria<\/td>\n<\/tr>\n
                              1. Bulk drugs
                              \n2. Formulations
                              \n3. Fertilizers
                              \n4. Sugar
                              \n5. Industrial alcohol
                              \n6. Electricity
                              \n7. Petroleum
                              \n8. Telecommunications<\/td>\n                              		During immediate previous F.Y.
                              \n(a) Aggregate value of net worth exceeding \u20b9 5 crores OR
                              \n(b) Aggregate value of turnover exceeding \u20b9 20 crores OR
                              \n(c) Company\u2019s equity or debt securities are listed or are in the process of getting listed whether in India or outside India.<\/td>\n<\/tr>\n
                              1. Cement
                              \n2. Tyre and tube
                              \n3. Steel Plant
                              \n4. Steel tubes and pipes
                              \n5. Paper or insecticides<\/td>\n                              		During immediately preceding F.Y.
                              \n(a) Aggregate value of turnover exceeds \u20b9 100 crores.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

                              The Cost Auditor has:<\/p>\n

                                \n
                              • To see whether the planned expenditure is designed to give optimum results.<\/li>\n
                              • To see whether size and channels of expenditure were designed to produce best results.<\/li>\n
                              • Whether return from expenditure on capital and current operations can be improved.<\/li>\n<\/ul>\n

                                Benefits of Cost Audit:<\/p>\n

                                  \n
                                • It ensures that cost control and cost reduction techniques are followed.<\/li>\n
                                • It ensures efficient utilisation of scarce resources.<\/li>\n
                                • It ensures that proper cost records are maintained.<\/li>\n
                                • It also ensures that the units has been running economically and efficiently.<\/li>\n<\/ul>\n

                                  Tax Audit:<\/p>\n

                                    \n
                                  • Audit of accounts required under the Income Tax Act, 1961 Section 44AB is known as Tax Audit.<\/li>\n
                                  • It is done to assist the income tax authorities in assessing correctly the income tax of assessees.<\/li>\n<\/ul>\n

                                    Such audit is mandatory for the following persons:<\/p>\n\n\n\n\n
                                    (a) For person carrying on profession.<\/td>\nIf gross receipts exceeds \u20b9 50,00,000 in the previous year.<\/td>\n<\/tr>\n
                                    (b) For person carrying on a business.<\/td>\nIf turnover exceeds \u20b9 1,00,00,000 in the previous year.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

                                    Bank Audit:
                                    \nAudit performed for monitoring and regulating the activities of a bank is known as Bank Audit.<\/p>\n

                                    The Auditor has to:<\/p>\n

                                      \n
                                    • Ensure that financial statements show a true and fair view.<\/li>\n
                                    • Adequate provisions for non performing assets\/ Bad Debts have been made in the books.<\/li>\n
                                    • All expenses\/incomes have been duly accounted for.<\/li>\n
                                    • Profit is correctly worked out.<\/li>\n<\/ul>\n

                                      The audit of banks is governed by the Banking Regulation Act, 1949.<\/p>\n

                                      Audit of Co-operative Societies:<\/p>\n

                                        \n
                                      • A co-operative society is an association where in some people work together in order to achieve a common economic objective.<\/li>\n
                                      • Here capital is contributed by all the members where as society is managed by some’elected people.<\/li>\n
                                      • Due to separation of ownership and management, audit is required by law.<\/li>\n
                                      • The affairs of co-operative societies are often managed by persons with no managerial, technical or accounting skills. Thus, an independent financial auditor is required to report on these aspects also.<\/li>\n<\/ul>\n

                                        Audit of Trust:<\/p>\n

                                          \n
                                        • A trust is a relationship created at the direction of an individual, in which one or more persons hold the individual\u2019s property subject to certain duties to use it and protect it for benefit of others.<\/li>\n
                                        • Audit of trust ensures the reliability of financial statements to those for whose benefit the trust is created.<\/li>\n
                                        • Trusts are required to be audited under the provisions of Income Tax Act, 1961.<\/li>\n<\/ul>\n

                                          Audit of Insurance:<\/p>\n

                                            \n
                                          • Audit of insurance\/insurance audit involves examination of the operations, records and books of account of the insurance company.<\/li>\n
                                          • Audit of insurance companies is governed under Insurance Regulatory and Development Act, 1999.<\/li>\n
                                          • Auditor has to see customers have paid the appropriate premium for risk cover provided to him.<\/li>\n<\/ul>\n

                                            Audit of Partnership Firms
                                            \n1. Audit of books and accounts of partnership firm is called as partnership firm audit.<\/p>\n

                                            2. This audit is not mandatory, under Partnership Act, 1932.<\/p>\n

                                            3. These firms are required to get their accounts audited under the provisions of Income Tax Act, 1961, but on satisfying the prescribed criterion.<\/p>\n

                                            4. Benefits of partnership firm audit:<\/p>\n

                                              \n
                                            • Helps in proper valuation of goodwill.<\/li>\n
                                            • Distribution of share of deceased partner.<\/li>\n
                                            • Enables easy availability of loans.<\/li>\n<\/ul>\n

                                              5. This audit is carried as per the terms of partnership deed and Partnership Act.<\/p>\n

                                              Sole Proprietorship Audit:<\/p>\n

                                                \n
                                              • It refers to the audit of books and accounts of sole proprietorship concern.<\/li>\n
                                              • It is not mandatory.<\/li>\n
                                              • But on satisfying the prescribed criterion they can get their accounts audited under Income Tax Act, 1961.<\/li>\n<\/ul>\n

                                                Benefits:<\/p>\n

                                                  \n
                                                • Ensures proper maintenance of books and accounts by the accountant.<\/li>\n
                                                • Prevention and detection of errors\/frauds.<\/li>\n
                                                • Audited Books are relied well by banks, statutory authorities etc.<\/li>\n<\/ul>\n

                                                  Government Audit:<\/p>\n

                                                    \n
                                                  • Auditing of government departments and companies is called as government audit.<\/li>\n
                                                  • It is conducted by the Comptroller and Auditor General of India (C & AG).<\/li>\n
                                                  • It ensures that the transactions of government are properly executed, books are properly maintained, income\/expenditure are correctly recorded, etc.<\/li>\n
                                                  • C & AG shall be appointed by the President and can be removed from office on the like grounds as a judge of supreme court.<\/li>\n
                                                  • The audit report relating to the accounts of UG & SG should be submitted by C & AG to the president or governor of the state.<\/li>\n
                                                  • The first auditor of the government company shall be appointed by C & AG within 60 days from the date of incorporation. And in case of failure, the board shall appoint the auditor in next 30 days.<\/li>\n
                                                  • Subsequent auditor shall be appointed by C & AG within 180 days from the commencement of the financial year.<\/li>\n
                                                  • C&AG also audits Government Companies under the provision of Companies Act, 2013 and other legislature.<\/li>\n<\/ul>\n

                                                    Management Audit:<\/p>\n

                                                      \n
                                                    • It has been originated from America.<\/li>\n
                                                    • It is a future oriented task, which evaluates the activities of all departments to provide proper suggestions to the management to help their work.<\/li>\n
                                                    • It helps in attaining organisational goals, refers to existence of control system, compliance of rules & regulations, process of managerial decisions etc.<\/li>\n
                                                    • It refers to the audit of a company’s management.<\/li>\n
                                                    • It checks the effectiveness of an organisation\u2019s systems and procedures.<\/li>\n
                                                    • Management audit is also known as operational audit.<\/li>\n
                                                    • It is not mandatory but recommendatory certainly.<\/li>\n<\/ul>\n

                                                      Management audit involves:<\/p>\n

                                                        \n
                                                      • Establishing performance objectives.<\/li>\n
                                                      • Setting standards and criteria for assessment.<\/li>\n
                                                      • Evaluating actual performance against targeted ones.<\/li>\n<\/ul>\n

                                                        Functions of Management Audit:<\/p>\n

                                                          \n
                                                        • It identifies objectives of organisation and allocates overall objectives in small parts.<\/li>\n
                                                        • It reviews structure of organisation and asset and decides whether goals can be obtained or not.<\/li>\n
                                                        • It examines all scope of work and liability centre.<\/li>\n
                                                        • It provides valuable suggestions to management after evaluation.<\/li>\n<\/ul>\n

                                                          Functional Audit:<\/p>\n

                                                            \n
                                                          • Checking of the system, processing, input\/output of a function is referred as a functional audit.<\/li>\n
                                                          • It is carried out to evaluate the effectiveness of department processes.<\/li>\n
                                                          • It helps to fill the gaps which creates a difference between targeted performance and actual performance.<\/li>\n<\/ul>\n

                                                            Propriety Audit:
                                                            \n1. Kohler defined proprietary audit as that which meets the test of public interest, commonly accepted customs and standards of conduct and particularly as applied to professional performance, requirements of Govt, regulations and professional codes.<\/p>\n

                                                            2. It mean to check that the transactions have been done in conformity with established rules, principles etc.
                                                            \nIt means verification of following:<\/p>\n

                                                              \n
                                                            • Proper recording has been done in appropriate books of accounts.<\/li>\n
                                                            • The assets have not been misused & properly safeguarded.<\/li>\n
                                                            • The business funds have been properly utilized.<\/li>\n
                                                            • The concern is yielding the expected results.<\/li>\n
                                                            • There may be cases where an expenditure is done in conformity with laws and rules, still either the expenditure was improper or was not required to be made.<\/li>\n
                                                            • To keep a check on such expenditures, propriety audit is done.<\/li>\n
                                                            • it is an important form of management audit.<\/li>\n
                                                            • This audit is done in respect of Government Companies and Government departments because public money and public interest are involved in it.<\/li>\n<\/ul>\n

                                                              Efficiency Audit:<\/p>\n

                                                                \n
                                                              • It is carried out to ascertain the efficiency of a process\/system.<\/li>\n
                                                              • It is also known as performance audit.<\/li>\n
                                                              • A performance audit can be in the form of review of a program to assure that it is satisfying its objectives.<\/li>\n
                                                              • It may be initiated by the organisation or any outside interested party.<\/li>\n
                                                              • It enables the management or owner to know whether the departments and agencies are managing resources with due regard and efficiency.<\/li>\n
                                                              • It also helps the department and agencies to identify opportunities to provide more or better services at the same or lower cost.<\/li>\n<\/ul>\n

                                                                Inputs are resources used to produce outputs. Outputs are goods and services produced to meet client needs. It is defined in terms of quantity and quality. Quantity refers to amount, volume or number of outputs produced. Quality refers to amount, volume or number of outputs produced. Productivity is the ratio of the amount of acceptable goods and services produced to amount of resources used to produced them.<\/p>\n

                                                                It is measured by comparing achieved productivity with desired norm, target or standard.<\/p>\n

                                                                Types of Auditing MCQ Questions<\/strong><\/p>\n

                                                                1. In earlier times, auditing was limited to:
                                                                \n(a) Finance Audit
                                                                \n(b) Internal Audit
                                                                \n(c) Cost Audit
                                                                \n(d) Both (a) and (b).
                                                                \nAnswer:
                                                                \n(a) Finance Audit<\/p>\n

                                                                2. Audit of a Partnership firm Is a:
                                                                \n(a) Audit required by law
                                                                \n(b) Audit by agreement
                                                                \n(c) Voluntary audit
                                                                \n(d) Audit required by owners.
                                                                \nAnswer:
                                                                \n(c) Voluntary audit<\/p>\n

                                                                3. Audit of Trust is governed under:
                                                                \n(a) Indian Trust Act
                                                                \n(b) Income Tax Act
                                                                \n(c) Miscellaneous Act
                                                                \n(d) None of these.
                                                                \nAnswer:
                                                                \n(b) Income Tax Act<\/p>\n

                                                                4. Audit of the internal control system established by the management is known as __________.
                                                                \n(a) Internal Audit
                                                                \n(b) Management Audit
                                                                \n(c) Operational Audit
                                                                \n(d) Propriety Audit.
                                                                \nAnswer:
                                                                \n(a) Internal Audit<\/p>\n

                                                                5. Scope of Internal Audit is defined by:
                                                                \n(a) Statute
                                                                \n(b) Owner
                                                                \n(c) Shareholders
                                                                \n(d) Management.
                                                                \nAnswer:
                                                                \n(d) Management.<\/p>\n

                                                                6. Secretarial audit is also known as __________ .
                                                                \n(a) Propriety Audit
                                                                \n(b) Compliance Audit
                                                                \n(c) Operational Audit
                                                                \n(d) Procedural Audit.
                                                                \nAnswer:
                                                                \n(b) Compliance Audit<\/p>\n

                                                                7. Secretarial audit is conducted by:
                                                                \n(a) Practicing Chartered Accountant
                                                                \n(b) Practicing Company Secretary
                                                                \n(c) Any Company Secretary
                                                                \n(d) Cost and Works Accountant
                                                                \nAnswer:
                                                                \n(b) Practicing Company Secretary<\/p>\n

                                                                8. Cost records include:
                                                                \n(a) Cost accounts
                                                                \n(b) Cost statements
                                                                \n(c) Cost reports
                                                                \n(d) All of these
                                                                \nAnswer:
                                                                \n(d) All of these<\/p>\n

                                                                9. Cost audit is mandatory for every manufacturing industry. This statement is __________.
                                                                \n(a) True
                                                                \n(b) False
                                                                \n(c) Partly true
                                                                \n(d) None
                                                                \nAnswer:
                                                                \n(b) False<\/p>\n

                                                                10. Tax audit is mandatory for a person carrying on a profession, if its gross receipts in the previous year exceeded __________.
                                                                \n(a) \u20b9 1,00,00,000
                                                                \n(b) \u20b9 25,00,000
                                                                \n(c) \u20b9 15,00,000
                                                                \n(d) \u20b9 50,00,000
                                                                \nAnswer:
                                                                \n(d) \u20b9 50,00,000<\/p>\n

                                                                11. Which of these is not an objective of carrying out a bank audit?
                                                                \n(a) To ensure financial statements show true and fair view.
                                                                \n(b) To ensure adequate provisions are made.
                                                                \n(c) To ensure profit is correctly worked out.
                                                                \n(d) To check the reasons for losses in the bank.
                                                                \nAnswer:
                                                                \n(d) To check the reasons for losses in the bank.<\/p>\n

                                                                12. Audit of Insurance Companies is governed by:
                                                                \n(a) Companies Act
                                                                \n(b) Income Tax Act
                                                                \n(c) Insurance Regulatory Development Act
                                                                \n(d) Miscellaneous Acts.
                                                                \nAnswer:
                                                                \n(c) Insurance Regulatory Development Act<\/p>\n

                                                                13. Audit of a proprietorship concern is also known as __________.
                                                                \n(a) Sole Proprietorship Audit
                                                                \n(b) Propriety Audit .
                                                                \n(c) Operational Audit
                                                                \n(d) Financial Audit.
                                                                \nAnswer:
                                                                \n(a) Sole Proprietorship Audit<\/p>\n

                                                                14. Government audit is conducted by:
                                                                \n(a) Practicing Chartered Accountant
                                                                \n(b) Practicing Company Secretary
                                                                \n(c) An expert
                                                                \n(d) Comptroller and Auditor General of India.
                                                                \nAnswer:
                                                                \n(d) Comptroller and Auditor General of India.<\/p>\n

                                                                15. Operational audit is the other name of:
                                                                \n(a) Management Audit
                                                                \n(b) Functional Audit
                                                                \n(c) Efficiency Audit
                                                                \n(d) None
                                                                \nAnswer:
                                                                \n(a) Management Audit<\/p>\n

                                                                16. Management audit is __________.
                                                                \n(a) Voluntary
                                                                \n(b) Mandatory
                                                                \n(c) Required by law
                                                                \n(d) None of these
                                                                \nAnswer:
                                                                \n(a) Voluntary<\/p>\n

                                                                17. Performance audit is the other name of:
                                                                \n(a) Operational Audit
                                                                \n(b) Functional Audit
                                                                \n(c) Efficiency Audit
                                                                \n(d) Propriety Audit.
                                                                \nAnswer:
                                                                \n(c) Efficiency Audit<\/p>\n

                                                                18. Which type of audit is conducted by Internal Audit Staff?
                                                                \n(a) Cost Audit
                                                                \n(b) Functional Audit
                                                                \n(c) Internal Audit
                                                                \n(d) Efficiency Audit.
                                                                \nAnswer:
                                                                \n(c) Internal Audit<\/p>\n

                                                                19. For a sugar manufacturing company, having a net worth of \u20b9 4.5 crores, cost audit is __________.
                                                                \n(a) Mandatory
                                                                \n(b) Voluntary
                                                                \n(c) Required by Government
                                                                \n(d) None
                                                                \nAnswer:
                                                                \n(b) Voluntary<\/p>\n

                                                                20. Audit of Co-operative Societies is a __________.
                                                                \n(a) Voluntary Audit
                                                                \n(b) Audit Government
                                                                \n(c) Audit Required under Law
                                                                \n(d) None of these
                                                                \nAnswer:
                                                                \n(c) Audit Required under Law<\/p>\n

                                                                21. Progressive Review is __________ of Internal audit.
                                                                \n(a) Limitation
                                                                \n(b) Benefit
                                                                \n(c) both (a) and (b)
                                                                \n(d) Neither (a) nor (b)
                                                                \nAnswer:
                                                                \n(b) Benefit<\/p>\n

                                                                22. A Company Secretary in practice has been assigned role of secretarial auditor under.
                                                                \n(a) Section 2(2)(c)(iv)
                                                                \n(b) Section 2(2)(d)(v)
                                                                \n(c) Section 2(2)(d)(iv)
                                                                \n(d) Section 2(2)(c)(v)
                                                                \nAnswer:
                                                                \n(d) Section 2(2)(c)(v)<\/p>\n

                                                                23. __________ is useful for purpose of cost control, cost reduction and proper utilization of resources.
                                                                \n(a) Bank audit
                                                                \n(b) Cost audit
                                                                \n(c) Tax audit
                                                                \n(d) Efficiency audit
                                                                \nAnswer:
                                                                \n(b) Cost audit<\/p>\n

                                                                24. __________ audit helps the management in finding out the inefficiencies in system.
                                                                \n(a) Efficiency
                                                                \n(b) Functional
                                                                \n(c) Propriety
                                                                \n(d) Management
                                                                \nAnswer:
                                                                \n(a) Efficiency<\/p>\n

                                                                25. Secretarial audit is voluntary for companies which are not covered under section 204.
                                                                \n(a) True
                                                                \n(b) Partly true
                                                                \n(c) Partly false
                                                                \n(d) False
                                                                \nAnswer:
                                                                \n(a) True<\/p>\n

                                                                26. Operational audit is also known as __________.
                                                                \n(a) Management audit
                                                                \n(b) Functional audit
                                                                \n(c) Propriety audit
                                                                \n(d) Efficiency audit
                                                                \nAnswer:
                                                                \n(a) Management audit<\/p>\n

                                                                27. \u201cSecretarial audit can be performed by Practising Company Secretary.\u201d
                                                                \n(a) True
                                                                \n(b) False
                                                                \n(c) Partly True
                                                                \n(d) Partly false
                                                                \nAnswer:
                                                                \n(b) False<\/p>\n

                                                                28. Who appoints internal auditor?
                                                                \n(a) Shareholder
                                                                \n(b) Management
                                                                \n(c) Government
                                                                \n(d) All of above
                                                                \nAnswer:
                                                                \n(b) Management<\/p>\n

                                                                29. Auditor has to obtain __________ audit evidence.
                                                                \n(a) Correct
                                                                \n(b) Sufficient and appropriate
                                                                \n(c) Adequate
                                                                \n(d) Useful
                                                                \nAnswer:
                                                                \n(b) Sufficient and appropriate<\/p>\n

                                                                30. Government audit is conducted by __________.
                                                                \n(a) Central Government
                                                                \n(b) Bank
                                                                \n(c) C & AG
                                                                \n(d) Board of Directors
                                                                \nAnswer:
                                                                \n(c) C & AG<\/p>\n

                                                                31. What are the factors affecting types of audit?
                                                                \n(a) Nature of work undertaken
                                                                \n(b) Approach used for conducting audit
                                                                \n(c) Organisation structure
                                                                \n(d) All of these
                                                                \nAnswer:
                                                                \n(d) All of these<\/p>\n

                                                                32. What are the categories of audit?
                                                                \n(a) Audit required under law
                                                                \n(b) Voluntary audit
                                                                \n(c) None
                                                                \n(d) both (a) and (b)
                                                                \nAnswer:
                                                                \n(d) both (a) and (b)<\/p>\n

                                                                33. Voluntary audit includes the following types of Organisation __________.
                                                                \n(a) Audit of partnership firm
                                                                \n(b) Sole proprietorship
                                                                \n(c) Hindu undivided families
                                                                \n(d) All of these
                                                                \nAnswer:
                                                                \n(d) All of these<\/p>\n

                                                                34. Organisations gets Internal audit with a view to evaluate __________.
                                                                \n(a) Effectiveness of internal control
                                                                \n(b) Soundness of financial system
                                                                \n(c) Effectiveness of business processes
                                                                \n(d) All of the above
                                                                \nAnswer:
                                                                \n(d) All of the above<\/p>\n

                                                                35. Objectives of audit __________.
                                                                \n(a) Working review
                                                                \n(b) Determine liabilities
                                                                \n(c) Special investigation
                                                                \n(d) All of these
                                                                \nAnswer:
                                                                \n(d) All of these<\/p>\n

                                                                36. Advantage of Internal Audit __________.
                                                                \n(a) Liabilities Protection
                                                                \n(b) Performance Improvement
                                                                \n(c) Ineffective Control
                                                                \n(d) All of the above
                                                                \nAnswer:
                                                                \n(b) Performance Improvement<\/p>\n

                                                                37. Users of financial statement are __________.
                                                                \n(a) Trade Creditor
                                                                \n(b) Labour Union
                                                                \n(c) Both (a) and (b)
                                                                \n(d) None of these
                                                                \nAnswer:
                                                                \n(c) Both (a) and (b)<\/p>\n

                                                                38. According to Section 139(1) of Company Act, Auditor can be appointed by __________.
                                                                \n(a) Shareholder
                                                                \n(b) Board of Directors
                                                                \n(c) In General Meeting
                                                                \n(d) None of these
                                                                \nAnswer:
                                                                \n(a) Shareholder<\/p>\n

                                                                39. Which of the following is NOT an objective of internal audit?
                                                                \n(a) To ensure effective control,
                                                                \n(b) To protect the organisations assets
                                                                \n(c) To help the external auditor
                                                                \n(d) To give an opinion on the true & fair view of the financial statements.
                                                                \nAnswer:
                                                                \n(d) To give an opinion on the true & fair view of the financial statements.<\/p>\n

                                                                40. Internal audit is __________.
                                                                \n(a) Beneficiary
                                                                \n(b) Mandatory
                                                                \n(c) Both (a) and (b)
                                                                \n(d) Neither (a) nor (b)
                                                                \nAnswer:
                                                                \n(a) Beneficiary<\/p>\n

                                                                41. The provisions relating to the appointment of auditor are contained in which section of the Companies Act, 2013?
                                                                \n(a) Sec. 141(1)
                                                                \n(b) Sec. 141(2)
                                                                \n(c) Sec. 139(1)
                                                                \n(d) Sec. 139(2)
                                                                \nAnswer:
                                                                \n(c) Sec. 139(1)<\/p>\n

                                                                42. The audit conducted to check the performance of a system or a process is called __________.
                                                                \n(a) Functional audit
                                                                \n(b) Propriety audit
                                                                \n(c) Management audit
                                                                \n(d) Efficiency audit.
                                                                \nAnswer:
                                                                \n(d) Efficiency audit.<\/p>\n

                                                                43. The objective of compliance management system is __________.
                                                                \n(a) To protect the interest of all stakeholders
                                                                \n(b) To avoid any legal action against the company and its management
                                                                \n(c) Both (a) and (b)
                                                                \n(d) Neither (a) nor (b)
                                                                \nAnswer:
                                                                \n(c) Both (a) and (b)<\/p>\n

                                                                44. Income Tax Audit is mandatory for professionals if the gross receipts exceeds __________.
                                                                \n(a) \u20b9 10,00,000
                                                                \n(b) \u20b9 25,00,000
                                                                \n(c) \u20b9 60,00,000
                                                                \n(d) \u20b9 50,00,000
                                                                \nAnswer:
                                                                \n(d) \u20b9 50,00,000<\/p>\n

                                                                45. NPA stands for.
                                                                \n(a) Net Performing Audit
                                                                \n(b) Notional Performance Audit
                                                                \n(c) Non Performing Auditor
                                                                \n(d) Non Performing Assets
                                                                \nAnswer:
                                                                \n(d) Non Performing Assets<\/p>\n

                                                                46. The provisions relating to audit & accounts of Banks are contained in __________.
                                                                \n(a) Bank Audit Act, 1949
                                                                \n(b) Companies Act, 2013
                                                                \n(c) Banking Regulation Act, 1949
                                                                \n(d) None of the above.
                                                                \nAnswer:
                                                                \n(c) Banking Regulation Act, 1949<\/p>\n

                                                                47. The audit of partnership is carried out as per the __________.
                                                                \n(a) Partnership deed
                                                                \n(b) Partnership Act.
                                                                \n(c) Both (a) & (b)
                                                                \n(d) Neither (a) nor'(b)
                                                                \nAnswer:
                                                                \n(a) Partnership deed<\/p>\n

                                                                48. The audit of receipts and expenditure of the union and state government is done by __________.
                                                                \n(a) Comptroller and Auditor General of India
                                                                \n(b) A Chartered Accountant
                                                                \n(c) Registrar
                                                                \n(d) Ministry of Corporate Affairs.
                                                                \nAnswer:
                                                                \n(a) Comptroller and Auditor General of India<\/p>\n

                                                                49. The audit which is carried so as to evaluate the effectiveness of the department process and for finding gaps in the desired and actual output is called __________.
                                                                \n(a) Propriety audit
                                                                \n(b) Functional audit
                                                                \n(c) Management audit
                                                                \n(d) Efficiency audit
                                                                \nAnswer:
                                                                \n(b) Functional audit<\/p>\n

                                                                50. The audit which is conducted to check unavoidable expenses is termed as __________.
                                                                \n(a) Functional audit
                                                                \n(b) Propriety audit
                                                                \n(c) Management audit
                                                                \n(d) None of the above
                                                                \nAnswer:
                                                                \n(b) Propriety audit<\/p>\n

                                                                51. Statutory audit is to be done by:
                                                                \n(a) A practicing Chartered Accountant or a firm of practicing Chartered Accountants
                                                                \n(b) A practicing Company Secretary or a firm of practicing Company Secretaries.
                                                                \n(c) A practicing Cost Accountant or a firm of practicing Cost Accountants
                                                                \n(d) None of the above
                                                                \nAnswer:
                                                                \n(a) A practicing Chartered Accountant or a firm of practicing Chartered Accountants
                                                                \nA practicing Chartered Accountant or a firm of practicing Chartered Accountants Statutory Audit or Financial Audit refers to the audit of financial statements to depict a true and fair picture. An independent auditor (external auditor) is appointed to conduct the audit.
                                                                \nThus a practicing CA or a firm of practicing CAs are appointed to conduct a statutory audit.<\/p>\n

                                                                52. Balance sheet audit includes verification of:
                                                                \n(a) Assets
                                                                \n(b) Liabilities
                                                                \n(c) Income accounts and expenses accounts wherever appropriate
                                                                \n(d) All of the above
                                                                \nAnswer:
                                                                \n(d) All of the above
                                                                \nBalance Sheet audit involves the verification of all the balance sheet items which involves both assets and liabilities as well as verification of income and expenses accounts whenever required.
                                                                \nThus, a company having internal audit system in place statutory audit is mandatory.<\/p>\n

                                                                53. The audit conducted by Comptroller and Auditor General of India is a form of:
                                                                \n(a) Bank Audit
                                                                \n(b) Financial Audit
                                                                \n(c) Routine Audit
                                                                \n(d) Government Audit
                                                                \nAnswer:
                                                                \n(d) Government Audit
                                                                \nGovernment Audit aims to ensure that the financial transactions of the government are executed properly. It is the duty of comptroller and Auditor General of India (C & AG) to audit the receipts and expenditure of the union and State Governments.
                                                                \nThus, audit conducted by the C & AG is a form of Government Audit<\/p>\n

                                                                54. __________ is useful for the purpose of cost control, cost reduction and proper utilization of scarce resources:
                                                                \n(a) Financial Audit
                                                                \n(b) Cost Audit
                                                                \n(c) Secretarial Audit
                                                                \n(d) Tax Audit
                                                                \nAnswer:
                                                                \n(b) Cost Audit
                                                                \nCost Audit refers to the audit of costing records of an entity. Costing records includes cost accounts, cost reports, cost statements, cost data, cost techniques etc.
                                                                \nThus, cost audit is useful for the purpose of cost control, cost reduction and proper utilisation of scarce resources.<\/p>\n

                                                                55. Who can order management audit?
                                                                \n(a) Workers of a company
                                                                \n(b) Central Government
                                                                \n(c) Board of Directors
                                                                \n(d) Securities and Exchange Board of India
                                                                \nAnswer:
                                                                \n(c) Board of Directors
                                                                \nManagement audit is a structured review of the systems and procedures of an organisation in order to evaluate whether they are being conducted efficiently and effectively. Thus, the Board of Directors in whose hands the management of the company rests can order the management audit.<\/p>\n

                                                                56. Cost Audit is:
                                                                \n(a) Mandatory for all companies
                                                                \n(b) Mandatory for manufacturing companies covered by Cost Audit Report Order
                                                                \n(c) Mandatory for all trading companies
                                                                \n(d) Mandatory for all manufacturing companies
                                                                \nAnswer:
                                                                \n(b) Mandatory for manufacturing companies covered by Cost Audit Report Order Ministry of corporate affairs has issued mandatory cost audit orders on companies engaged in bulk drugs, fertilisation, sugar telecommunication, industrial alcohol and electricity & petroleum and if in immediate previous year aggregate value of net worth exceeds the specified limits.
                                                                \nThus, cost audit is mandatory for manufacturing companies covered by cost audit report order.<\/p>\n

                                                                57. Statutory audit of a company is:
                                                                \n(a) Mandatory
                                                                \n(b) Voluntary
                                                                \n(c) Recommendatory
                                                                \n(d) Voluntary but recommendatory
                                                                \nAnswer:
                                                                \n(a) Mandatory
                                                                \nStatutory audit is conducted to ascertain whether the financial statements presents a true and fair view of the financial position. The need for statutory audit arises because of the separation of ownership and management of the company. Shareholders need to be assured that the financial statements prepared by the management are reliable. Thus, statutory audit is mandatory for companies.<\/p>\n

                                                                58. Who appoints an internal auditor?
                                                                \n(a) Shareholders of the company
                                                                \n(b) Statutory auditor
                                                                \n(c) Institute of the Internal auditors of India
                                                                \n(d) Board of Director of the company
                                                                \nAnswer:
                                                                \n(d) Board of Director of the company
                                                                \nInternal audit is an evaluation and analysis of the business operation conducted by the internal audit staff who are appointed by the Board of Directors of the company.<\/p>\n

                                                                59. Ram is a chartered accountant working as proprietor. His gross receipts are \u20b9 51 Lakhs for the year. Which type of audit will necessarily be applicable for him?
                                                                \n(a) Statutory audit
                                                                \n(b) Tax audit
                                                                \n(c) Internal audit
                                                                \n(d) None of the above
                                                                \nAnswer:
                                                                \n(b) Tax audit
                                                                \nIn India, the Income Tax Act, 1961, provides for the compulsory audit of the accounts of certain income tax assessee whose turnover or receipts exceed the specified limits.
                                                                \nAs per the Income Tax Act, every person carrying on the business whose turnover or gross receipts exceeds \u20b9 100,00,000 2 crores for assessee claiming presumptive taxation benefits and \u20b9 50,00,000 in case of profession in the previous year shall get his accounts audited. In this case, Ram should necessarily get his accounts audited.<\/p>\n

                                                                60. In comparison to the independent auditor, an internal auditor is more likely to be concerned with:
                                                                \n(a) Cost accounting system
                                                                \n(b) Internal control system
                                                                \n(c) Legal compliance
                                                                \n(d) Accounting system.
                                                                \nAnswer:
                                                                \n(b) Internal control system
                                                                \nInternal audit is an evaluation and analysis of the business operation conducted by the internal audit staff. It is the part of the overall system of internal control established in an organisation. Moreover, it helps the statutory auditors in getting the statutory audit done effectively. The statutory audit is also required to comment whether the company is having sound internal audit system or not.
                                                                \nThus, in comparison to the independent statutory auditors, an internal auditor is more likely to be concerned with the Internal Control System.<\/p>\n

                                                                61. Which of the following is primarily carried out to ascertain the cases of improper, avoidable and infructuous expenditure?
                                                                \n(a) Propriety audit
                                                                \n(b) Statutory audit
                                                                \n(c) Tax audit
                                                                \n(d) Functional audit
                                                                \nAnswer:
                                                                \n(a) Propriety audit
                                                                \nUnder propriety audit, the expenditure is analysed with a view to ascertain the cases of improper, avoidable and infructuous expenditure even though the expenditure has been incurred in conformity with the existing rules and regulations.<\/p>\n

                                                                62. In general, the scope of management audit is:
                                                                \n(a) Flexible
                                                                \n(b) Rigid
                                                                \n(c) Prescribed by law
                                                                \n(d) Prescribed by the appointing authority.
                                                                \nAnswer:
                                                                \n(a) Flexible
                                                                \nManagement audit is a structured review of the systems and procedures of an organisation in order to evaluate whether they are being conducted efficiently and effectively. It is not mandatory but is recommendatory. Thus, its scope is flexible.<\/p>\n

                                                                63. The statutory auditor of a company can act as:
                                                                \n(a) Internal Auditor
                                                                \n(b) Cost Auditor
                                                                \n(c) Tax Auditor
                                                                \n(d) None of the above
                                                                \nAnswer:
                                                                \n(c) Tax Auditor<\/p>\n

                                                                The internal and statutory auditor of a company cannot be the same persons.
                                                                \nCost auditor must be a member of ICWA and statutory auditor must be a member of ICAI. Thus, cannot be the same persons.
                                                                \nTax auditor and statutory auditor means one and the same thing. Thus, statutory auditor of a company can act as a tax auditor.<\/p>\n

                                                                64. In general, what is the period covered in a statutory audit?
                                                                \n(a) 1 Year
                                                                \n(b) 2 Year
                                                                \n(c) 3 Year
                                                                \n(d) Depending upon the auditor\u2019s wish.
                                                                \nAnswer:
                                                                \n(a) 1 Year
                                                                \nThe statutory auditor reports on the original books of account and the financial statement to the members. Thus, statutory audit covers a period of 1 year.<\/p>\n

                                                                65. As per Companies Act, 2013, which of the following is not voluntary for Companies in India:
                                                                \nX. Secretarial Audit
                                                                \nY. Statutory Audit
                                                                \nZ. Cost Audit W.
                                                                \nInternal Audit Correct option is:
                                                                \n(a) X and Y
                                                                \n(b) X and W
                                                                \n(c) X and Z
                                                                \n(d) X, Y, Z and W
                                                                \nAnswer:
                                                                \n(d) X, Y, Z and W
                                                                \nVarious types of audit prescribed under Companies Act, 2013 are:
                                                                \n1. Statutory Audit: Sec. 139 to 147 under chapter -10 contains provisions regarding audit and auditors. Statutory auditor appointed for a term of 5 years. All companies are required to appoint the same.<\/p>\n

                                                                2. Internal Audit: Certain class or classes of companies as may by prescribed shall appoint internal auditor and report to BOD. \u2014 Secretarial Audit: Every listed company and other class of companies as maybe prescribed is required to annex to the board\u2019s report, a secretarial audit report.<\/p>\n

                                                                3. Cost Audit: Certain class of companies engaged in the production of such goods or providing such services as may be prescribed may be directed to get their cost audit records audited.
                                                                \nThus, option (d) is correct.<\/p>\n

                                                                66. Who appoints the auditor for government company:
                                                                \n(a) Comptroller and Auditor general of India
                                                                \n(b) Shareholders
                                                                \n(c) Central Government
                                                                \n(d) Directors
                                                                \nAnswer:
                                                                \n(a) Comptroller and Auditor general of India
                                                                \n\u201cComptroller and Auditor General of India\u201d appoints the auditor for Government company.<\/p>\n

                                                                67. Statutory Audit is to be done by:
                                                                \n(a) A practicing Chartered Accountant or a firm of practicing CA.
                                                                \n(b) A practicing CS or a firm of practicing CS
                                                                \n(c) A practicing cost accountant or a firm of practicing cost accountant
                                                                \n(d) None of the above.
                                                                \nAnswer:
                                                                \n(a) A practicing Chartered Accountant or a firm of practicing CA.
                                                                \nStatutory Audit or Financial Audit refers to the audit of financial statements to depict a true and fair view. An independent auditor (external auditor) is appointed to conduct the audit. Thus, a practicing CA or a firm of practicing CA\u2019s are appointed to conduct a statutory audit.<\/p>\n

                                                                68. Which of the following is voluntary audit.
                                                                \n(a) Internal Audit
                                                                \n(b) Tax Audit
                                                                \n(c) Cost Audit
                                                                \n(d) Statutory Audit
                                                                \nAnswer:
                                                                \n(a) Internal Audit
                                                                \nWhen there is no statutory obligation to conduct audit, still the audit is carried out, it is known as voluntary audit. Internal audit is also a voluntary audit.<\/p>\n

                                                                69. Income tax Audit is conducted under:
                                                                \n(a) Income Tax Act
                                                                \n(b) Banking Regulation Act
                                                                \n(c) Companies Act
                                                                \n(d) Insurance Act
                                                                \nAnswer:
                                                                \n(a) Income Tax Act
                                                                \nTax audit is the audit of accounts required under the Income Tax Act, 1961. It is done to assist the Income Tax authorities in assessing correctly the Income Tax of assessees.<\/p>\n

                                                                70. Who can do a Bank Audit?
                                                                \n(a) C.A.
                                                                \n(b) C.S.
                                                                \n(c) CMA
                                                                \n(d) All of the above
                                                                \nAnswer:
                                                                \n(a) C.A.
                                                                \nAudit performed for monitoring and regulating the activities of a bank is known as Bank Audit. It is performed by CA.<\/p>\n

                                                                71. The given statement regarding bank audit \u201cAdequate Provision for non perlorming assets\/ Bad debts has to be made in the books\u201d is:
                                                                \n(a) True
                                                                \n(b) False
                                                                \n(c) Partly True
                                                                \n(d) Partly False
                                                                \nAnswer:
                                                                \n(a) True
                                                                \nUnder bank audit, the auditors have to certify that statement of accounts of the bank as at the closure of the financial year to reveal true and fair view of the bank\u2019s financial positions, adequate provision for NPA\/ bad debts has been made in the books or not. Thus, the given statement is True.<\/p>\n

                                                                72. Tax audit is conducted _________number of times in a year.
                                                                \n(a) 1
                                                                \n(b) 2
                                                                \n(c) 3
                                                                \n(d) \u2018n\u2019 no. of times
                                                                \nAnswer:
                                                                \n(a) 1
                                                                \nTax audit is conducted once in a year.<\/p>\n

                                                                73. Which type of audit may be conducted by organisation\u2019s staff?
                                                                \n(a) Internal Audit
                                                                \n(b) External Audit
                                                                \n(c) Cost Audit
                                                                \n(d) Tax Audit
                                                                \nAnswer:
                                                                \n(a) Internal Audit
                                                                \nInternal Audit is an evaluation and analysis of the business operation conducted by the internal audit staff. It is the part of overall system of internal control established in an organisation.<\/p>\n

                                                                74. Who will be responsible for errors in audit report If external auditor relies on the work of internal auditor?
                                                                \n(a) External Auditor
                                                                \n(b) Internal Auditor
                                                                \n(c) Both (a) and (b)
                                                                \n(d) Management
                                                                \nAnswer:
                                                                \n(a) External Auditor
                                                                \nExternal Audit is generally conducted to ascertain whether the Financial Statement presents a true and fair view of the financial position and working result of the organization under audit. The opinion of the auditor, an independent expert assures the owners about the reliability of the financial statements. They will also place greater reliance on financial statements if they have been audited. In some cases, external auditor may use the work of internal auditor by preparing his audit report. However, this does not relieves the external auditor and he continues to remain responsible for errors in the audit report.
                                                                \nThus, external auditor will be responsible for the errors in audit report even if external auditor relies on the work of internal auditor.<\/p>\n

                                                                75. Cost Audit is compulsory for __________.
                                                                \n(a) Fertilization Company
                                                                \n(b) Sugar Company
                                                                \n(c) Tele Communication
                                                                \n(d) All of the above.
                                                                \nAnswer:
                                                                \n(d) All of the above.
                                                                \nCost Audit is a system of audit introduced by the Government of India for the review, examination and appraisal of the cost accounting records and attendant information, required to be maintained by specified industries.
                                                                \nThus, Cost Audit is compulsory for Fertilization, Sugar Companies and Tele Communication.<\/p>\n

                                                                76. Why auditing cannot be done by internal audit staff?
                                                                \n(a) Biased nature
                                                                \n(b) Incapable staff
                                                                \n(c) Both (a) & (b)
                                                                \n(d) None of the above.
                                                                \nAnswer:
                                                                \n(a) Biased nature
                                                                \nAn internal audit is carried out by the team of professionals in the organization. If internal audit is done by the internal audit staff, bias ness arises, thus due to biased nature, internal audit should not be done by internal audit staff.<\/p>\n

                                                                77. Provisions related to bank audit is given in:
                                                                \n(a) Banking Regulation Act, 1949
                                                                \n(b) Companies Act, 2013
                                                                \n(c) Income Tax Act, 1961
                                                                \n(d) None of the above.
                                                                \nAnswer:
                                                                \n(a) Banking Regulation Act, 1949
                                                                \nThe Banking Regulation Act, 1949 contains the provisions relating to the maintenance of accounts and their audit in case of banking sector.<\/p>\n

                                                                78. Audit is:
                                                                \n(a) Internal
                                                                \n(b) External
                                                                \n(c) Both (a) and (b)
                                                                \n(d) None of the above
                                                                \nAnswer:
                                                                \n(c) Both (a) and (b)
                                                                \nAudit are Internal as well as External. Internal audit is when the management appoints auditor while external audit comprises of statutory audit, etc as demanded by law.<\/p>\n

                                                                79. Which of following audits are done every year?
                                                                \n(i) Tax Audit
                                                                \n(ii) Statutory Audit
                                                                \n(iii) Concurrent Audit
                                                                \n(a) (i) & (ii)
                                                                \n(b) (ii) & (iii)
                                                                \n(c) (i) & (iii)
                                                                \n(d) All of the above
                                                                \nAnswer:
                                                                \n(a) (i) & (ii)
                                                                \nThe Tax Audit and Statutory Audit are the audits which are done every year while concurrent audit is voluntary and management can decide whether to perform it per year or not.<\/p>\n

                                                                80. The cost auditor is to Judge whether the planned expenditure is designed to give optimum result. This exercise may be categorised as:
                                                                \n(a) Operation audit
                                                                \n(b) Financial audit
                                                                \n(c) Efficiency audit
                                                                \n(d) Management audit
                                                                \nAnswer:
                                                                \n(c) Efficiency audit
                                                                \nThe cost auditor is to judge whether the planned expenditure is designed to give optimum result. This exercise may be categorised as efficiency audit which refers to comparing the actual results with the desired\/ projected results. It is directed towards the measurement of whether plans have been effectively executed.<\/p>\n

                                                                81. For a tax audit, the specified limit given under Income tax Act, 1961 for a person carrying on business shall be:
                                                                \n(a) Turnover exceeds \u20b9 40,00,000 in the previous year
                                                                \n(b) Turnover exceeds \u20b9 2,00,00,000 for assessee claiming presumptive scheme in the previous year
                                                                \n(c) Turnover is below \u20b9 40,00,000 in the previous year
                                                                \n(d) Turnover is below \u20b9 60,00,000 in the previous year.
                                                                \nAnswer:
                                                                \n(b) Turnover exceeds \u20b9 2,00,00,000 for assessee claiming presumptive scheme in the previous year
                                                                \nAs per the Income Tax Act, 1961, every person carrying on business whose turnover or gross receipts exceeds \u20b9 2,00,00,000 for assessee claiming presumptive scheme (\u20b9 50,00,000 if carrying on profession) in the previous year shall get his accounts audited.<\/p>\n

                                                                82. Consider the following statements about Bank Audit in India\u20b9 (X) The Bank audit may be done by any person who possesses the prescribed qualification i.e. CA, CS and CMA (Y) one of the objectives of Bank audit is to ascertain the adequacy of the provisions of Non-performing assets in Bank. On the basis of above.
                                                                \n(a) Statement X is false and statement Y is true
                                                                \n(b) Statement X and statement Y both are false
                                                                \n(c) Statement X is true and statement Y is false
                                                                \n(d) Statement X and statement Y both are true.
                                                                \nAnswer:
                                                                \n(a) Statement X is false and statement Y is true
                                                                \nIn case of a bank audit, the person who possesses the qualification of a practicing Chartered Accountant is to be appointed as an auditor as per CA Regulations Act, 1988. The Auditors have to certify that statement of accounts of the bank as at the closure of the financial year reveal true and fair view of the banks financial, position, adequate provision for Non-performing Asset (NPA)\/bad debts has been made in the books.
                                                                \nSo, on the basis of above, statement X is false and statement Y is true.<\/p>\n

                                                                83. An auditor of a partnership firm is appointed as per __________.
                                                                \n(a) Status
                                                                \n(b) Agreement
                                                                \n(c) Convention
                                                                \n(d) Government Orders.
                                                                \nAnswer:
                                                                \n(b) Agreement
                                                                \nAt present, partnership firms in India are not legally bound to get their financial statements audited. Still, many firms get their financial statement audited as it helps to get loan sanctioned from bank. The audit should be carried out as per the terms of partnership deed and Partnership Act.<\/p>\n

                                                                84. Cost audit is useful for the purpose of proper utilization of scarce resources through (i) cost control (ii) cost reduction (iii) cost minimisation. The options are:
                                                                \n(a) II and III
                                                                \n(b) I and II
                                                                \n(c) I, II and III
                                                                \n(d) I and III
                                                                \nAnswer:
                                                                \n(b) I and II
                                                                \nBenefits of Cost audit:<\/p>\n

                                                                  \n
                                                                • It ensures that cost control and cost reduction techniques are followed.<\/li>\n
                                                                • It ensures efficient utilization of scarce resources.<\/li>\n
                                                                • It ensures that proper cost records are maintained.<\/li>\n
                                                                • It also ensures that unit has been running economically and efficiently.<\/li>\n<\/ul>\n

                                                                  85. The statutory auditor is duty bound to enquire whether __________ expenses have been charged to __________ Account.
                                                                  \n(a) Fixed, Revenue
                                                                  \n(b) Personal, Revenue
                                                                  \n(c) Personal, Capital
                                                                  \n(d) Capital, Profit and Loss
                                                                  \nAnswer:
                                                                  \n(c) Personal, Capital
                                                                  \nThe Statutory auditor is duty bound to enquire whether personal expenses have been changed to Capital Account. The personal expenses are not the expenses of the business and as per the separate entity concept, books of business should be kept free from the personal transactions of proprietor\/partner.
                                                                  \nHence, the auditor is duty bound check the above.<\/p>\n

                                                                  86. For a tax audit, the specified limit given under Income Tax Act, 1961 for a person carrying on business shall be:
                                                                  \n(a) Turnover exceeds \u20b9 2,00,00,000 for assessee claiming presumptive scheme in the previous year
                                                                  \n(b) Turnover exceeds \u20b9 40,00,000 in the previous year
                                                                  \n(c) Turnover is below \u20b9 40,00,000 in the previous year
                                                                  \n(d) Turnover is below \u20b9 60,00,000 in the previous year
                                                                  \nAnswer:
                                                                  \n(a) Turnover exceeds \u20b9 2,00,00,000 for assessee claiming presumptive scheme in the previous year
                                                                  \nAs per Income Tax Act, every person carrying on business whose turnover or gross receipts exceeds \u20b9 2,00,00,000 for assessee claiming presumptive scheme (50,00,000 if carrying profession) in previous year shall get his accounts audited.<\/p>\n

                                                                  87. In India, the audit of co-operative society:
                                                                  \n(a) Voluntary
                                                                  \n(b) Mandatory
                                                                  \n(c) Mandatory on satisfying certain criterion
                                                                  \n(d) Mandatory for some specified class of societies.
                                                                  \nAnswer:
                                                                  \n(b) Mandatory
                                                                  \nIn co-operative society there is separation of ownership from management. Management is in hands of elected members which necessitates an independent financial audit of accounts of co-operative society. Considering this, audit of co-operative societies is required by law in India. Thus, it is mandatory.<\/p>\n

                                                                  88. The audit conducted by CAG (Comptroller Auditor General of India) is a form of:
                                                                  \n(a) Propriety Audit
                                                                  \n(b) Statutory Audit
                                                                  \n(c) Bank Audit
                                                                  \n(d) Routine Audit.
                                                                  \nAnswer:
                                                                  \n(b) Statutory Audit
                                                                  \nIf is duty of Comptroller and Auditor General of India to audit the receipts and expenditure of Union Govt, and State Govt. So it can be said the audit conducted by CAG is form of statutory audit.<\/p>\n

                                                                  89. Company secretary are granted for __________ audit:
                                                                  \n(a) Statutory Audit
                                                                  \n(b) Secretarial Audit
                                                                  \n(c) Cost Audit
                                                                  \n(d) Tax Audit
                                                                  \nAnswer:
                                                                  \n(b) Secretarial Audit
                                                                  \nSecretarial Audit is a Compliance Audit. A Company Secretary in practice has been assigned the role of Secretarial Audit under section 2(2)(c)(v) of Company Secretaries Act, 1980.<\/p>\n

                                                                  90. What is the capital that makes it mandatory to have company secretary:
                                                                  \n(a) 2,00,00,000 and above
                                                                  \n(b) 3,00,00,000 and above
                                                                  \n(c) 5,00,00,000 and above
                                                                  \n(d) None of the above
                                                                  \nAnswer:
                                                                  \n(c) 5,00,00,000 and above
                                                                  \nA Company having paid-up share capital 5,00,00,000 and above shall have a Company Secretary.<\/p>\n

                                                                  91. The auditor of a Government company is appointed by the:
                                                                  \n(a) Comptroller & Auditor General of India
                                                                  \n(b) The Shareholder in a general meeting
                                                                  \n(c) The board of directors
                                                                  \n(d) The shareholders at an annual general meeting
                                                                  \nAnswer:
                                                                  \n(a) Comptroller & Auditor General of India
                                                                  \nGovernment audit also includes the audit of government companies conducted by Comptroller and Auditor General of India (C & AG) in accordance with the provisions of Companies Act, 2013 and other relevant legislations. The auditor of a Government Company is appointed by Comptroller and Auditor General of India (C & AG).<\/p>\n

                                                                  92. If a sole proprietor ship firm has turnover of 10000000 or more, conduct of audit is:
                                                                  \n(a) Mandatory
                                                                  \n(b) Voluntary
                                                                  \n(c) Both
                                                                  \n(d) None
                                                                  \nAnswer:
                                                                  \n(a) Mandatory
                                                                  \nIf a sole proprietorship firm has turnover of \u20b9 1,00,00,000 or more, then conduct of audit is mandatory for the firm, under the provision of Income Tax Act, 1961.<\/p>\n

                                                                  93. As per the Banking Regulation Act, the bank audit may be done by:
                                                                  \n(a) A Chartered Accountant in practice or a firm of Chartered Accountants in practice
                                                                  \n(b) A lawyer
                                                                  \n(c) A Company Secretary in practice or a firm of Company Secretary in practice
                                                                  \n(d) A cost accountant in practice or a firm of cost accountant in practice.
                                                                  \nAnswer:
                                                                  \n(a) A Chartered Accountant in practice or a firm of Chartered Accountants in practice
                                                                  \nAudit forms an integral and important part of banks monitoring and regulation. The auditor being Chartered Accountant in practice or a firm of Chartered Accountant in practice certify that statement of accounts of bank as at the closure of the financial year reveal true and fair view of the bank financial position.<\/p>\n

                                                                  94. Management decides the scope of __________.
                                                                  \n(a) Cost audit
                                                                  \n(b) Financial audit
                                                                  \n(c) Internal audit
                                                                  \n(d) Tax audit
                                                                  \nAnswer:
                                                                  \n(c) Internal audit
                                                                  \nAn internal audit is carried out by the team of professionals in the organization. It is not mandatory but organization gets the internal audit done with a view to evaluate the effectiveness of internal control, soundness of financial system, effectiveness of business process etc., overall the scope of internal audit.<\/p>\n

                                                                  95. Balance Sheet audit does not include:
                                                                  \n(a) Examination of adjusting and closing entries
                                                                  \n(b) Routine check
                                                                  \n(c) Vouching of income and expenses accounts related to assets & liabilities
                                                                  \n(d) Verification of assets and liabilities.
                                                                  \nAnswer:
                                                                  \n(b) Routine check
                                                                  \nBalance sheet audit does not include routine check. Its primary objective is to report to the owners that the accounts, financial statements give a true and fair view of the state of company\u2019s affairs at the end of the financial year.<\/p>\n

                                                                  96. The statutory auditor of a company can act as:
                                                                  \n(a) Internal auditor
                                                                  \n(b) Tax auditor
                                                                  \n(c) Cost auditor
                                                                  \n(d) Concurrent auditor
                                                                  \nAnswer:
                                                                  \n(b) Tax auditor
                                                                  \nThe Statutory Auditor also act as a Tax Auditor.<\/p>\n

                                                                  97. The operations of a Co-operative society are managed by:
                                                                  \n(a) Auditor
                                                                  \n(b) Government
                                                                  \n(c) Elected member
                                                                  \n(d) Volunteer
                                                                  \nAnswer:
                                                                  \n(c) Elected member
                                                                  \nIn the Cooperative Society, there is separation of ownership from management while capital is contributed by all the members. The management of its affairs are in the hands of some of the members elected for this purpose.<\/p>\n

                                                                  98. Which of the following statements is not true about continuous audit?
                                                                  \n(a) It may be carried out on daily basis.
                                                                  \n(b) It is expensive
                                                                  \n(c) It is needed when the organization does not have a good internal control system.
                                                                  \n(d) It is conducted at regular interval.
                                                                  \nAnswer:
                                                                  \n(d) It is conducted at regular interval.
                                                                  \nThe point that continuous audit is conducted at regular interval is not true as it is the type of audit thats carried out on daily basis and is running continuously in the company.<\/p>\n

                                                                  99. __________ is conducted to ascertain whether the financial statements present a true and fair view of the financial position of the Organisation under audit:
                                                                  \n(a) Cost Audit
                                                                  \n(b) Secretarial Audit
                                                                  \n(c) Tax Audit
                                                                  \n(d) Financial Audit
                                                                  \nAnswer:
                                                                  \n(d) Financial Audit
                                                                  \nFinancial Audit is generally conducted to ascertain whether the financial statement present a true and fair view of financial position and working result of an organisation under audit.<\/p>\n

                                                                  100. Statutory audit is to be done by __________.
                                                                  \n(a) Practicing CA or a firm of practicing CA
                                                                  \n(b) A Practicing CS or a firm of practicing CS
                                                                  \n(c) Practicing cost accountant or a firm
                                                                  \n(d) BOD
                                                                  \nAnswer:
                                                                  \n(a) Practicing CA or a firm of practicing CA
                                                                  \nStatutory Audit is often called Financial Audit. Independent financial audit is generally conducted to ascertain whether the financial statement presents a true and fair view of the financial position and working result of the organization under audit. The need for financial audit arises as the control of the company is vested in the hands of the management of the company and the financial statements are also prepared by the management.
                                                                  \nThus this audit Is done by CA in practice or a firm.<\/p>\n

                                                                  101. Who can order management audit?
                                                                  \n(a) Management
                                                                  \n(b) Central Government
                                                                  \n(c) Workers of Company
                                                                  \n(d) BOD
                                                                  \nAnswer:
                                                                  \n(a) Management
                                                                  \nManagement audit is an emerging concept of auditing. It has been originated from America. Management audit is an act of evaluation of all the activities of all the departments with a view to provide appropriate suggestions to the management to help their work. In other words, management auditing is a future oriented task which evaluates timely in all the levels of management like production management, sales management etc.<\/p>\n

                                                                  The main objective of management audit is to improve the profit earning capacity, work of management, objectives of program, social objectives and human resource development so that organizational goal can be easily attained. It refers to the existence of control system, compliance of rules and regulations, process of managerial decisions etc. Generally management audit\/operational audit are not mandatory but it recommendatory certainly. Hence it is conducted by the management.<\/p>\n

                                                                  102. Statutory audit is often called \u2018financial audit\u2019
                                                                  \n(a) True
                                                                  \n(b) False
                                                                  \n(c) Can\u2019t say
                                                                  \n(d) None of these
                                                                  \nAnswer:
                                                                  \n(a) A financial audit is an independent, objective evaluation of an organization\u2019s financial reports and financial reporting processes. The primary purpose for financial audits is to give regulators, investors, directors and managers reasonable assurance that financial statements are accurate and complete.
                                                                  \nHence, we can say that Statutory Audit is also a financial audit as the objectives are same.<\/p>\n

                                                                  103. For big companies having turnover of \u20b9 200 crore or more, which one of the following is not mandatory but recommendatory in nature?
                                                                  \n(a) Propriety Audit
                                                                  \n(b) Management Audit
                                                                  \n(c) Statutory Audit
                                                                  \n(d) Tax Audit
                                                                  \nAnswer:
                                                                  \n(b) Management Audit
                                                                  \nManagement Audit is an Emerging concept, originated in America. It is an act of evaluation of all the activities of all the departments with a view to provide appropriate suggestions to the management to help their work.
                                                                  \nIt is generally not mandatory but recommendatory.<\/p>\n

                                                                  104. The internal auditor is appointed by:
                                                                  \n(a) Stock Exchange
                                                                  \n(b) Shareholders
                                                                  \n(c) Management
                                                                  \n(d) Government
                                                                  \nAnswer:
                                                                  \n(c) Management
                                                                  \nThe Internal Auditor is appointed by Management and thus, he report to management.<\/p>\n

                                                                  105. Which of the following organisations does not require statutory audit?
                                                                  \n(a) Public limited companies
                                                                  \n(b) Sole trading Firm
                                                                  \n(c) Electricity supply companies
                                                                  \n(d) Banking companies
                                                                  \nAnswer:
                                                                  \n(c) Electricity supply companies
                                                                  \nThe Internal Auditor is appointed by Management and thus, he report to management.<\/p>\n

                                                                  106. Ram is a chartered accountant working as proprietor. His gross receipts are \u20b9 50 Lakhs for the year. Which type of audit will necessarily be applicable for him?
                                                                  \n(a) Statutory audit
                                                                  \n(b) Tax audit
                                                                  \n(c) Internal audit
                                                                  \n(d) None of the above
                                                                  \nAnswer:
                                                                  \n(b) Tax audit
                                                                  \nIn India, Income tax Act, 1961, Section 44AB provides for the compulsory audit of the account of certain income for assessee whose turnover or receipts exceeds the specified limits.
                                                                  \nAs per income tax Act, every person carrying on business whose turnover or gross receipts exceeds \u20b9 1,00,00,000 (\u20b9 25,00,000 if carrying on profession) in previous year shall get accounts audited. Here, Ram is a C.A. which is professional and his gross receipts is \u20b9 50 lakhs. So, he shall get accounts audited.<\/p>\n

                                                                  107. Primary responsibility for the adequacy of financial statement disclosures rest with the:
                                                                  \n(a) Auditor
                                                                  \n(b) Management
                                                                  \n(c) Auditor\u2019s Staff
                                                                  \n(d) Central Government
                                                                  \nAnswer:
                                                                  \n(b) Management
                                                                  \nInternal auditor is more likely to be concerned with internal control system in comparison to independent auditor and internal auditor has to keep control over its business activities. The internal control can determine the degree of control over work.<\/p>\n

                                                                  108. In comparison to the independent auditor, an internal auditor is more likely to be concerned with:
                                                                  \n(a) Cost accounting system
                                                                  \n(b) Internal control system
                                                                  \n(c) Legal compliance
                                                                  \n(d) Accounting system
                                                                  \nAnswer:
                                                                  \n(b) Internal control system
                                                                  \nIt is primary responsibility of firm or business that firstly the financial statement is to be disclosed with management then to auditor or any other person because management first check all the transactions are correctly posted or not or there is need of auditing or not need of auditing.<\/p>\n

                                                                  109. Which of the following is primarily carried out to ascertain the cases of importer, avoidable and infructuous expenditure?
                                                                  \n(a) Propriety audit
                                                                  \n(b) Statutory audit
                                                                  \n(c) Tax audit
                                                                  \n(d) Functional audit
                                                                  \nAnswer:
                                                                  \n(a) Propriety audit
                                                                  \nKohler has defined the propriety audit as that which meets the test of public interest, commonly accepted customs. Propriety Audit mean whether the transactions have been done in conformity with established rules, principles and some established standard. It is essential function of audit to bring to light not only cases of clear irregularity but also every matter which in its judgement appears to involve improper expenditure or waste of public money or stores.<\/p>\n

                                                                  110. Who is disqualified to be a cost auditor?
                                                                  \n(a) Employee of an organisation
                                                                  \n(b) Company Secretary in practice
                                                                  \n(c) Chartered Accountant
                                                                  \n(d) All of the above.
                                                                  \nAnswer:
                                                                  \n(d) All of the above.
                                                                  \nThe following persons shall not be eligible for appointment as an auditor of a company:<\/p>\n

                                                                  A body corporate other than a limited liability partnership
                                                                  \nAn officer \/ Employee of the company
                                                                  \nA person who is a partner, or is in the employment, of an officer or employee of the company
                                                                  \nA person who, or his relative or partner and holding security of or interest in the company or its subsidiary, or of its holding or associate company or a subsidiary of such holding company not exceed \u20b9 1 lakh.<\/p>\n

                                                                  Hence, option (d) is correct.<\/p>\n

                                                                  111. Tax audit is regulated under the:
                                                                  \n(a) Income Tax Act, 1961.
                                                                  \n(b) Companies Act, 2013.
                                                                  \n(c) Under the provisions of Insurance, Regulatory Act, 2015.
                                                                  \n(d) None of the above.
                                                                  \nAnswer:
                                                                  \n(a) Income Tax Act, 1961.
                                                                  \nIncome Tax Act, 1961 is regulate tax audit. Hence, option (a) is correct.<\/p>\n

                                                                  112. Statutory audit is also known as __________.
                                                                  \n(a) Bank Audit
                                                                  \n(b) Financial Audit
                                                                  \n(c) Insurance Audit
                                                                  \n(d) Government Audit
                                                                  \nAnswer:
                                                                  \n(b) Financial Audit
                                                                  \nStatutory Audit is often called financial audit it is covered under Companies Act, 2013. Hence, option (b) is correct.<\/p>\n

                                                                  113. Company Secretary is a __________ for a company.
                                                                  \n(a) Key Managerial personnel
                                                                  \n(b) Managing Director
                                                                  \n(c) Manager
                                                                  \n(d) All of the above
                                                                  \nAnswer:
                                                                  \n(a) Key Managerial personnel
                                                                  \nCompany Secretary is a Key Managerial Personnel of a company.
                                                                  \nThus, option (a) is correct.<\/p>\n

                                                                  114. Who is eligible for doing Secretarial Audit.
                                                                  \n(a) Practising CA
                                                                  \n(b) Practicising CS
                                                                  \n(c) Practising CMA
                                                                  \n(d) None of the above.
                                                                  \nAnswer:
                                                                  \n(b) Practicising CS
                                                                  \nA practicing Company Secretary has been assigned for the role of Secretarial Audit under Section 2 of the Company Secretary Act, 1980. Thus, option (b) is correct.<\/p>\n

                                                                  115. Tax audit is mandatory for:
                                                                  \n(a) Partnership
                                                                  \n(b) Company
                                                                  \n(c) Sole proprietorship
                                                                  \n(d) None of the above.
                                                                  \nAnswer:
                                                                  \n(b) Company
                                                                  \nTax audit is mandatory for a company:<\/p>\n