Chapter 1

Nature, Object and Scope of Audit

1. preparation and presentation of financial statements of an entity is

met
responsibility of ______________
2. As per SA-200 ,the overall objectives of the auditor are:
reasonable assurance and express his opinion
1. To obtain _____________
 whether the financial statements as a whole are free from
material mis-statement(whether due to fraud or error)
_______________________
T & F view
 Whether it shows ______________________
 Whether it is made as per _______________
AFRF

confidence
3. The purpose of an audit is to enhance the __________________________ in
the financial statements. (module)
high
4. reasonable assurance is a _____________ level of assurance but it is not
complete assurance.
secondary
5. Prevention and detection of frauds, and error is __________________.
met
objective of Auditor and Primary Objective of __________________
6. absolute
In Audit we cannot get ________________ Assurance we can get only
reasonable
_________________ inherent
assurance because of _________________ limitation of
Audit
Audit nisk
7. Auditor cannot reduce _________________
.
to zero
8. Fraud -
Intentional Mis-statement is called as ______________
9. Mention which type of opinion is expressed in following cases-
(i) F.S shows T& F view – unmodified (clean .

(ii) F.S do not show true and fair view adverse

.
-

(iii) We are unable to express our opinion – disclaimen

(iv) F.S shows T& F view except the matters stated in basis para –qualified
.

financial infor
10.Audit is independent examination of ______________________
Investigation
11.____________________ is a critical examination of the accounts with a
special purpose
12.Following are not included in scope of Audit
o which fall outside _______________ of his _________________
o authentication of _________________
o official ___________________ into alleged wrong doing
13.__________________ examination connotes critical examination & scrutiny of
the accounting statements
14.The preparation of financial statements involves __________________ by
management
15.Fraud involves _______________ and _______________ scheme
16.The matter of difficulty, time, or cost involved is __________ in itself a valid
basis for the auditor to _________ an audit procedure for which there is
_________ alternative.
 __________________” means an engagement in which a practitioner
expresses a conclusion designed to enhance the degree of confidence of the
intended users other than the responsible party about the outcome of the
evaluation or measurement of a subject matter against criteria.

17.Overview of Elements of assurance engagement

Mnemonic Elements of an assurance What???????
engagement
P Three __________relationship
A An appropriate
___________________
C Suitable ________________
E Sufficient appropriate
____________________
R Written assurance
_____________________ in
appropriate form
18.Sufficient means ______________________
19.Appropriate means ___________________
20.Audit procedures used to gather audit evidence may be effective/ineffective
for detecting an intentional misstatement.
21.Audit is a ______________assurance engagement.
22.Review is an ____________ assurance engagement
23.Reasonable assurance engagement provides _______________ level of
assurance.
24.Limited assurance engagement provides ___________ level of assurance than
reasonable assurance engagement.
25.Example of reasonable assurance engagement is an __________ engagement.
26.Example of limited assurance engagement is review engagement.
27.Match the pair
(i) Standards on Review Engagements
(ii) Standards on Assurance Engagements
(iii) Standards on Auditing
(iv) Standards on Related Services
(a) apply in the context of an audit of financial statements by an
independent auditor
(b) apply in the context of review of financial statements
(c) apply in assurance engagements dealing with subject matters other than
historical financial information.
(d) These standards apply in engagements to perform agreed-upon
procedures regarding financial information.

28.____________________ have been issued to establish standards and provide

guidance regarding a firm’s responsibilities for its system of quality control for
the conduct of audit and review of historical financial information and for other
assurance and related service engagements.
29.Auditing begins where _______________ ends.
CHAPTER 2
AUDIT REPORT

1 Match the pair

(i) SA 700
(ii) SA 701
(iii) SA 705
(iv) SA 706
(v) SA 710
(a) Eom para
(b) Comparatives
(c) Unmodified opinion
(d) KAM para
(e) Modified opinion

2 The auditor shall express an ________________ opinion when the auditor

concludes that the financial statements are prepared, in all material respects,
in accordance with the applicable financial reporting framework.
3 The auditor shall __________ the opinion in the auditor’s report when the
auditor concludes that, based on the audit evidence obtained, the financial
statements as a whole are not free from material misstatement; or the auditor
is unable to obtain sufficient appropriate audit evidence to conclude that the
financial statements as a whole are free from material misstatement.
4 There are three types of modified opinions, namely-a ___________opinion, an
_________opinion, and a __________ of opinion.
5 As per SA 710, there are two different broad approaches to the auditor’s
reporting responsibilities in respect of comparative information:
__________________ and ______________________________ The approach
to be adopted is often specified by _____________ but may also be specified in
____________ of engagement
6 In considering the qualitative aspects of the entity’s accounting practices, the
 Possible biasesa
auditor may become aware of ________________ in management’s
judgements
Purpose nework– A financial reporting framework designed to
.

7 General
_________________________
meet the common financial information needs of a wide range of users. The
financial reporting framework may be a fair presentation framework or a
compliance framework.
8 The description of the auditor’s responsibilities for the audit of the financial
statements shall be included:
 auditor's report
Within the body of the _______________
 annexure
Within an ________________ -

to the auditor’s report, in which case the

auditor’s report shall include a reference to the location of the appendix or
 specific referent within the auditor’s report to the location of
By a ______________________
such a description

Full hme Cop .

9 Chartered Accountants having ____________________________ can register
on UDIN
10 Circumstances When a Modification to the Auditor’s Opinion Is Required
The auditor shall modify the opinion in the auditor’s report in the following
circumstances:
(a) The auditor concludes that, based on the audit evidence obtained, the
financial statements as a whole are
materially mis-stated
________________________________________________________; or
SA
(b) The auditor is unable to obtain _______________________________________
to conclude that the financial statements as a whole are free from material
misstatement.

11 The auditor shall express a qualified opinion when The auditor, having obtained
-

sufficient appropriate audit evidence, concludes that misstatements,

material but not __________,
individually or in the aggregate, are __________, pervasive. to the

financial statements
12 The auditor shall express an adverse opinion when the auditor, having obtained
sufficient appropriate audit evidence, concludes that misstatements,
 individually or in the aggregate, are both ______________________________
to the financial statements.
13 Pervasive effects on the financial statements are those that, in the auditor’s
judgement:
 Are not confined to ____________________________________
 If so confined, represent or could represent a _________________ of the
financial statements; or
 In relation to disclosures, are _________________ to users’ understanding of
the financial statements.

14 The auditor shall _____________________ when the auditor is unable to obtain

sufficient appropriate audit evidence on which to base the opinion, and the
auditor concludes that the possible effects on the financial statements of
undetected misstatements, if any, could be both material and pervasive.
15
Nature of Matter Giving Rise to the Auditor’s Judgement about the
Modification Pervasiveness of the Effects or Possible
Effects on the Financial Statements
Material but not Material and
Pervasive Pervasive
Financial statements are materially
misstated
Inability to obtain sufficient
appropriate audit evidence

16 Match the pair-

(i) except for the effects of the matter(s) described in the Basis for
Qualified Opinion section,
(ii) do not present fairly
(iii) the auditor has not been able to obtain sufficient appropriate audit
 evidence
(a) Adverse Opinion.
(b) Qualified Opinion
(c) Disclaimer of Opinion
17 Auditor uses ________________ para for Those matters that, in the auditor's
professional judgment, were of most significance in the audit of the FS of the
current period
18 Communicating key audit matters in the auditor's report is not A substitute
(i) for ________________ in the FS
(ii) expressing a _________________ opinion
(iii) for reporting in accordance with SA 570 when a material uncertainty exists
relating to events or conditions that may cast significant doubt on an entity's
ability to continue as a _______________________; or
(iv) A separate __________________ on individual matters.

19 EMPHASIS OF MATTER - A matter, although appropriately presented or

disclosed in the FS, that is of such importance that it is
______________________ to users' understanding of the ___________; or
20 OTHER MATTER - As appropriate, any other matter that is _________________
to users' understanding of the ___________, the _____________________ or
the ___________________ .
21 When corresponding figures are presented, the auditor’s opinion shall not
refer to the corresponding figures except in the following circumstances:
(a) If the auditor’s report on the prior period, as previously issued, included a
qualified opinion, a disclaimer of opinion, or an adverse opinion and the
matter which gave rise to the modification is _________________
(b) If the auditor obtains audit evidence that a material misstatement _________
in the prior period financial statements
22 If the prior period financial statements were not audited, the auditor shall state
in an __________________________ paragraph in the auditor’s report
23 When comparative financial statements are presented, the auditor’s opinion
shall refer to ____________ period for which financial statements are presented
24 where the joint auditors are in disagreement with regard to the opinion or any
 matters to be covered by the audit report, they shall express their opinion in a
__________________ audit report
25 However, the auditor is not required to ___________________on the matters
specified in sub-section (1) unless he has any special comments to make
26 Where the branch office is situated in a country outside India, the accounts of
the branch office shall be audited either by
(i) The ___________________ or
(ii) By an ___________________ or
(iii) By any other _________________________
27 No joint auditor is bound by views of ___________ or ______________ of joint
auditor
28 whether the company has adequate internal financial controls with reference
to financial statements in place and the operating effectiveness of such
controls;
However, it may be noted that the reporting requirement on adequacy of
internal financial controls (IFCs) with reference to financial statements shall not
be applicable to a private company which is a–
(i) _____________________ company; or
(ii) _______________________company; or
(iii) Company having turnover less than ` _____________ crore as per latest
audited financial statement and having aggregate borrowings from banks or
financial institutions or any body corporate at any point of time during the
financial year less than ` ______________