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CA Final Due Diligence — practice questions

Explore 38 free Due Diligence questions in CA Final Auditing. Open each question or exercise to read its content, reference answers and available explanation.

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Due Diligence questions and exercises with answers

Showing questions 1–30 of 38.

A buyer reviews a target firm's books and liabilities before an acquisition. What is this called?Read the answer and worked solution →What best describes due diligence in business?Read the answer and worked solution →Due diligence is most commonly what kind of exercise?Read the answer and worked solution →A firm has a third party assess it before sale. This is called what?Read the answer and worked solution →Which due diligence finding can change a deal's purchase price?Read the answer and worked solution →Which of these is an area normally covered in a due diligence on a company being acquired?Read the answer and worked solution →Which emerging area of concern are acquirers now also expected to examine during due diligence?Read the answer and worked solution →What does a due diligence Compatibility Audit examine?Read the answer and worked solution →Why is valuation considered in a due diligence process on mergers?Read the answer and worked solution →Due diligence on a foreign agent begins at the start and then repeats. What are the two stages?Read the answer and worked solution →How long does ongoing anti-corruption due diligence on a partner continue?Read the answer and worked solution →Failing to vet foreign agents risks breaching which US law?Read the answer and worked solution →Which UK law needs due diligence on partners for an adequate procedures defence?Read the answer and worked solution →How does UK guidance describe due diligence on partners?Read the answer and worked solution →In which 1933 US statute did the term due diligence become a specialised legal term?Read the answer and worked solution →What must a defendant show for a strict liability defence?Read the answer and worked solution →Which body revised its guidelines in 2011 to include human rights due diligence for multinational firms?Read the answer and worked solution →Which UN Special Representative put forward the idea of human rights due diligence?Read the answer and worked solution →Forensic accounting investigates which area?Read the answer and worked solution →Who is credited with the birth of forensic accounting through the Al Capone investigation?Read the answer and worked solution →Al Capone was convicted on evidence of which offence?Read the answer and worked solution →Which engagement is a typical use of a forensic accountant?Read the answer and worked solution →The fraud triangle lists perceived opportunity, perceived pressure and which third element?Read the answer and worked solution →An employee in debt believes he will repay stolen cash soon. Which fraud triangle element is his belief?Read the answer and worked solution →Which law is a common quantitative tool that predicts expected digit patterns in accounting data?Read the answer and worked solution →Benford's law, also called the first-digit law, says that in many real datasets the leading digit is likely to be what?Read the answer and worked solution →Which is a common type of fraud scheme investigated by forensic accountants?Read the answer and worked solution →Forensic rating models derive an overall score showing what?Read the answer and worked solution →Z-score forensic models weight financial ratios using coefficients obtained from which technique?Read the answer and worked solution →Which Indian fraud case in 2008 led to the development of models such as the J-score?Read the answer and worked solution →

Worked practice questions

A buyer reviews a target firm's books and liabilities before an acquisition. What is this called?

  1. Capital budgeting
  2. Window dressing
  3. Statutory audit
  4. Due diligence
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Correct answer: D. Due diligence

Investigating a target before a deal is the reasonable care that defines due diligence.

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What best describes due diligence in business?

  1. Annual tax return filing
  2. Dividend approval process
  3. Reasonable care before a contract
  4. Valuation made after a sale
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Correct answer: C. Reasonable care before a contract

Due diligence means the investigation or care a reasonable person takes before agreeing to a contract or act.

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Due diligence is most commonly what kind of exercise?

  1. A statutory return
  2. A court-imposed fine
  3. A voluntary investigation
  4. A licence renewal
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Correct answer: C. A voluntary investigation

Although it can be a legal obligation, due diligence more commonly refers to voluntary investigations such as checking a counterparty.

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More Auditing topics

Auditor's ReportOverview of Audit of Public Sector UndertakingsInternal AuditStandards on Auditing and Professional EthicsInternational Ethics Standards Board for AccountantsRisk Assessment and Internal ControlSpecial Features of Audit of Banks and Non-Banking Financial CompaniesAuditor's Report on Financial Statements