Chapter no 1

Q No 1- Define Auditing.
Ans- The term audit is an efforts to find out the fairness and establish the
reliability or unreliability of an entity’s financial statements which consist
of balance sheet,profit and loss account,cash flow statement,notes and
other statements and explanatory notes.
Q No 2- Define external Audit.
Ans- An external audit is that which is concerned with the critical review
of representation made in published financial statement.it is compulsory
for all companies which are registered under the companies ordinance
1984 to have their accounts audited by the professional auditors.
Q No 3- Define continuous Audit.
Ans- Under continuous audit is an auditor required to visit organisation
at regular intervals during financial year ,say monthly,quarterly and
examine the books of accounts .
Q No 4- Define final Audit.
Ans- A final or periodical or complete audit is that which is commenced
at the end of accounting year when all accounts have been closed and
final account have been prepared ,and this is carried on until the audit
work for the entire period is completed.
Q No 5-Enlist usefulness of Auditing.
Ans- 1)Fraud detection 2)Errors detection 3)Regularity and vigilance of
staff 4) Reliance in Audited accounts by outside parties
Q No 6-Difference between accounting and Auditing.
A)Accounting.
1)it is concerned with the technique and procedure of recording
,classifying,summarizing,the business transactions in a set of
books,interpreting and communicating the result thereof.
2)The spade work is done by the accountant.
3)Unaudited accounting records cannot be relied upon.
B)Auditing.
1)it is analytical,critical,investigative and concerned with basis for
accounting measurement and assertion.
2)The finishing touch is given by the auditor.
3)Audited accounts records can be relied upon.
4) Auditing starts where accounting end.
Q No 7-What is government audit.
Ans-The government audit is an instrument of financial control.it is
mainly concerned with the audit of:
1)receipts 2)expenditure 3)sanction 4)previous of fund 5)rules and order
Q No 8 Einlist reliance on audited accounts by outside parties.
A)income and assessment b)claim for compensation 3)raising a
loan4)proposed sales of the business
(9) Enlist the objective of an audit?
1-The true and fair view\
2 errors and defalcations
3internal control
4 constructive advice and guidelines
Q10. Define interim audit?
Ans This type of audit is conducted when the management of the
organization desires to know the trading result of the business in orders
to declare interim dividend where audited financial statements are
required to be issued soon after the close of financial year