T.Y. B.COM
SEMESTER - 6
COMPANY AUDIT
MCQS :
UNIT - 3
• CARO REPORT - 2016
• AUDITOR'S REPORT
CARO REPORT - 2016
1) CARO 2016 does not apply to the following class/classes of companies.....
(a) Banking co. as defined u/s 5(c) of the Banking Regulation Act, 1949
(B) Insurance company as defined under insurance Act, 1938
(c) Company licensed to operate u/s 8
(d) All of the above
2) CARO 2016 does not apply to private limited co. whose aggregate of paid up Capital & Reserve ..........
(a) Less than equal to 10 crore
(b) Less than equal to 1 crore
(c) More than equal to 10 crore
(d) More than equal to 1 crore
3) CARO 2016 does not apply to Private Ltd. Co. whose total revenue ...........
(a) Less than equal to 10 crore
(b) Less than equal to 1 crore
(c) More than equal to 10 crore
(d) More than equal to 1 crore
4) CARO does not apply to Pvt. Ltd. Co. whose total borrowing ...........
(a) Less than equal to 10 crore
(b) Less than equal to 1 crore
(c) More than equal to 10 crore
(d) More than equal to 1 crore
5) CARO 2016 requirements are ............. to the provision of Sec.143 of the Act.
(a) Similar
(b) Different
(c) Supplemental
(d) None
6) As per Sec.143(II), the ........... may order for the inclusion of a statement on specified matters in the Auditor’s specified matters in the Auditor’s report for specified class or description of companies.
(a) Company Law Board
(b) CAG
(c) Central Government
(d) Dept. of companies affairs
7) For........ companies, CARO is supplemental to the directions given by C & AG of India.
(a) Foreign Companies
(b) Govt. Companies
(c) Pvt. Ltd. Companies
(d) Public Ltd. Companies
8) The net owned funds to deposits ratio of Nidhi companies should be ..........
(a) 1:2
(b) 2:1
(c) 3:1
(d) 2:3
9) Which section is applied to loans, investments, guarantees and security ?
(a) 185
(b) 186
(c) Both A & B
(d) None of these
10) To be exempt from CARO, a private company should not be .........
(a) Subsidiary company
(b) Holding company
(c) Both A & B
(d) None of these
11) CARO, 2016 reporting shall not apply to the Auditor’s report on consolidated financial statements. True or False.
(a) True
(b) False
(c) Partially True
(d) Partially False
AUDITOR’S REPORT
12) Based on kind of opinion expressed by the auditor, the audit report can be classified into ......... types.
(a) Four
(b) Three
(c) Five
(d) Six
13) Unmodified opinion report is also known as ...........
(a) Clean Audit Report
(b) Unqualified Report
(c) Both A & B
(d) None of these
14) Modified Report is also known as .........
(a) Qualified Report
(b) Adverse opinion
(c) Disclaimer of opinion
(d) All of these
15) When the Auditor expresses an opinion with reservation there in is called .........
(a) Clean Audit Report
(b) Qualified Audit Report
(c) Adverse Report
(d) Disclaimer of opinion Report
16) An adverse opinion is issued when the auditor believes:
(a) Some parts of the financial statements are materially misstated or misleading
(b) the financial statements would be found to be materially misstated if an investigation were performed
(c) the auditor is not independent
(d) the overall financial statements are so materially misstated that they do not present fairly the financial position or results of operations and cash flows in conforming with GAAP.
17) Examples of unqualified opinions which contain modified wording (without adding an explanatory paragraph) include:
(a) the use of other auditors
(b) material uncertainties
(c) substantial doubt about the audited company (or the entity) continuing as a going concern
(d) lack of consistent application of GAAP
18) Items that materially affect the comparability of financial statements generally require disclosure in the footnotes. If the client refuses to properly disclose the item, the auditor will most likely issue:
(a) a disclaimer
(b) an unqualified opinion
(c) a qualified opinion
(d) an adverse opinion
19) When the auditor concludes that there is substantial doubt about the entity’s ability to continue as a going concern the appropriate audit report would be:
(a) an unqualified opinion report an explanatory paragraph
(b) a disclaimer of opinion
(c) neither A or B
(d) either A or B
20) An auditor may not issue a qualified opinion when:
(a) a scope limitation prevents the auditor from completing an important audit procedure
(b) the auditor’s report refers to the work of a specialist
(c) the auditor lacks independence with respect to the audited entity
(d) an accounting principle at variance with GAAP is used
21) When misstatements are so material that an adverse opinion is issued, a scope paragraph would be:
(a) qualified
(b) unchanged
(c) deleted
(d) expanded to identify the additional procedures which the auditor performed
22) Which of the following statements is true?
(a) The auditor is required to issue a disclaimer of opinion in the event of a material uncertainty.
(b) The auditor is required to issue a disclaimer of opinion in the event of a going concern problem.
(c) The auditor is required to issue a disclaimer of opinion for a material uncertainty and for a going concern problem.
(d) The auditor has the option, but is not required, to issue a disclaimer of opinion for a material uncertainty or for a going concern problem.
23) Whenever an auditor issues a qualified opinion, the implication is that the auditor:
(a) does not know if the financial statements are presented fairly.
(b) does not believe the financial statements are presented fairly.
(c) believes the financial statements are presented fairly.
(d) believes the financial statements are presented fairly “except for” a specific aspect of them.
24) If a misstatement is immaterial to the financial statements of the entity for the current period, but is expected to have a material effect in future periods, it is appropriate to issue a(n):
(a) adverse opinion.
(b) qualified opinion.
(c) unqualified opinion.
(d) disclaimer of opinion.
25) Which of the following requires recognition in the auditor’s opinion as to consistency?
(a) The correction of an error in the prior year’s financial statements resulting from a mathematical mistake in capitalizing interest.
(b) A change in the estimate of provisions for warranty costs.
(c) The change from the cost method to the equity method of accounting for investments in common stock.
(d) A change in depreciation method which has no effect on current year’s financial statements but is certain to affect future years.
26) Qualified Report given by auditor when he obtain sufficient audit evidence for misstatement of Financial Statement undetected misstatement could be ..................
(a) material
(b) pervasive
(c) material and pervasive
(d) material but not pervasive
27) Adverse report given by Auditor when he obtain sufficient Audit evidence for misstatement which can be concluded could be ................ Financial Statement.
(a) material
(b) pervasive
(c) material and pervasive
(d) material but not pervasive
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It is also necessary to have the experience in several different departments of the organization. The auditors can have the proper understanding of the products and any other services those are associated with the company’s sell traits. seo audit
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