CA Intermediate Paper 5

Nature, Objective and Scope of Audit MCQ

Chapter 1 • 8 Questions from ICAI Study Material

Questions

8

Est. Time

12 min

Source

ICAI Book

Sample Questions: Nature, Objective and Scope of Audit

Preview 4 of 8 questions from Chapter 1

1. Which of the following is not an advantage of audit?

A) It provides high quality financial information.
B) It acts as a moral check on employees.
C) It enhances risk of management bias. ✓
D) It helps in safeguarding interests of shareholders.

2. Which of the following is NOT TRUE about an assurance engagement?

A) It relates to providing assurance about historical financial information only. ✓
B) The practitioner obtains sufficient appropriate evidence.
C) There is some information to be examined by practitioner.
D) A written assurance report in appropriate form is issued by practitioner.

3. Which of the following is TRUE about Engagement Standards?

A) Engagement standards ensure proper rights to practitioners in course of performance of their duties.
B) Engagement standards ensure preparation and presentation of financial statements in a standardized manner.
C) Engagement standards ensure uniformity by practitioners in course of performance of their duties. ✓
D) Engagement standards ensure savings in resources of clients.
Correct/Incorrect

4. The basic objective of audit does not change with reference to nature, size or form of an entity.

Correct ✓
Incorrect

Explanation: An audit is an independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion thereon. It is clear that the basic objective of auditing, i.e., expression of opinion on financial statements does not change with reference to nature, size or form of an entity.