This book contains standardized level of MCQs for those preparing for Chartered Accountancy Exams, from SA 200 to SA 299, issued by ICAI, New Delhi.

2. Foreword
Hi, This extract of 10 pages contain,
MCQs on Auditing Standards
SA 299) issued by the Institute of
Chartered Accountants of India, which
are framed in a manner, such that
reasonable portion of SAs can be Revised
very easily, before exams. It is useful
for both CA Intermediate and
Students.
Hi, This extract of 10 pages contain,
MCQs on Auditing Standards (SA 200 to
issued by the Institute of
Chartered Accountants of India, which
are framed in a manner, such that
reasonable portion of SAs can be Revised
exams. It is useful
for both CA Intermediate and CA Final
Please make best use of this material
and do give me your feedback and
criticisms on this extract.
Mail: burhan.pmf
https://www.Linkedin.com/in/burhanabdul
20-Mar
Please make best use of this material
and do give me your feedback and
criticisms on this extract.
Mail: burhan.pmf@gmail.com
https://www.Linkedin.com/in/burhanabdul
Mar-2020

3. SA 200
1) Audit Risk is a function of;
A- Risk of Material Misstatements x Detection Risk
B- Inherent Risk x Control risk x Detection Risk
C- Risk of Material Misstatements x Correction Risk
D- Both A & B are same
2) Risk that financial statements are materially
misstated prior to audit is called;
A- Inherent Risk
B- Uncorrected Risk
C- Risk of Material Misstatement
D- Undetected Risk
3) Which of the following is not included in the
fundamental principles of Ethics u/SA 200?
A- Confidentiality
B- Professional Competence
C- Independence in appearance
D- Professional Behavior
E- None of the above
4) As per SA 200, “The Auditor shall comply with
each requirement of an SA” Exception to this
statement is-
A- Auditor is facing difficulty in applying such audit
procedures.
B- Requirement is Conditional and such condition is
not present.
C The entire SA is not relevant.
D- All of the above.
E- Only B and C.
5) Statement 1: SAs override laws and
regulations, when it comes to management
responsibilities.
Statement 2: SAs don not impose responsibilities
on management or TCWG.
A- Both Statements are Incorrect
B- Both Statements are Correct
C- Only (1) is Correct
D- Only (2) is Correct
6) Failure to achieve an objective of relevant SA
represents ______ requiring ________.
A- Inefficiency in audit planning, New audit plan.
B- Deficiency in Internal Ctrl, Communication to
TCWG.
C- A Significant Matter, Audit Documentation.
D- Inherent Limitation of Audit, Modification of
Opinion
SA 210
1) Which of the following is not an attribute of
Financial Reporting Frameworks u/SA 210?
A- Relevance D- Acceptability
B- Completeness E- Neutrality
C- Reliability F- Understandability
2) “The use of acceptable financial reporting
framework by the management, in preparation of
FS” is;
A- Ascertained by the auditor while evaluating
misstatements at assertion level.
B- Ascertained by the auditor while evaluating
misstatements at Financial Statement Level.
C- A pre-Condition for an Audit.
D- Normally assumed by the auditor, during the Audit
Engagement.

4. 3) Auditor shall not accept the audit engagement
if;
A- AFRF is unacceptable.
B- Management representation on its responsibility
has not been obtained.
C- Management asks the Auditor, to provide a lower
level of Assurance, which is not acceptable to Adr.
D- All of the above E- Only A and B
4) On Recurring audits, The Auditor shall assess-
A- Whether the circumstances require the terms of
the audit engagement to be revised.
B- Whether there is any change in the, Integrity of
Management and TCWG, as compared to previous
engagement.
C- Whether there is a need to remind the entity the
existing terms of the audit engagement.
D- All of the Above E- Only A and C
SA 220
1) Auditor’s objective as per SA 200 is to
implement Quality Control Procedures at;
A- Engagement Level.
B- Assertion Level.
C- Financial Statement Level.
D- All of the Above.
2) A process designed to provide an objective
evaluation, before the report is issued, of the
significant judgments the engagement team made,
and the conclusions reached in formulating the
report is called;
A- Monitoring of Engagement Team.
B- Inspection of Ethical Requirements.
C- Engagement Quality Ctrl Review.
D- Ethical Compliances.
3) The responsibility for- Directing, supervising
and performing audit engagement in compliance
with professional standards and regulatory
requirements is of;
A- Principal auditor.
B- Engagement Partner.
C- All the members of Engagement team.
D- Any Auditor of the firm who is a CA.
4) An effective system of QC includes ________,
designed to provide the firm with reasonable
assurance that its policies and procedures relating
to the system of QC are relevant, adequate and
operating effectively.
A- A Monitoring Process.
B- An EQC Review.
C- An Inspection.
D- Engagement Team Review.
5) In case of differences of opinion that arise
within the Engagement team, the same shall be
resolved by;
A- Following firm’s policies and procedures.
B- Consulting the Engagement Quality Ctrl Reviewer.
C- Following guidelines issue by ICAI.
D- By Passing a vote system in a team meeting.
6) EQCR has to be completed;
A- On or before the date of completion of Audit.
B- On or before the date of forming an opinion.
C- On or before the date of approval of FS by the
board
D- On or before the date of Auditor’s report.

5. SA 230
1) Audit documentation does not include;
A- Letters of Representation.
B- Checklists.
C- Superseded drafts of working papers.
D- Issues Memoranda.
2) One or more folders or other storage media, in
physical or electronic form, containing the records
that comprise the audit documentation for a
specific engagement is called;
A- Audit Note book.
B- Audit File.
C- Audit Documentation.
D- Working Papers.
3) The auditor shall prepare audit documentation
that is sufficient to enable _________, having no
previous connection with the audit to understand,
NTE of audit procedures, its results ……
A- Any Person.
B- Any Auditor.
C- Successor Auditor.
D- Any Experienced Auditor.
4) If any matter, material, arises after the date
of auditor’s report, and auditor performs new or
additional audit procedures or draws new
conclusions, auditor need not document the same,
as once audit report is signed, auditor cannot
include or exclude any matter in audit
documentation.
A- Correct
B- Incorrect
C- It’s a Matter of Professional Judgment.
D-He shall include it in subsequent Audits.
5) Statement (1) In exceptional circumstances, the
auditor judges it necessary to depart from
relevant requirements in a SA, he shall document
the reasons for such departure.
Statement (2) But he is not required to do so if
the entire SA is irrelevant.
Statement (3) He is not required to do so, if the
requirement is conditional and the condition does
not exist
A- All are Incorrect
B- Only (1) & (2) are correct.
C- All are Correct.
D- Only (1) & (3) are correct.
6) Auditor shall assemble the audit documentation
in an audit file and complete the administrative
process of assembling the final audit file on a
timely basis;
A- Not more than 60 days after the date of AR.
B- Not more than 90 days after the date of FS.
C- Not more than 30 days of completion of audit.
D- Not more than 60 days of completion of audit.
E- As soon as practicable.
7) The retention period of final audit file is
Minimum 7years:
A- From the date of AR.
B- From the date of completion of Audit.
C- From the date of approval of FS by the Directors.
D- From the date of Retiring from the entity as Adr.
8) “Auditor has a right to exercise lien on the
Books of the entity, on non-payment his fees, by
the client as per the case law; ‘RD Saxena vs.
Balram Prasad Sharma’ [2000] SCC 264 “
A- Correct B- Incorrect

6. 9) Which of the following is not a content of
permanent audit file?
A- Extracts of copies of important legal documents.
B- Information containing legal and organizational
structure of entity.
C- Analysis of significant ratios and trends.
D- Analysis of transactions and balances.
10) What is the alternative for the auditor if he
is not able to recover the audit fees from the
client neither he is able to exercise lien on client’s
returnable documents/Books?
A- He may proceed against the client for such non-
payment.
B- He may retain any property of the client, other
than Books.
C- He may issue a Modified opinion.
D- He may refuse to Issue Audit Report.
11) Which of the following statement is
incorrect?
A- Statutory Auditor has a right to consider the
report of Branch auditor.
B- Auditor has a right to seek clarifications or visit
the branch, if necessary to perform his duties.
C- Auditor has a Right to access the photocopies of
the branch auditor’s working papers.
D- Branch Auditor is bound to co-ordinate with the
principal auditor in context of Principal Adr’s work.

7. SA 240
1) (i) SA 240 deals with auditor’s responsibility
relating to fraud in an audit of FS.
(ii) SA 240 expands on how SA-315 is to be
applied in relation to ROMM due to fraud.
A- Both are correct.
B- Only (i) is correct.
2) (i) Auditor does not make any legal
determination of whether fraud has actually
occurred.
(ii) Auditor may either suspect or identify the
occurrence of fraud.
A- Only (i) is correct. B- Only (ii) is correct.
C- Both are incorrect. D- Both are correct.
3) Which of the following is Correct?
A- Auditor may accept all records and Documents as
genuine, unless he has a reason to believe contrary.
B- Auditor shall investigate forgery matters if
suspicion arises.
C- Auditor shall investigate inconsistencies, if
inquiries of Mngt and TCWG are inconsistent.
D- All of the above.
4) If auditor identifies a fraud involving
management, employees, having significant roles in
Internal Controls or other frauds resulting in
material misstatement he shall communicate the
matters to;
A- Management at Appropriate level
B- TCWG
C- Either (A) or (B)
D- Both (A) and (B)
5) Which of the following is an example of a Fraud
Risk Factor under fraudulent financial reporting
due to ‘Opportunities’?
A- Low Morale among senior Management.
B- Significant Related Party transactions not in the
ordinary course of business.
C- New Accounting, Statutory, or Regulatory
requirements.
D- All of the above.
6) Which of the following is an example of a Fraud
Risk Factor under Misappropriation of assets due
to Attitudes or Rationalizations?
A- Disregard for the need for monitoring or reducing
risks related to misappropriation of assets.
B- Personal or financial pressures on management or
employees with access to cash.
C- Inventory items that are small in size, of high
value or in high demand.
D- Inadequate SODs or independent Checks.

8. SA 250
1) Auditor’s objective under SA 250 is to perform
specified audit procedures to identify non
compliance with other laws and regulations that;
A- May have Material Effect on FS.
B- May help the auditor to find out frauds.
C- May have Potential Material Effect on FS.
D- All of the above.
2) SA 250 also extends its applicability to other
assurance engagements, in which the auditor is
specifically engaged to test and report separately
on compliance with specific laws or regulations.
A- True. B- False.
3) Types of laws and regulations described in SA
250 are;
A- Having Direct effect on determination of material
amounts and disclosures in FS.
B- Having Indirect effect on determination of
material amounts and disclosures in FS.
C- Having Direct effect on determination of Going
Concern Assumption of the entity.
D- Having Indirect effect on determination of Going
Concern Assumption of the Entity.
E- All of the Above.
F- Only A and B.
4) Where NC has a material effect on FS and it
has not been adequately reflected in FS, Auditor
shall;
A- Express a Disclaimer of opinion u/SA 705.
B- Express Qualified or Adverse opinion u/SA 705.
C- Withdraw from the Engagement.
D- Obtain a Written representation from the
management, and use it as Audit Evidence u/SA 500.
5) Non Compliance includes ‘personal misconduct’ by
any personnel of the entity, which has adverse
effect on the Society.
A- True. B- False.
6) It is the responsibility of ________ with
oversight of ________ to ensure that entity’s
operations are conducted in accordance with the
provisions of laws and regulations.
A- Management & TCWG.
B- TCWG & Management.
C- TCWG & Legal Counsel.
D- Management & Legal Counsel
7) ‘Auditor is responsible for Preventing &
Detecting Non-Compliance with all laws and
regulations’
A- True B- False
8) Auditor’s responsibility, in context of SA 250,
to detect material misstatement is reduced since;
A- Not all laws or regulations affect the FS.
B- Whether an act constitutes NC is a matter to be
decided by the court of law.
C- NC may be designed to conceal it (eg. collusion,
Forgery, etc).
D- All of the Above.
E- Only A and C.
9) As per SA 250 Omission or commission by the
entity, either intentional or unintentional, which
are contrary to prevailing laws or regulations, is
called;
A- Fraud and Error.
B- Misstatement.
C- Non – Compliance.
D- All of the above.

9. SA 260
1) Which of the following is true as per the scope
of SA 260?
1- Special Considerations apply to SA 260 where
all TCWG are involved in managing the entity and
for Listed Entities.
2- Auditor is not required to communicate with
Entity’s Management or Owners, unless they are
also charged with governance
A– Only (1)
B– Only (2)
C– Neither (1) nor (2)
D- Both (1) and (2)
2) As per SA 260, A Person(s) or Organization(s)
with responsibility for overseeing the STRATEGIC
DIRECTION of the entity and obligations related
to the accountability of the entity are called
A– Management
B– Top Level Management
C– TCWG
D- Governance Board
3) The responsibility of communicating the
‘Matters of Governance interest’ to TCWG lies
with Auditor and not Management.
A – True B – False
4) Which of the following is not a matter to b
communicated to TCWG u/ the scope of “SA 260”
A– Auditor’s Responsibilities.
B– Management’s Responsibility.
C– Audit Scope.
D- Significant Findings in Audit.
E- Auditor’s Independence in case of Listed Entities
1) Which of the following is true as per the scope
Special Considerations apply to SA 260 where
all TCWG are involved in managing the entity and
Auditor is not required to communicate with
Entity’s Management or Owners, unless they are
2) As per SA 260, A Person(s) or Organization(s)
with responsibility for overseeing the STRATEGIC
DIRECTION of the entity and obligations related
to the accountability of the entity are called;
3) The responsibility of communicating the
‘Matters of Governance interest’ to TCWG lies
4) Which of the following is not a matter to be
communicated to TCWG u/ the scope of “SA 260”
Auditor’s Independence in case of Listed Entities
5) In certain cases where Management / TC
fails to take corrective action against the Mis
statements, communicated and which are Material
to Regulatory or Funding Bodies the Auditor shall;
A– Obtain Written Representation from the
management as Audit Evidence
B– Modify the Report Opinion u/ SA
C– Communication to third parties is prohibited under
SA 260; therefore auditor cannot communicate such
matters to third parties.
D- Auditor is also required to communicate such
material issues to such Interested Authorities
6) Significant delays, Unw
imposed by management to provide information…
These are the Examples of
A- Significant matters discussed with management.
B- Significant Difficulties.
C- Qualitative Aspects of accounting policies.
D- Either of the above
Answers
5) In certain cases where Management / TCWG
fails to take corrective action against the Mis-
statements, communicated and which are Material
to Regulatory or Funding Bodies the Auditor shall;
Obtain Written Representation from the
management as Audit Evidence
Modify the Report Opinion u/ SA 705.
Communication to third parties is prohibited under
SA 260; therefore auditor cannot communicate such
matters to third parties.
Auditor is also required to communicate such
material issues to such Interested Authorities
6) Significant delays, Unwillingness or Restrictions
imposed by management to provide information…
These are the Examples of-
Significant matters discussed with management.
Significant Difficulties.
Qualitative Aspects of accounting policies.
Answers

10. SA 265
1) The objective of Auditor under SA 265, is to
communicate to TCWG and Management,____ that
the auditor has identified during the audit and
that, in auditor’s professional judgment are of
sufficient importance to merit their respective
attentions.
A – Deficiencies in Internal Control.
B – Significant Deficiencies in Internal Control.
C – Any forms Internal Control Matters.
D – Misstatements due to lack of Internal Ctrls.
2) SA 265 imposes additional responsibilities on
the auditor over and above SA-315 and SA-330.
A – False
B – True
3) In making Risk Assessment, auditor shall
consider internal controls for the purpose of –
A – Expressing an opinion on the effectiveness of IC.
B – Finding out deficiencies in IC.
C– Designing appropriate Audit Procedures.
D – Collecting SAAE, and documenting it.
4) Deficiency in IC exists when;
A – Management is involved in fraudulent reporting.
B – A control designed, implemented in such a way
that it is unable to prevent, detect and correct
misstatements (PDCMM) in FS on timely basis.
C – A control necessary to PDCMM in FS on timely
basis is missing.
D – All of the above
E- Only B and C.
5) A deficiency or combination of deficiencies in
IC that, in the auditor’s professional judgment, is
of sufficient importance to merit the attention of
TCWG is called;
A– Deficiency in IC
B– Significant deficiency in IC
C– Fraud Risk Factors
D- Uncorrected Significant Deficiency in IC
6) “Failure of management to remedy significant or
other deficiencies in IC that were previously
communicated may become a significant deficiency
by itself”
A- False
B – True
7) Significance of a deficiency or a combination of
deficiencies in IC depends on –
A– Whether the Mis-statement has actually occurred
B– The likelihood that a Mis-statement could occur.
C- Potential Magnitude of the Mis-statement.
D- All of the above.
E- Cant say, because, significance of deficiency is a
matter of professional judgement.
8) If Auditor identifies deficiencies which are not
significant, he shall communicate such deficiencies
to;
A– TCWG .
.B– Not required communicating it to anyone, as they
are not significant.
C– Management at appropriate level if it is relevant
as per his professional judgment
D- Compulsorily to TCWG + Management.

11. SA 299
1) SA 299 also extends its scope with the
relationship between a principal auditor who
reports on F.S of the entity and another auditor
who reports on the F.S of one or more divisions or
branches included in the entity.
A – True.
B – False.
C – True, but Subject to certain Terms and
Conditions prescribed by SA 600.
D - True, but Subject to certain Terms and
Conditions prescribed by SA 299.
2) Which of the following lack in case of Joint
Audit?
1 – Better quality of work performance.
2 – Lower costs to carry out the audit work.
3 – Clear definition of responsibility.
4 – Better Coordination among Joint Auditors.
5 – Improved services to Client Company.
6 – Areas of Common Concern not being neglected
A – 1,4,6
B – 3,4,6
C – 3,2,5
D – 2,5,6
3) Where the audit work cannot be divided among
the JAs, and is carried out by all of them, All
Joint Auditors are -
A – Severally Responsible.
B – Jointly Responsible.
C – Jointly and Severally Responsible.
D – It will be determined on the basis of the report
issued by the investigation Authority.
4) In case of joint audit, if any matter is bought
to the attention of the joint auditor ’A’ , by the
other joint auditor ’B’ , after the audit report
has been submitted, the joint auditor ‘A’ would
not be responsible for those matters.
A – True.
B – False.
5) Each JA has a right to assume that the other
JAs have carried out their work in accordance
with generally accepted audit procedures.
A – True
B – False
6) JA shall review the work performed by the
other JA, to ensure whether the work has been
performed in correct manner.
A – Correct
B – Incorrect
7) In case of Disagreement among joint auditors
the opinion shall be issued on the basis of –
A – Lottery System.
B – Views of the majority of the JAs.
C – Each of them should express their own opinion
through a separate report.
D – Each of them shall state their different opinions
in the same report, with two paragraphs of Audit
opinion, signed by All JAs.
E - Normally all JAs arrive at same conclusions, thus
SAs are silent on such exceptional issues.
8) Division of audit work among Joint Auditors is
cannot be done on the basis of -
A – Audit of Identifiable units.
B – Items of Assests/Liab/Income/Expenditure.
C – Direction of TCWG or Management.
D – With Reference to periods of time.