Auditing Standards issued by the CAG of India

  1. All officers and staff of the Department are expected to abide by these Auditing Standards and apply them conscientiously in auditing for achieving the mission of promoting _____.
    1. accountability
    2. transparency
    3. good governance
    4. all of the above
  2. The CAG’s Auditing Standard constitute the framework which set out the professional standards for _______.
    1. the organization
    2. its personnel – the individual auditors
    3. both
    4. none
  3. Which of the following statements is not correct?
    1. These standards establish the norms which are applicable to all public sector audit engagements, irrespective of their form or context.
    2. These standards incorporate the Prerequisites for the functioning of Supreme Audit Institutions and Fundamental Auditing Principles of the International Standards of Supreme Audit Institutions, which have been suitably adapted with due consideration of the audit mandate and rules applicable to SAI India.
    3. These standards determine the audit procedures that shall be applied in audit and constitute the criteria or benchmark against which the quality of audit results is evaluated.
    4. none of the above
  4. Duties and powers of CAG in relation to the accounts of the Union and the States etc. are envisaged in Article _______.
  5. Reports of the CAG in relation to accounts of Union, State etc. are envisaged in Article _____.
    Net proceeds of any tax or duty shall be ascertained and certified by CAG as per Article _____.
    1. 149;151;279
    2. 151;149;279
    3. 151:279:149
    4. 279;151;149
  6. The _______ Schedule of the Constitution of India envisages audit of accounts of District and Regional Councils of autonomous regions.
    1. fourth
    2. fifth
    3. sixth
    4. seventh
  7. The general provisions relating to audit are elaborated in Sections _____and ____ of the DPC Act.
    1. 10 to 20 and 23
    2. 13 to 21 and 24
    3. 14 to 23 and 27
    4. 15 to 24 and 28
  8. To fulfill its mandate, SAI India undertakes
    1. financial audit
    2. compliance audit
    3. performance audit
    4. combination of such audits
    5. all of the above
  9. The pre-requisites constitute the principles that are essential for ______.
    1. the functioning of SAI, India
    2. proper practice of public sector auditing within the SAI.
    3. both
    4. none
  10. The pre-requisites for functioning SAI, India includes ______.
    1. Independence
    2. Accountability and Transparency
    3. Ethics
    4. Quality Assurance
    5. All of the above
  11. An adequate degree of independence from _____ branch of the Government is essential for the conduct of audit and for the credibility of its results.
    1. Legislative
    2. Executive
    3. both
    4. none
  12. While conforming to the Constitutional provisions and laws enacted by the legislatures, SAI India has the functional and organizational autonomy required for carrying out its mandate and is free from direction or interference from the Legislature or the Executive in the:
    1. selection of audit issues
    2. Planning, programing, conduct, reporting and follow up of audits
    3. organization and management of its office.
    4. all of the above
  13. The DPC Act empowers SAI India to inspect any office of accounts under the control of the Executive and to require the production of all necessary documents and information necessary for the proper discharge of its statutory responsibilities.
    1. true
    2. false
  14. _________ refers to the legal and reporting framework, organizational structure, strategy, procedures and actions to ensure that the SAI meets its legal obligations with regard to its audit mandate and reporting and that the SAI and its personnel can be held responsible for their actions
    1. Accountability
    2. Transparency
    3. Ethics
    4. Independence
  15. _________ refers to the SAI’s timely, reliable, clear and relevant public reporting on its status, mandate, strategy, activities and performance as also of the audit findings, conclusions and public access to information about the SAI.
    1. Accountability
    2. Transparency
    3. Ethics
    4. Independence
  16. The ________ of SAI India shall be in public domain.
    1. mandate
    2. mission
    3. responsibilities
    4. all of the above
  17. While conducting its audits, SAI India shall communicate the criteria on which opinions would be based to the auditable entities and keep them informed about the ___________ as part of the reporting process.
    1. audit objectives
    2. methodology and findings
    3. the scope of audits undertaken
    4. all of the above
  18. Public sector auditing can be described as a systematic process of objectively obtaining and evaluating evidence to determine whether information or actual conditions conform to established criteria.
    1. true
    2. false
  19. Public sector auditing is essential in that it provides legislature and oversight bodies, those charged with governance and the general public with
    1. information
    2. independent and objective assessments concerning the stewardship
    3. performance of public sector policies, programmes or operation
    4. all of the above
  20. Public sector auditing contributes to good governance by:
    1. providing the intended users with independent, objective and reliable information, conclusions or opinions based on sufficient and appropriate evidence relating to public sector entities
    2. enhancing accountability and transparency, encouraging continuous improvement and sustained confidence in the appropriate use of public funds and assets and the performance of public administration
    3. reinforcing the effectiveness of those bodies that exercise general monitoring and corrective functions over public sector and those responsible for the management of publicly funded activities
    4. creating incentives for change by providing knowledge, comprehensive analysis and well-founded recommendations for improvement.
    5. all of the above
  21. Public sector refers to the sector that is controlled by __________.
    1. Central Government
    2. State Government
    3. Local Government
    4. all of the above
  22. _______ focuses on determining whether an entity’s financial information is presented in accordance with the applicable financial reporting and regulatory framework. This is accomplished by obtaining sufficient and appropriate audit evidence to enable the auditor to express an opinion as to whether the financial information is free from material misstatement due to fraud or error.
    1. Financial audit
    2. Compliance audit
    3. Performance audit
    4. all of the above
  23. __________focuses on whether a particular subject matter is in compliance with the criteria. It is performed by assessing whether activities, financial transactions and information are, in all material aspects, in compliance with the applicable authorities which include the Constitution, Acts, Laws, rules and regulations, budgetary resolutions, policy, contracts, agreements, established codes, sanctions, supply orders, agreed terms or the general principles governing sound public sector financial management and the conduct of public officials.
    1. Financial audit
    2. Compliance audit
    3. Performance audit
    4. all of the above
  24. _________ focuses on whether interventions, programmes and institutions are performing in accordance with the principles of economy, efficiency and effectiveness and whether there is room for improvement. Performance is examined against suitable criteria and the causes of deviations from those criteria or other problems are analyzed. The aim is to answer key audit questions and to provide recommendations for improvement.
    1. Financial audit
    2. Compliance audit
    3. Performance audit
    4. all of the above
  25. The basic elements of Public sector audit are……
    1. The three parties the auditor, the responsible party and intended users
    2. Subject matter, criteria and subject matter information
    3. Types of engagement
    4. all of the above
  26. Public sector audits involve at least which of the following parties:
    1. The auditor,
    2. The responsible party and
    3. Intended users.
    4. All the above
  27. In Public Sector audit _____ would be the responsible parties.
    1. the auditable entities
    2. those charged with the governance of the auditable entities
    3. both
    4. none
  28. __________ are the individuals, organizations or classes thereof for whom the auditor prepares the audit report.
    1. The responsible parties
    2. The intended users
    3. both
    4. none
  29. The Intended users may include
    1. Individuals, organizations or classes thereof for whom the auditor prepares the audit report.
    2. Legislative or oversight bodies, those charged with governance or the general public.
    3. The Parliament or the Legislature which represents the citizens by determining the priorities of public finance, purpose and content of public spending and income
    4. All the above
  30. ______ refers to the information, condition or activity that is measured or evaluated against certain criteria. It can take many forms and have different characteristics depending on the audit objective.
    1. Subject matter
    2. Criteria
    3. Subject matter information
    4. none of the above
  31. An appropriate subject matter is/are
    1. identifiable and
    2. capable of consistent evaluation or measurement against the criteria,
    3. such that it can be subjected to procedures for gathering sufficient and appropriate audit evidence to support the audit opinion or conclusion
    4. all the above
  32. _________are the benchmarks used to evaluate the subject matter.
    1. Criteria
    2. Subject Matter Information
    3. Indicators
    4. none of the above
  33. __________refers to the outcome of evaluating or measuring the subject matter against the criteria. It can take many forms and have different characteristics depending on the audit objective and audit scope.
    1. Criteria
    2. Subject matter
    3. Subject Matter Information
    4. none of the above
  34. In __________ engagements, the responsible party measures the subject matter against the criteria and presents the subject matter information, on which the auditor then gathers sufficient and appropriate audit evidence to provide a reasonable basis for expressing a conclusion.
    1. attestation
    2. direct reporting
    3. both
    4. none
  35. In ________engagements, it is the auditor who measures or evaluates the subject matter against the criteria
    1. attestation
    2. direct reporting
    3. both
    4. none
  36. _____________ are always attestation engagements, as they are based on financial information presented by the responsible party.
    1. financial audit
    2. performance audit
    3. compliance audit
    4. all of the above
  37. ________audit is generally direct reporting engagement.
    1. financial audit
    2. performance audit
    3. compliance audit
    4. only ‘b’ and ‘c’
  38. Most of the audit evidence obtained by the auditor will be persuasive rather than conclusive.
    1. true
    2. false
  39. In reasonable assurance the audit conclusion is expressed ______ either explicitly or in other forms conveying the necessary degree of confidence.
    1. negatively
    2. neutrally
    3. positively
    4. none
  40. A limited assurance conveys the limited nature of the assurance provided and the audit conclusion is expressed in a ______ manner stating that based on the procedures performed, nothing has come to the auditor’s attention to cause the auditor to believe that the subject matter is not in compliance with the applicable criteria.
    1. positive
    2. neutral
    3. negative
    4. none
  41. The principles to be observed by all individual auditors are categorized into _____ distinct groups.
    1. two
    2. three
    3. four
    4. five
  42. _________ relate to the basic audit concepts, which shall be considered by auditors prior to commencement and at more than one point during the audit process.
    1. General principles
    2. Principles related to the audit process
    3. both
    4. none
  43. Auditors shall maintain appropriate professional behaviour by applying _____ throughout the audit
    1. professional scepticism
    2. professional judgment
    3. due care
    4. all of the above
  44. ___________ refers to maintaining professional distance, an alert and questioning attitude when assessing the sufficiency and appropriateness of evidence obtained throughout the audit. It also entails remaining open-minded and receptive to all views and arguments.
    1. professional scepticism
    2. professional judgment
    3. due care
    4. all of the above
  45. _________ implies the application of collective knowledge, skills and experience to the audit process.
    1. professional scepticism
    2. professional judgment
    3. due care
    4. all of the above
  46. ___________ denotes that auditors shall plan and conduct audits in a diligent(careful) manner. Auditors shall avoid any conduct that might discredit their work.
    1. professional scepticism
    2. professional judgment
    3. due care
    4. all of the above
  47. Quality control procedures shall cover matters such as __________.
    1. the direction, review and supervision of the audit process
    2. the need for consultation in order to reach decisions on difficult or contentious matter
    3. both
    4. none
  48. SAI, India has the sole responsibility for any audit opinion or report it might produce on the subject matter and that responsibility is not reduced by its use of work done by other parties.
    1. true
    2. false
  49. Which of the following statements is not correct?
    1. The audit risk is the risk that the audit report may be inappropriate.
    2. The auditor performs procedures to reduce or manage the risk of reaching inappropriate conclusions, recognising that the limitations inherent to all audits mean that an audit can never provide absolute certainty of the condition of the subject matter.
    3. When the objective is to provide reasonable assurance, the auditor shall reduce audit risk to an acceptably low level given the circumstances of the audit.
    4. The audit may also aim to provide limited assurance, in which case the acceptable risk that criteria are not complied with is greater than in a reasonable assurance audit.
    5. none of the above
  50. Materiality is not relevant in all audits.
    1. true
    2. false
  51. A matter can be judged material if knowledge of it would be likely to influence the decisions of the intended users.
    1. true
    2. false
  52. Materiality is often considered in terms of value, but it also has ________.
    1. quantitative aspects
    2. qualitative aspects
    3. both
    4. none
  53. A matter may be material because of the context in which it occurs.
    1. true
    2. false
  54. Materiality shall be considered for the purpose of _______ though the materiality levels could differ for each of the processes.
    1. planning
    2. evaluating the evidence obtained
    3. reporting
    4. all of the above
  55. Materiality considerations may include _________.
    1. stakeholder concerns
    2. public interest
    3. regulatory requirements and consequences for society
    4. all of the above
  56. Auditors shall prepare audit documentation that is sufficiently detailed to provide
    1. a clear understanding of the work performed
    2. evidence obtained
    3. conclusions reached
    4. all of the above
  57. According to the auditing standards the materiality is NOT decided by
    1. The value of the transaction
    2. The nature of the item of transaction
    3. The context in which the transaction occurs
    4. The year in which the transaction is made
  58. Adequate documentation is important to
    1. confirm and support the auditor’s opinion and reports
    2. serve as evidence of the auditor’s compliance with auditing standards
    3. provide evidence of work done for future reference
    4. All of the above
  59. Audit documentation shall include an________.
    1. audit strategy
    2. audit plan
    3. both
    4. only ‘a’
  60. It is not essential that the entity being audited be kept informed of all matters relating to the audit.
    1. true
    2. false
  61. In case of an entrusted audit, there is a need for arriving at an agreement on the terms of audit with the auditable entity.
    1. true
    2. false
  62. Under audit planning, important information like _______ shall be firmed up before audit is carried out.
    1. the subject, scope and objectives of audit
    2. access to data
    3. the audit process
    4. roles and responsibilities of different parties to the engagement
    5. all of the above
  63. The nature of the risks identified will not vary according to the audit objectives.
    1. true
    2. false
  64. In a problem analysis the auditor shall consider ______.
    1. actual indications of problems
    2. deviations from what should be or is expected
    3. both
    4. none
  65. To facilitate the process of risk assessment or problem analysis data from multiple sources may be collated and combined to gain insights and discern patterns.
    1. true
    2. false
  66. The primary responsibility for the prevention and detection of fraud rests with _______.
    1. the entity’s management
    2. those charged with governance
    3. audit team
    4. both ‘a’ and ‘b’
  67. ________means limiting opportunities for fraud to take place.
    1. fraud prevention
    2. fraud deterrence
    3. fraud limiting
    4. none of the above
  68. ___________ means dissuading(discouraging) individuals from committing fraud because of the likelihood of detection.
    1. fraud prevention
    2. fraud dissuading
    3. fraud deterrence
    4. none
  69. Planning for a specific audit includes _________.
    1. strategic aspects
    2. operational aspects
    3. both
    4. none
  70. Strategically, audit planning shall define _________.
    1. the audit scope
    2. the audit objectives
    3. the audit approach
    4. all of the above
  71. The __________ refer to what the audit is intended to accomplish.
    1. scope
    2. objective
    3. approach
    4. none of the above
  72. The ______ relates to the subject matter and the criteria which the auditors will use to assess and report on the subject matter and is directly related to the objectives.
    1. scope
    2. objective
    3. approach
    4. criteria
  73. The _________ will describe the nature and extent of the procedures to be used for gathering audit evidence.
    1. approach
    2. scope
    3. objective
    4. evidence
  74. Which of the following statement is not correct?
    1. Operationally, planning entails setting a timetable for audit and defining the nature, timing and extent of the audit procedures.
    2. During planning, auditors shall assign the members of their team as appropriate and identify other resources that may be required, such as subject experts.
    3. Audit planning shall be responsive to significant changes in circumstances and conditions.
    4. Audit planning is not an iterative process that takes place throughout the audit.
  75. Under audit planning the choice of procedures will depend on the risk assessment or problem analysis.
    1. true
    2. false
  76. Audit evidence is any information used by the auditor to determine whether the subject matter complies with the applicable criteria.
    1. true
    2. false
  77. Methods of obtaining audit evidence can include _______.
    1. inspection and observation
    2. inquiry and confirmation
    3. recalculation and re-performance
    4. analytical procedures and other research techniques.
    5. all of the above
  78. Evidence shall be both sufficient (quantity) to persuade a knowledgeable person that the findings are reasonable, and appropriate (quality) – i.e. relevant, valid and reliable
    1. true
    2. false
  79. The quantity of evidence required depends on
    1. the risk of material misstatement or non-compliance of the subject matter information (the greater the risk, the more evidence is likely to be required)
    2. the quality of such evidence (the higher the quality, the less may be required).
    3. both
    4. none
  80. The reliability of evidence is not influenced by its source and nature.
    1. true
    2. false
  81. Evidence is more reliable when it is obtained from sources external to the responsible party.
    1. true
    2. false
  82. Evidence that is generated internally is not reliable when the related controls are effective.
    1. true
    2. false
  83. Evidence obtained directly by the auditor (for example, through observation of the application of a control) is more reliable than evidence obtained indirectly or by inference (for example, through inquiry into the application of a control).
    1. true
    2. false
  84. Evidence is more reliable when it exists in documentary form, whether paper, electronic, or other media (for example, a simultaneous written record of a meeting is more reliable than a subsequent oral report of what was discussed).
    1. true
    2. false
  85. Which of the following statement is not correct?
    1. After completing the audit procedures, the auditor will review the audit documentation in order to determine whether the subject matter has been sufficiently and appropriately audited.
    2. Before drawing conclusions, the auditor reconsiders the initial assessment of risk and materiality in the light of the evidence collected and determines whether additional audit procedures need to be performed.
    3. The auditor shall evaluate the audit evidence with a view to obtaining audit findings.
    4. When evaluating the audit evidence and assessing materiality of findings the auditor shall take both quantitative and qualitative factors into consideration.
    5. Based on the findings, the auditor shall exercise professional judgement to reach a conclusion on the subject matter or subject matter information.
    6. none of the above
  86. The audit process involves preparing a report to communicate the results of the audit to _______.
    1. stakeholders
    2. others responsible for governance
    3. the general public
    4. all of the above
  87. Which of the following statement is correct?
    1. Audit reports shall be easy to understand, free from vagueness or ambiguity and complete.
    2. Audit reports shall be objective and fair, only including information which is supported by sufficient and appropriate audit evidence and ensuring that findings are put into perspective and context.
    3. The form and content of a report will depend on the nature of the audit, the intended users, the applicable standards and legal requirements. The reports can appear in short form or long form.
    4. All of the above
  88. Long-form reports generally describe in detail _______ including potential consequences and constructive recommendations to enable remedial action.
    1. the audit scope
    2. audit findings
    3. audit conclusion
    4. all of the above
  89. In an attestation engagement the report is generally referred to as the Auditor’s Report.
    1. true
    2. false
  90. A modified opinion or conclusion may be_____ (except for) – where the auditor disagrees with, or is unable to obtain sufficient and appropriate audit evidence about certain items in the subject matter which are, or could be, material but not pervasive.
    1. qualified
    2. adverse
    3. disclaimed
    4. none
  91. A modified opinion or conclusion may be _____ where the auditor, having obtained sufficient and appropriate audit evidence, concludes that deviations or misstatements, whether individually or in the aggregate, are both material and pervasive.
    1. qualified
    2. disclaimed
    3. adverse
    4. none

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