Audit Internal Control MCQs – T4Tutorials.com

1 The independent auditor should evaluate objectivity of the internal auditor.
The most important factor influencing it would be:
(a) Organizational level to which he reports
(b) Qualification of internal auditor
(c) System of quality control of his work
(d) All of the above
Organizational level to which he reports
2. When an independent auditor relies on the work of an internal auditor, he or she should:
(a) Examine the scope of internal auditor’s work
(b) Examine the system of review and documentation of internal auditor’s work
(c) Adequacy of related audit programme
(d) All of the above
All of the above
Proper management reduces the opportunities in which a person would both-
(a) Establish controls and executes them
(b) Records cash receipts and cash payments
(c) Perpetuate errors and frauds and conceals them
(d) Record the transaction in journal and ledger
Perpetuate errors and frauds and conceals them
4. An auditor should study and evaluate internal controls to:
(a) Determine whether safeguarded
(b) Suggest improvements internal control in
(c) Plan audit procedures
(d) Express and opinion
Plan audit procedures
5.XYZ Ltd. Conducts quarterly review of operations. It discovers that other country may affect material to the next quarter. This is an example of
(a) Risk assessment
(b) Control procedure
(c) Supervision
(d) Control environment
Risk assessment
6. The primary purpose of performing tests of control is to provide reasonable assurance that:
(a) There are no misstatements due to fraude error in financial statement
(b) Accounting system is well documented
(c) Written evidence is there to support transactions
(d) If internal control is effective
If internal control is effective
7. If the auditor assesses control risk a high:
(a) Document the conclusions
(b) Documents the reasons alog with conclusions
(c) Perform tests of control
(d) Perform walk through tests
Document the conclusions
8. The overall attitude and awareness of directers concerning the importance of internal control is reflected in:
(a) Accounting controls
(b) Control environment
(c) Control procedures
(d) Supervision
Control environment
9. Which of the following are included in test of control?
(a) Re-performance and observation
(b) Inquiry procedures and analytical
(c) Comparison and conformation.
(d) Inspection and verification
Re-performance and observation
10. Control risk is assessed at:
(a) Overall financial statements level
(b) Fraud risk factor level
(c) Financial statement assertion level
(d) Control environment level.
Financial statement assertion level
11. Which of the following is not an
example of a circumstance, after obtaining understanding to plan the audit? an
(a) Controls are known to be cost ineffective
(b) Controls are effective but auditor opinions tests of control would not be cost effective
(c) Controls are effective and evidence already obtained is adequate
(d) Performing extensive substantive testing would not lead to efficiency
Controls are effective and evidence already obtained is adequate
12. An auditor checks control risk because it:
(a) Affects the audit risk
(b) Affects the level of detection risk that auditor may accept
(c) Helps him to fix materiality level for each financial assertion
(d) Is directly related to inherent risk
Affects the level of detection risk that auditor may accept
13. B.A flow chart, that depicts the auditor’s:
(a) Understanding of the system
(c) Documentation of assessment of control risk
(d) Both (a) and (c)
Understanding of the system
14. The performance of tests of control documented in:
(a) Audit programme
(b) Flow charts
(c) Working papers
(d) Any of the above
Working papers
15. Which of the following statements is not correct?
(a) Intern risk and control risk cannot be controlled by the management
(b) Detection risk is related directly to they effectiveness of the auditor prosecutor
(c) Detection risk related inversely to control risk
(d) Internet risk and control risk are highly interrelated
Intern risk and control risk cannot be controlled by the management
16. The independence of an internal auditor will most likely be assured if he reports to the:
(a) President Finance
(b) President System
(c) Managing Director
(d) None of these
Managing Director
17. In comparison to the independent auditor, an internal auditor is more likely to be involve with:
(a) Cost accounting system
( b) Internal control system
(c) Legal compliance
(d) Accounting system
Internal control system
18. Tests of control are not concerned with:
(a) Existence of controls
(b) Effectiveness of controls
(c) Continuity of controls
(d) Designing of controls
Designing of controls
20.consideration of internal control is as follows:
(a) Obtain an understanding, design substantive test;, make a preliminary assessment of control risk
(b) Design substantive tests, , perform tests of control, make a preliminary assessment of control risk
(c) Obtain an understanding, perform tests of control, design substantive procedures
(d) Perform tests of control, obtain and understanding, make preliminary assessment `control risk, design a of
Obtain an understanding, make a preliminary assessment of control risk, perform tests; of control, design substantive procedures
21. Which of the following – is not an limitation of internal control system?
(a) Management override
(b) Collusion among employees
(c) Inefficiency of internal auditor
(d) Abuse of authority
Inefficiency of internal auditor

Audit Internal Control MCQs
By: Prof. Dr. Fazal Rehman | Last updated: July 28, 2024

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