MCQ for CA Final Audit - Chapter 3 RISK ASSESSMENT AND INTERNAL CONTROL

Sample Multiple Choice Questions (MCQ's) for CA Final - Paper 3 - Advanced Auditing and Professional Ethics - Chapter 3: RISK ASSESSMENT AND INTERNAL CONTROL - For Practice relevant for May/Nov 23 Examinations

 

Q:1 Inherent risk, control risk and detection risk are components of ___________.      

 

  1. Business risk.
  2. Materiality risk.
  3. Auditor's risk.
  4. Audit risk.

Answer: 4

 

Q:2 Detection risk is _____________. 

 

  1. the risk that a misstatement that could occur in an assertion, and that could be material, will not be prevented, or detected and corrected, on a timely basis by the entity's internal control.
  2. the susceptibility of an assertion to misstatement that could be material, before consideration of any related controls.
  3. the risk that the auditor expresses an inappropriate audit option when the financial statements are materially misstated.
  4. the risk that an auditor's substative procedures will not detect a misstatement that exists and that could be material.

 

Answer: 4

 

Q:3 In determining what a significant risk is, the auditor considers a number of matters, including all the following except _____________.            

 

  1. whether the risk is related to recent significant accounting developments and, therefore, requires specific attention.
  2. the degree of subjectivity in the measurement of financial information related to the risk.
  3. the complexity of transactions that may give rise to the risk.
  4. the likelihood of the occurrence of the risk.

 

Answer: 4

 

Q:4 Risk assessment procedures that may indicate fraud include inquiries of management regarding:

 

  1. whether management knows of any fraud in the entity.
  2. if there is fraud elsewhere in their industry.
  3. if there are any relatives of the executives employed in the entity.
  4. internal control effectiveness.

 

Answer: 1

 

Q:5 Significant conditions, events, circumstances or actions that could adversely affect the entity's ability to achieve its objectives and execute its strategies create:

 

  1. management risks.
  2. detection risks.
  3. control risks.
  4. business risks.

 

Answer: 4

 

Q:6 All of the following are components of internal control except:      

 

  1. Management Reports.
  2. Risk Assessment Process
  3. Monitoring
  4. The Information System.

 

Answer: 1

 

Q:7 Implementation of a control means that the control exists and that:             

 

  1. all necessary personnel are trained to operate the control.
  2. the entity is using it.
  3. the control was properly designed.
  4. the control is documented.

 

Answer: 2

 

 

CA Final - Paper 3 - Advanced Auditing and Professional Ethics - Chapter 4   

 

To get back to the Chapterwise MCQ List Page      

 

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