INTERNAL AUDIT
1. …………… is an evaluation and analysis of the
business operation conducted by the internal
audit staff.
(a) External audit
(b) Internal control
(c) Internal audit
(d) Cost audit
2. Internal audit is the independent appraisal
activity within an organization for the review of
…………..
(a) Accounting
(b) Financial
(c) Other business practices
(d) (a), (b), & (c)
3. An internal audit is carried out by …………….
(a) Employee of organization
(b) Chartered accountant working within
organization
(c) Officers of organizations
(d) Any of the above
4. The internal audit is ……………..
(a) Mandatory
(b) Not mandatory
(c) Compulsory
(d) All of the above
5. An organization gets the internal audit done with
a view to evaluate ……………..
(a) Effectiveness of internal control
(b) Soundness of financial system
(c) Effectiveness of business processes
(d) All of the above
6. As per ……………….., statutory auditor also
requires to comment whether the company is
having sound internal audit system or not.
(a) Company Audit Report Order, 2003
(b) Company Audit Report Order, 2012
(c) Company Audit Order, 2005
(d) Company Report Order, 2006
OBJECTIVE OF INTERNAL AUDIT
7. Which of the following is/are objective of internal
audit?
(a) To keep proper control over debtors
(b) To evaluate the accounting system
(c) To help the management to motivate and
provide effective leadership to the workers
(d) All of above
8. Which of the following is/are objective of internal
audit?
(a) To review the working of business
(b) To protect the assets of organization
(c) To evaluate the internal check system
(d) All of above
9. Which of the following is/are objective of internal
audit?
(a) To detect the error in the accounting records
(b) To detect frauds in the books of accounting
(c) To determine liabilities of employees
(d) All of above
10. Which of the following is/are objective of internal
audit?
(a) To check the performance appraisal in
relation to financial activities
(b) To evaluate the working of each
management function
(c) To provide suggestions for improvement of
business activities
(d) All of above
11. Which of the following is/are objective of internal
audit?
(a) To seek new ideas relating to procedures,
marketing, financing and other business matters
(b) To determine the proper use of resources
(c) To examine the accounting policies
(d) All of above
12. Which of the following is/are not objective of
internal audit?
(a) To report to the members of company
(b) To check the performance appraisal in
relation to financial activities
(c) To detect the error in the accounting records
(d) All of above
13. Which of the following is/are not objective of
internal audit?
(a) To keep proper control over business
activities
(b) To help the management to point out
weaknesses
(c) To help the management to hide mistakes in
accounting
(d) All of above
14. Which of the following is/are not objective of
internal audit?
(a) To determine liabilities of employees
(b) To protect the interest of outsiders &
competitors
(c) To evaluate the working of each
management
(d) All of above
15. Which of the following is/are not objective of
internal audit?
(a) To formulate business strategy
(b) To detect the error in the accounting records
(c) To provide suggestions for improvement of
business activities
(d) All of above
BENEFITS INTERNAL AUDIT
16. Which of the following is/are benefit of internal
audit?
(a) It helps to have proper accounting system
(b) It helps to better management of business
concern
(c) It helps to review progress of a business
concern
(d) All of above
17. Which of the following is/are benefit of internal
audit?
(a) Internal audit is helpful to have effective
control over business activities
(b) The assets protection is possible through
internal audit
(c) The internal audit is helpful to apply division
of labour
(d) All of above
18. Which of the following is/are benefit of internal
audit?
(a) It helps to protect accounting records from
errors and fraud
(b) Internal audit is helps to fix the responsibility
of people having poor performance
(c) The work performed by internal auditor can
help external auditor in carrying out the audit
(d) All of above
19. Which of the following is/are not benefit of
internal audit?
(a) It helps to have proper accounting system
(b) The assets protection is possible through
internal audit
(c) It helps to hide the frauds created by
management
(d) All of above
20. Which of the following is/are benefit of internal
audit?
(a) The internal audit is helpful to apply division
of labour
(b) It helps to review progress of a business
concern
(c) It helps to protect accounting records from
errors and fraud
(d) All of above
TYPES OF AUDIT
21. ………….. is generally conducted to ascertain
whether the Balance Sheet and Profit & Loss
A/c presents a true and fair view of the financial
position.
(a) Cost audit
(b) Financial audit
(c) Secretarial audit
(d) Management accounting audit
22. For which of the following reason financial audit
is conducted?
(a) The control of the company is vested in the
hands of the management of the company
(b) To get assurance that the financial
statements prepared by the management are
reliable
(c) To provide assurance to investors regarding
profitability and financial position
(d) All of above
23. Which of following party is/are interested in
financial audit?
(a) Trade creditors
(b) Banks & financial institutions
(c) Tax authorities
(d) All of above
24. Which of following party is/are interested in
financial audit?
(a) Government authorities
(b) Labour unions
(c) Management
(d) All of above
25. Which of following party is/are not interested in
financial audit?
(a) Trade creditors
(b) Debenture holders
(c) Shareholders
(d) Relatives of management
26. ………….. of the Companies Act, 1956 contains
provisions regarding the appointment of the
auditor.
(a) Section 225
(b) Section 224
(c) Section 226
(d) Section 227
27. Section 224 of the Companies Act, 1956
generally auditors are appointed by ………….
(a) Preference shareholders
(b) Equity shareholders
(c) Debenture holders
(d) Creditors
28. Though
auditors
are
appointed equity
shareholders in certain cases auditor can be
appointed by ……………
(a) Directors
(b) Central Government
(c) (a) or (b)
(d) Debenture holders
29. Auditors are generally appointed by equity
shareholders in ……………..
(a) Annual general meeting
(b) Board meeting
(c) Special meeting
(d) Extraordinary general meeting
30……………. Is a process to check that the
company has complied with the legal and
procedural requirements and also followed the
due processes.
(a) Cost audit
(b) Financial audit
(c) Secretarial audit
(d) Management accounting audit
31. Secretarial audit is also known as ………………
(a) Compliance audit
(b) Test audit
(c) System audit
(d) Sampling audit
32. …………. has been assigned the role of
secretarial auditor under section 2(2)(c)(v) of the
Company Secretaries Act, 1980.
(a) Practicing CA
(b) Practicing CS
(c) Practicing CWA
(d) Practicing CFA
33. Which of the following reason is appropriate for
introduction of secretarial audit?
(a) Increasing complexities of laws and
responsibilities
(b)
Initiating
corrective
measures
and
strengthening compliance mechanism and
processes
(c) Both (a) & (b)
(d) None of above
34. Objective of secretarial audit is ……………….
(a) To protect the interests of all the
stakeholders
(b) To avoid any legal action against the
company and its management
(c) To maintain good corporate governance
practices
(d) All of above
35. Secretarial audit is …………….. on the
companies.
(a) Not mandatory
(b) Mandatory
(c) Compulsory
(d) None of above
36. ……………… as “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.”
(a) Management accounting audit
(b) Financial audit
(c) Secretarial audit
(d) Cost audit
37. ……………… defines cost audit as “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.”
(a) Chartered Institute of Management
Accountants, London
(b) The Institute of Cost & Works Accountants of
India
(c) The Institute of Chartered Accountants of
India
(d) The Institute of Company Sectaries of India
38. According to ……………, cost audit is “the
verification of the correctness of cost accounts
and of adherence to the cost accounting plan.”
(a) CIMA
(b) ICAI
(c) ICWAI
(d) ICSI
39. Cost audit comprises of …………
(a) The verification of the cost accounting
records such as the accuracy of the cost
accounts, cost reports, cost statements, cost
data, costing techniques and
(b) Examining these records to ensure that they
adhere to the cost accounting, plans,
procedures and objectives
(c) Making adjustment of costing records with
accounting records
(d) (a) & (b)
40. Ministry of Corporate Affairs has issued
mandatory cost audit orders on companies
engaged in ……………
(a) Electricity & petroleum
(b) Industrial alcohol
(c) Telecommunications
(d) All of above
41. Ministry of Corporate Affairs has issued
mandatory cost audit orders on companies
engaged in …………….
(a) Sugar
(b) Fertilization
(c) Bulk drugs
(d) All of above
42. The cost auditors has to judge ……………..
(a) Whether the return from expenditure on
capital as well as current operations could be
improved by some other alternative plan of
action
(b) Whether the size and channels of
expenditure were designed to produce the best
results
(c) Whether the planned expenditure is
designed to give optimum results
(d) All of above
43. Cost audit is useful for the purpose of ……….
(a) Cost increase
(b) Cost reduction
(c) Cost control
(d) (b) & (c)
44. In India, the ……………, provides for the
compulsory tax audit of the accounts of certain
income tax assessees whose turnover or
receipts exceed the specified limits.
(a) The Companies Act, 1956
(b) The Income-tax Act, 1961
(c) The Central Sales Tax Act, 1956
(d) All of above
45. The objective of tax audit is to assist the ……….
(a) To help the assessee to make proper
planning for avoidance of tax
(b) To help the assessee in carrying out frauds
(c) Tax authorities in making the correct income
tax assessment of the assessee concerned
(d) All of above
46. Tax audit under The Income-tax Act, 1961
conducted by ………………..
(a) Practicing CS
(b) Practicing CA
(c) Practicing CWA
(d) Practicing CFA
47. For businessman tax audit is compulsory if his
…………..
(a) Profit exceeds Rs. 60,00,000
(b) Turnover exceeds Rs. 60,00,000
(c) Taxable income exceeds Rs. 60,00,000
(d) Gross receipts exceeds Rs. 60,00,000
48. For professional tax audit is compulsory if his
……………
(a) Profit exceeds Rs. 15,00,000
(b) Receipts exceeds Rs. 15,00,000
(c) Taxable income exceeds Rs. 15,00,000
(d) Gross receipts assets exceeds Rs.
15,00,000
49. In relation to bank audit NPA means ………….
(a) Non Performing Assets
(b) No Performed Assets
(c) Non Programmed Assets
(d) Non Personal Assets
50. ……………… contains the provisions relating to
the maintenance of accounts and audit of
banks.
(a) The Banking Regulation Act, 1949
(b) The Income-tax Act, 1961
(c) The Central Sales Tax Act, 1956
(d) None of above
51. Many public trusts get their accounts audited
pursuant to the requirement of the ……………
(a) The Banking Regulation Act, 1949
(b) The Income-tax Act, 1961
(c) The Central Sales Tax Act, 1956
(d) The Companies Act, 1956
52. The insurance audit is an examination of the
…………. of the insurance company.
(a) Operations
(b) Records
(c) Books of account
(d) (a), (b) & (c)
53. The auditor should be conversant with the
provisions of …………….. which contains the
provision of the maintenance of accounts and
audit of the insurance companies.
(a) The Banking Regulation Act, 1949
(b) The Insurance Regulatory and Development
Act, 1999
(c) The Central Sales Tax Act, 1956
(d) None of above
54. Like companies, partnership firms in India are
………… required to get their financial
statements audited.
(a) Not legally
(b) Legally
(c) Compulsorily
(d) None of above
55. Partnership firms get their financial statements
audited as audited accounts helps in …………..
(a) Proper valuation of goodwill
(b) Distribution of share of the deceased partner
to their legal heirs
(c) To get the loan sanctioned from the bank to
the firm
(d) All of above
56. Statutory audit is compulsory for …………..
(a) Company
(b) Partnership firm
(c) Sole proprietor
(d) All of above
57. ………….. aims at ensuring that the financial
transactions of the government are executed
properly under sanctions and authorities and are
correctly recorded in the books of account.
(a) Government audit
(b) Management audit
(c) Functional audit
(d) Cost audit
58. Auditor of government companies are appointed
by ……………
(a) C & AG
(b) CA
(c) CWA
(d) CS
59. In ………………., a function is analyzed
thoroughly with respect to system, process,
input and output.
(a) Functional audit
(b) Performance audit
(c) Propriety audit
(d) Efficiency audit
60. Under …………….., the expenditure is analyzed
with a view to ascertain the cases of improper,
avoidable or in fructuous expenditure even
though the expenditure has been incurred in
conformity with the existing rules and
regulations.
(a) Functional audit
(b) Performance audit
(c) Propriety audit
(d) Trust audit
61. …………….. is a form of audit which is being
carried out for ascertaining the performance of a
system or process or input and is being carried
out to judge whether the result as achieved are
in conformity with set standards or not.
(a) Functional audit
(b) Management audit
(c) Propriety audit
(d) Efficiency audit
62. Efficiency audit also known as …………..
(a) Performance audit
(b) Functional audit
(c) Management audit
(d) Propriety audit
63. The performance audit may be initiated by
………………
(a) The organization
(b) Central Government
(c) By external interested parties
(d) (a) or (c)
Question No.
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Answers
(c)
(d)
(d)
(b)
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(a)
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(d)
(a)
(c)
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(c)
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(a)
(d)
(b)
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(b)
(c)
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(c)
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