Nature, Objective, and Scope of Audit in Chartered Accountancy

Play an AI-generated podcast conversation about this lesson

What caused the shares of the IT company to drop as soon as the markets opened on Monday?

Auditors had not reviewed the financial statements
Audited profits were below market expectations (correct)
Auditors had given positive remarks on the financial statements
Audited profits were above market expectations

Why did the uncle of the individual approach a bank for funds?

To purchase shares in an IT company
To expand his business (correct)
To retire from business
To pay off personal debts

What did the credit officer of the bank request from the individual's uncle for considering the loan application?

Latest stock market reports
Business expansion plans
Audited financial statements of past years (correct)
Personal identification documents

What did the individual think could have been a significant factor contributing to the substantial increase in direct tax collections as highlighted in the Union Budget?

Higher taxes paid by companies based on audited results (B) Signup and view all the answers

From the text, what did the individual reflect upon regarding auditors' role in the economy?

Auditors have a significant role in the economy and nation-building (C) Signup and view all the answers

Based on the information provided, why do companies pay taxes on profits shown in their audited financial statements?

To contribute to nation-building through tax payments (C) Signup and view all the answers

What is one of the reasons why an auditor cannot guarantee that financial statements are free from material misstatements?

Inherent limitations of an audit (C) Signup and view all the answers

Why might an auditor not be able to rely on information obtained in the second year of an audit?

The information may have lost its relevance over time (A) Signup and view all the answers

What could lead to the cessation of a business according to the text?

Emergence of new business models or products (D) Signup and view all the answers

Why is it mentioned that an auditor cannot reduce audit risk to zero?

Because of inherent limitations of an audit (C) Signup and view all the answers

Why is it crucial for an auditor to consider future events in their audit procedures?

To ensure that the financial statements are free from material misstatements (D) Signup and view all the answers

What impact do future events have on the ability of an entity to continue its business?

May affect it adversely (D) Signup and view all the answers

Why do diverse users rely on audited financial statements?

To gain confidence in the financial statements (A) Signup and view all the answers

What is the main reason behind the importance of auditing in the modern world?

To ensure compliance with legal and regulatory requirements (B) Signup and view all the answers

What is the primary role of auditors in the economy?

To provide credibility to financial statements (D) Signup and view all the answers

What does the scope of audit encompass?

Evaluation of the internal control system (B) Signup and view all the answers

What are the responsibilities of auditors according to the text?

To provide assurance on the reliability of financial information (A) Signup and view all the answers

What is not included in the scope of auditing?

Manipulating financial data for personal gain (C) Signup and view all the answers