ANS: B. Statutory or Compulsory Audits Under Statutory Audit the rules relating to the scope of the audit, auditor’s qualifications, his rights, duties, and responsibilities, etc. a) External b) Interim c) Internal Answer: c) Internal Auditor 6. It helps the shareholders to keep themselves protected from any fraud and misrepresentation. Auditing refers to the careful examination of the financial records of a business organization. Types Social audit. On the other hand, the investigation is performing as per the need of an organization. A good auditor is not only able to clear your issues quickly, but also helps you improve your company. An environmental audit is a type of evaluation intended to identify environmental compliance and management system implementation gaps, along with related corrective actions. internal audit and external audit. Internal audit is not compulsory, but a company can conduct it to review the operational activities of the firm or an organization. Hence it is always a good idea to make use of auditing services even when they are not compulsory for the organization. Internal control, as defined in accounting and auditing, is a process for assuring achievement of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. In other words, irrespective of the fact whether audit is compulsory, statutory or voluntary. e 2 a) Internal b) Voluntary c) Statutory Answer : c) Statutory Audit 5.----- Auditor is the employee of the organization and appointed by the management. However, recently auditing has begun to include non-financial subject areas such as safety, security, information system performance and environmental concerns. 100, by –– (i) a person contemplated in paragraph (a); or (ii) a person who is qualified to be appointed as an accounting officer of a close corporation in There are many different types of auditing used these days for the evaluation of the accounting activities. It can be done internally (by employees of the organization) or externally (by an outside firm). The result of this was the release of Auditing & EDP. In order to facilitate understanding of the scope and authority of the pronouncements of the Auditing and Assurance Standards Board ('AASB'), the ICAI has issued revised preface viz., Preface to Standards on Quality Control for Auditing, Review, Other Assurance and Related Services, which has come into effect from 1st April, 2008. are determined by the law, which can be increased by an agreement between the employer of the organization and the auditor, but cannot be decreased in any situation. The auditor reviews the financial report of the organization, as per the auditing standard set by the government body. AUDITING AND TAXATION TY BCOM – AUDITING AND TAXATION – MCQ – QUESTION BANK - COMPILED BY MANOJ VORA. It is needed when the organization has a good internal control system d) It is expensive 23.Internal check is carried on by a) Staff specially appointed for the purpose It is obligatory for all separate legal entities. The external audit is compulsory by law. Chief importance of auditing is as follows: Auditing is carried out after the final preparation of the financial statements and accounts. Auditing can be best understood as an inspection of the company to validate the authenticity of a company’s claims.. A lot of the basic procedures of both accounting and auditing are analogous. It has advantage for every type of organization. companies 6. Auditing is compulsory for a) Small scale business b) Partnership firms c) Joint stock Companies d) Proprietary Concerns 5. However some companies also undertake internal audit which implies that company appoints some professional internal auditors to conduct audit of accounts as well as company’s systems and policies. The role of auditing towards organizational success have attracted comment on the front pages of national newspapers, rather than in just the financial pages have even led on occasion to question and statement in parliament. 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