Practical Auditing quiz

Auditing is compulsory for

• Small scale business

• Partnership firm

• All joint stock companies

Internal audit means

Which is the backbone of auditing

• Vouching

• Accounting

• Revaluation

Concurrent audit is a part of

• Internal check system

• Continuous audit system

• Internal audit system

Which of the following statement is correct

• Valuation is a part of verification

• Verification is a part of valuation verification

• Auditor is a valuer

Statement 1: scope of valuation is wider than verification

Statement 2: valuation is done after vouching but before verification.

Verify which statement is true & false

Answer explanation

Statement 2 is true statement 1 is false

In case of return Inwards the auditor should verify

• Credit note & delivery challan

• Credit note & goods received note

• Purchase invoice & goods received note

Answer explanation

Credit note & goods received note should be verified

Steps in internal control system

• Perform tests of control, obtain and understanding, make a preliminary assessment of control risk, design

• Obtain an understanding, design substantive test, perform tests of control, and make a preliminary assessment of control risk

• Obtain an understanding, make a preliminary assessment of control risk, perform tests of control, design substantive procedures

Internal auditor is appointed by

Internal audit is helpful in

• Detection of errors & frauds

• Auditing items in depth

• Prevention of frauds & errors