The auditor has serious concern about the going concern of the company. It is dependent on company’s obtaining a working capital loan from a bank which has been applied for. The management of the company has made full disclosure of these facts in the notes to the balance sheet. The auditor is satisfied with the level of disclosure. He should issue___________?

Related Mcqs:

1. When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the___________?

   A. Amount of known misstatement is documented in working papers
   B. Estimates of the total likely misstatement is less than materiality level
   C. Estimate of the total likely misstatement is more than materially level
   D. Estimates of the total likely misstatement cannot be made

2. When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the_____________?

   A. Amount of known misstatement is documented in working papers
   B. Estimates of the total likely misstatement is less than materiality level
   C. Estimate of the total likely misstatement is more than materially level
   D. Estimates of the total likely misstatement cannot be made

3. Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of the auditor?

   A. The shareholders in a general meeting
   B. The managing director
   C. The board of directors in a board meeting
   D. The audit committee

4. The term of the auditor ship of first auditor would be from the date of appointment till________?

   A. the conclusion of statutory meeting
   B. the conclusion of first annual general meeting
   C. the conclusion of next annual general meeting
   D. the date of removal

5. An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to his or her independence. The threat would be a___________?

   A. Self-interest threat
   B. Self-review threat
   C. Advocacy threat
   D. Familiarity threat

6. When applying analytical procedures, an auditor could develop independent estimate of an account balance to compare it to­___________?

   A. client’s unedited account balance
   B. client’s unedited account balance adjusted for trends in the industry
   C. Prior year audited balance
   D. Prior year audited balance adjusted for trends in the industry

7. The auditor’s permanent working paper file should not normally, include__________?

   A. Extracts from client’s bank statements
   B. Past year’s financial statements
   C. Attorney’s letters
   D. Debt agreements

8. Which of the following statement is true regarding an auditor’s working papers?

   A. They document the level of independence maintained by the auditor
   B. They should be considered as the principle support for the auditor’s report
   C. They should not contain details regarding weaknesses in the internal control system
   D. They help the auditor to monitor the effectiveness of the audit firm’s quality control

9. Which of the following statement best describes the understanding with respect to ownership and custody of working papers prepared by an auditor?

   A. The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation
   B. The safe custody of working papers is the responsibility of client, if kept at his premises
   C. The working papers must be retained by an audit firm for a period of 10 years
   D. Successor auditors may have access to working papers of the predecessor auditors. The approval of client is not required.

10. The current file of the auditor’s working papers, generally, should include____________?

    A. A flowchart of the internal controls
    B. Organisation charts
    C. A copy of financial statements
    D. Copies of bond and debentures