PRACTICE SET-7

PC 22-Government Audit

1. The main difference between PPP and privatization is that

a. in the case of PPP there is no permanent transfer of ownership of the assets to the private partner
and the public sector agency remains accountable for providing services of the required quality.
b. in the case of Privatisation there is no permanent transfer of ownership of the assets to the private
partner and the public sector agency remains accountable for providing services of the required
quality.
c. in the case of PPP there is no permanent transfer of ownership of the assets to the private partner
but the private sector agency becomes accountable for providing services of the required quality.
d. in the case of Privatisation there is no permanent transfer of ownership of the assets to the private
partner but the private sector agency becomes accountable for providing services of the required
quality.
2. The PPP Appraisal Committee will be serviced by a Special Cell set up for the purpose in the
a. Niti Aayog b. Department of Economic Affairs (DEA)
c. Department of Legal Affairs d. O/o the CAG
3. SAI’s risks with regard to the PPP audit include
i. Insufficient domain knowledge
ii. Lack of expertise required to examine the process and the results
iii. Failure to identifying worthwhile lessons
iv. Absence of following up the audit work

a. i, ii and iii b. ii, iii and iv

c. i, ii and iv d. All of the above
4. Pick the incorrect one
a. Unless the promoting department or PSU has considered different alternatives for implementing
the project and selected the most appropriate set up, the project may not succeed in the long run.
It causes Feasibility or Organisational Risk
b. The public sector partner will have to fulfil several conditions precedent to enable the private
sector partner to start work on the project, including making available the required land and assets
etc. and environmental and other statutory clearances. Such risk is called Conditions Precedent Risks
c. The risk that involves two issues, one regarding the ease with which the required finance could be
raised for the project, and the other is about the abatement of interest charges and repayment of
the principal is called Accounting Risk.
d. None of the given
5. Revenue Risk associated with a PPP
i. Shortfall in demand and consequentially the revenue has the potential of destabilizing the PPP
arrangement because the private sector partner may be forced at some stage to opt out.
ii. This may not only result in disruption of services but also delay ancillary development thus
impacting adversely on the generation of expected revenue. Shortfall in revenue generation will
hurt the private partner as finance is brought by it.
iii. Shortfall in demand and revenue can result from unrealistically higher level of user charges
allowed and fixed under the PPP arrangement
iv. It has to be seen whether the formula for tariff fixation or user charges is worked out correctly
and takes into account the best interest of the user community as well as the investors

a. ii, iii and iv b. i, iii and iv

c. i, ii and iv d. All of the above
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6. Selection of PPP projects for audit will depend on the risk factors associated with the projects
i. The extent and value of the shareholding / participation of the government / public sector partner
in the PPP unit, value of assets transferred, total project cost etc.
ii. Government guarantees and other state support elements
iii. Concession nature and its value including revenue sharing
iv. The nature and criticality of the service to be provided by the PPP venture and its impact on the
public at large
v. System for monitoring and evaluation of the performance of the service provider.

a. i, ii, iii and iv b. i, ii, iv and v

c. i, iii, iv and v d. All of the above
7. The comparator used by the public entity as a benchmark to help to decide whether an alternative
procurement method using private finance would offer better value for money is called
a. Project Comparator b. Public Sector Comparator
c. Financial Close d. Model Concession
8. The sum of all expected cash flows over the total economic life of the project, taken one year at a
time, and discounted by a factor which represents the opportunity cost of capital is called
a. Net Present Value b. Net Future Value
c. Net Economic value d. Cost of Capital
9. Audit of total Project Cost of a PPP
a. TPC could also be adversely impacted by concessionaire’s risk perceptions in terms of attitude of
the government authorities and degree of absolutism in the terms and conditions incorporated in
the bid documents as to those aspects which can be precisely predicted and measured upfront.
b. Since the ROI from the project and the user charge / tariff / toll will depend on the quantum of
the TPC, a higher cost of construction might benefit the private partner at the cost of the user
community.
c. Public auditors should eschew the temptation of expecting the public authority to transfer most
of the risks to the private sector partner even as it may push up the project cost and thus prove
counter-productive.
d. All of the above
10. With regard to audit of viability gap funding (VGF)
a. It is essential for the auditors to assess carefully the actual funding gap by analysing the total
capital cost, revenue generation based on projected demand, tariff / toll structure and capping (if
imposed), rate of return and cash flow.
b. The DPR will include the working of the total capital cost and the extent of shortage in financing
the capital which may not be covered by the expected returns.
c. Both A&B
d. None of the given
11. The Audit Board is constituted
a. by CAG for performance audits of Central Public Sector Undertakings
b. by CAG for performance audits of Public Sector Undertakings whether Central or State
c. by AG for performance audits of State Public Sector Undertakings falling within his/her jurisdiction
b. by AG for performance audits of Public Sector Undertakings whether Central or State falling within
his/her jurisdiction
12. For the purpose of Section 23 of the Act, which of the following shall be deemed to be the general
principles of Government accounting?
a. General Financial Rules, 2017 b. Government Accounting Rule, 1990
c. Receipt & Payments Rules, 1983 d. All of the above
13. In respect of the State Government, the AG (Audit) shall report the cases of delay to
a. the CAG b. the Chief Secretary
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 c. the Secretary Finance Department d. the Governor
14. Pick the correct one regarding reply to audit observation by auditable unit
a. The officer in charge of the auditable entity shall send the reply to an audit note or inspection
report within two weeks of its receipt.
b. Even if it is not feasible to furnish the final replies to some of the observations in the audit note or
inspection report within the prescribed time limit, the first reply shall not be delayed on that account
and an interim reply may be given indicating the likely date by which the final reply shall be furnished.
c. Both a & b
d. None of the given.
15. Results of audit conducted with reference to data, information and documents of any auditable
entity that are available in an audit office or an accounts office will be communicated to the auditable entity
in the form of
a. Action Taken Notes b. Managerial Note
c. Inspection Notes d. Audit Notes
16. Pick the incorrect one
a. The annual audit plan for audit of panchayati raj institutions and urban local bodies in the next
financial year prepared by the Local Fund Auditor shall be submitted to the AG (Audit) of the State
by the end of April
b. The local fund auditor will furnish returns in such format as may be prescribed by the AG for advice
and monitoring.
c. None of the given
d. Both A&B
17. Annual accounts duly adopted by the board of directors of a Government company or a deemed
Government company and audited by the statutory auditor shall be submitted to the Accountant General
(Audit) within 3 months of the close of the year of accounts. The AG, in respect of a non-listed Government
company, may
a. extend the said date by one month b. reduce the said date by one month
c. reduce the said date by two months d. extend the said date by two months
18. Audit of the a Government company or a deemed Government company by the CAG is called
a. Special Audit Report b. Supplementary Audit Report
c. Separate Audit Report d. Independent Audit Report
19. Pick the correct one
a. In case serious irregularities are noticed in the discharge of professional duties by the statutory
auditor, the CAG may, if considered necessary, on the recommendation of a committee appointed
by him and after giving due opportunity to the statutory auditor to represent, debar him from further
appointment as auditor of a Government company or a deemed Government company for such
period as may be considered fit.
b. The matter may also be referred to the Government for taking disciplinary action against the
statutory auditor.
c. both a & b
d. None of the given
20. The conditions for undertaking audit of a body or authority at the request of the President or the
Governor of a State or the Administrator of a Union Territory having a legislative assembly under Section
20(1) are the
i. Audit shall be entrusted to the Comptroller and Auditor General preferably for a period of five
accounts years. The arrangement will be reviewed after the expiry of this period.
ii. The Comptroller and Auditor General may appoint a primary auditor to conduct audit on his behalf
and in accordance with the directions or guidelines issued by him.
iii. The CAG or an officer so authorised in this regard, will communicate the results of audit to the
governing body of the body or the authority with a copy to the concerned government. The

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 governing body shall submit a copy of the report to the concerned Government along with its
observations.
iv. Any expenditure incurred by the CAG in connection with the audit of the body or authority,
including the expenditure incurred for the services of the primary auditor, if any, shall be paid by the
Government concerned to the CAG

a. ii, iii and iv b. i, ii and iv

c. i, ii and iii d. All of the above
21. Voucher Level Computerisation (VLC) uses the software
a. IBM b. Lunix
c. Unix d. Oracle
22. To deal with the certification work, a separate cell on financial (attest) audit may be formed within
each Group in every Audit Office headed by
a. a Senior/Audit Officer b. An Assistant Account General
c. a Dy. AG/ Sr. Dy. AG d. the AG
23. Possible fraud indicators are
i. Missing vouchers
ii. Production of photocopies of documents instead of originals
iii. Discrepancies between predicted figures and actual figures during analytical review procedures
iv. Employees in sensitive posts not taking leave

a. i, ii and iii b. ii, iii and iv

c. i, iii and iv d. All of the above
24. Authorised for Submission of the report to the President/Governor/Administrator
a. CAG alone in all the case
b. Any authority power to whom delegated by the CAG
c. Any authority so authorised in case of CAG’s absence on leave or otherwise
d. Any authority so authorised by the Union Government in consultation with the CAG.
25. The Accountant General, before forming the unqualified opinion, must be satisfied that
i. the financial statements have been prepared in accordance with relevant legislation, regulations,
instructions of Finance Department, Government Accounting and applicable accounting standards.
Any departures are justified and adequately explained in the financial statements
ii. there is adequate disclosure of all information relevant to a proper understanding of the financial
statements
iii. appropriate accounting policies have been consistently applied in the preparation of financial
statements.
iv. the financial statements are free from material irregularity and therefore that the transactions
recorded in them conform with the authority which governs them.

a. ii, iii and iv b. i, ii and iii

c. i, iii and iv d. All of the above
26. The documents to which the auditor needs to refer each year should be placed in a Standing File.
This file should contain current information about the organisation itself, such as
i. the authority for the audit ii. List of key audit personnel
iii. governing legislation iv. organisation’s chart and key personnel
v. descriptions of accounting systems and manuals
vi. systems evaluations

a. i, ii, iii, iv and v b. i, iii, iv, v and vi

c. ii, iii, iv, v and vi d. All of the above.

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27. All the Government Departments in the context of auditing the accounts of Governments,
a. can be considered as going concerns
b. can be considered as business entity
c. Both A&B
d. None of the given
28. Procedures to identify subsequent events are:
i. making enquiries of management to ascertain their procedures for identifying subsequent events
ii. reading minutes of management meetings and board meetings
iii. reviewing the latest available financial information such as post period accounts, budgets and
management information
iv. obtaining revised guidelines from Headquarters Office
v. considering Parliamentary or State Legislature proceedings occurring after the period end which
might have an impact on the auditee.

a. i, iii, iv and v b. ii, iii, iv and v

c. i, ii, iii and v d. All of the above
29. Which is regarded as an opportunity for the entity to discuss the audit findings with the audit
representatives. This also affords opportunity to the audit officer/group supervisory officer to clarify any
points of doubt that the entity may like to raise?
a. Entry conference b. Exit Conference
c. Settlement Conference d. Review Conference
30. Before sampling any transactions the auditors should carry out a preliminary review of the listing of
population items, which should include the application of planning analytical procedures and the same is
intended to
i. establish that the sampling frame the auditors intend to sample from does, in fact, match the
planning expectations (for example, in terms of completeness)
ii. contribute to auditors’ judgement as to where the main sensitivities or risks are in the population
iii. provide an analysis of the population, as a basis for grouping the population by transaction type
or value
iv. allow auditors to determine our sampling methodology and enable auditors to decide which
sampling unit should be tested

a. i, ii and iii b. ii, iii and iv

c. i, ii and iv d. All of the above.
31. Pick the correct ones
i. In the case of Union Government Accounts, the three Offices of Director General Audit (Central
Revenues), Principal Director of Audit (Economic and Service Ministries) and Principal Director of
Audit (Scientific Departments) should prepare Audit Plans in respect of financial audit of the
Departments covered by their respective offices.
ii. Where other Sub Auditors carry out the financial audit of some Departments and provide an audit
certificate to the Principal Auditor (as in the case of Railways, Posts and Defence), the respective Sub
Auditors should prepare their Audit Plans.
iii. The Office of the Director General Audit (Central Revenues) may require other Sub Auditors and
the Offices of the State Accountants General to carry out test audit of the transactions of field offices
of the Union Government Ministries / Departments covered under their audit jurisdiction.
iv. When the auditee entity falls under the audit jurisdiction of more than one audit office, the audit
planning should be carried out by the primary auditor without the involvement of the sub-auditor.

a. i, ii and iii b. i, iii and iv

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 c. i, ii and iv d. All of the above
32. For each audit objective where specific risk factors were identified, the audit team should
a. rely on mitigating controls and perform a minimum level of substantive procedures
b. perform focused substantive procedures
c. Both a and b
d. either a or b.
33. As auditors cannot be sure that the errors predicted and found in testing are the only errors in the
account, the sample chosen should ensure that
a. the auditors cannot be 95% sure that they have found any error
b. the auditors can be 95% sure that they have found any error
c. the auditors can be 95% sure that they have not found any error
d. the auditors cannot be 95% sure that they have not found any error
34. The review of the procedures and practices by a professional, who has not been associated with the
specific audit with a view to ensuring that the best practices and standards have been followed is called
a. Cadre Review b. Associate Review
c. Peer Review d. Profession Review
35. Certification of financial statement pertaining to World Bank Aided Projects
a. Balance Sheet
b. Statement of Expenditure
c. Profit and Loss Account/ Revenue Account
d. Balance Sheet and Profit and Loss Account/ Revenue Account
36. As an exception, audit of which of the following need not be kept in abeyance till such posting is
completed?
a. Contract Agreements
b. vouchers that are required to be posted in Works Registers
c. Establishment bills and other bills relating to entitlements of government servants
d. All of the above.
37. Governments and Heads of Departments required to furnish to Audit detailed information about the
financial assistance given to various institutions, the purpose(s) for which the assistance was sanctioned and
the total expenditure of the institutions
a. every month b. every quarter
c. every six month d. every year
38. The AG (A&E) issues Pension Payment Order, if the pension is payable in his circle of accounting unit
a. not later than fifteen days in advance of the date of retirement of the government servant
b. not later than one month in advance of the date of retirement of the government servant
c. not later than forty-five days in advance of the date of retirement of the government servant
d. not later than two month in advance of the date of retirement of the government servant
39. No contract involving an uncertain or indefinite liability or any condition of an unusual character
should be entered into without the prior consent of the competent
a. legal authority b. financial authority
c. both legal and financial authorities d. None of the given.
40. In respect of civil departments, copies of contracts and agreements should invariably be obtained
and examined in Central Audit relating to purchases of the value of
a. Rs 5 lakhs and above b. Rs 10 lakhs and above
c. Rs 1 lakhs and above d. Rs 15 lakhs and above
41. Deposits covered in Audit may be classified broadly except
a. Civil Deposits that include revenue deposits, civil court deposits, criminal court deposits, etc.
b. Local Fund Deposits
c. Special Deposits Accounts of government companies
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 d. Unclaimed Deposits
42. A State may not, without the consent of the Government of India, raise any loan if
a. any part of a loan made to the State by the Government of India is still outstanding
b. if that Government has guaranteed the repayment of any loan
c. Both a & b
d. either of a and b
43. Currency transfers in the non-banking treasuries and sub-treasuries located in which of the State/UT
are treated as transactions of the Union Government and separate Central Remittance Check Registers are
maintained for watching clearance of the debits and credits relating to these transfers?
a. Andaman & Nicobar b. Lakshadweep
c. Pondicherry d. Jammu & Kashmir
44. Who prepares and signs the Finance Accounts covering the accounts of the Union Government as a
whole for each financial year?
a. the CAG b. the Secretary, Department of Expenditure (MoF)
c. the CGA d. the Public Account Committee
45. Under Article 258/239(i) the President has delegated the State Government/Administrator of the
Union Territory Government
a. the opening of sub-heads and detailed heads of account
b. the opening of major and minor heads of account
c. the opening of detailed and object heads of account
d. All of the above
46. Capital receipts in so far as they relate to expenditure previously debited to capital in the course of
construction of a project should be
a. credited to revenue accounts b. taken in reduction of expenditure
c. credited to deposit account d. put to suspense accounts
47. Pick the correct one
i. The World Bank gives aid in two ways - Sanctioning and releasing an amount of expenditure in
advance and Reimbursement of claim.
ii. In India, sanctioning and releasing an amount of expenditure in advance system is adopted.
iii. The interest rate on the Bank loans ranges between 3 to 5 % and compensation for risk services
is between 1 to 1.5%.
iv. Loans are repayable over 15 to 20 years with grace period of 3 to 5 years

a. ii, iii and iv b. i, iii and iv

c. i, ii and iv d. All of the above
48. AG may also carry out an evaluation of the effectiveness of the Pas by comparison of
expected/planned outcome of each PA and actual outcome and reason for variation and remedial measures
a. monthly b. quarterly
c. half-yearly d. annually
49. Pick the correct one
a. PA reports are essentially a means to improving public sector performance and accountability
which can be achieved through implementation of the recommendations
b. Consistent and systematic follow-up process in the Department may contribute significantly to the
effectiveness of PA in improving the programme management
c. A follow-up is not restricted to the implementation of recommendations but focuses on whether
the audited entity has adequately addressed the problem and remedied the underlying conditions
after sufficient time has been allowed for this process
d. All of the above
50. Performance audits deliver new information, knowledge or value by
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 i. Providing new analytical insights
ii. Making existing information more accessible to various stakeholders
iii. Providing an independent and authoritative view or conclusion based on audit evidence
iv. Providing recommendations based on an analysis of audit findings.
v. Assisting executive in policy making

a. ii, iii, iv and v b. i, ii, iii and iv

c. i, ii, iv and v d. All of the above
51. Performance audit is an independent assessment or examination of the extent to which an
organisation, programme or scheme operates
a. Economically, Efficiently and Effectively
b. Economically, Efficiently, Effectively and Ethically
c. Economically, Efficiently, Effectively and Equally
d. Economically, Efficiently, Effectively, Ethically and Equally
52. Performance Audit
a. question the intentions and decisions of the legislature and also examines whether any
shortcomings in the laws and regulations or their way of implementation have prevented the
specified objectives from being achieved.
b. does not question the intentions and decisions of the legislature and also does not examine
whether any shortcomings in the laws and regulations or their way of implementation have
prevented the specified objectives from being achieved.
c. does not question the intentions and decisions of the legislature, but examines whether any
shortcomings in the laws and regulations or their way of implementation have prevented the
specified objectives from being achieved.
d. question or does not question the intentions and decisions of the legislature but also examines or
does not examine whether any shortcomings in the laws and regulations or their way of
implementation have prevented the specified objectives from being achieved varies topic to topic.
53. Pick the correct one
i. System-oriented- Approach, which examines the proper functioning of management systems
ii. Result-oriented- Approach, which assesses whether outcome or output objectives have been
achieved as intended or programmes and services are operating as intended
iii. Problem-oriented- Approach, which examines, verifies and analyses the causes of particular
problems or deviations from criteria.
iv. Top-down-The audits that concentrate mainly on the requirements, intentions, objectives and
expectations of the legislature and central government.
v. Bottom-up- The audits that focus on problems of significance to people and the community.

a. i, ii, iii and iv b. ii, iii, iv and v

c. i, ii, iii and v d. All of the above
54. To identify the audit objectives, the scope and the methodology to achieve the objectives of a
particular performance audit,
a. a Pilot Study is conducted b. a Desk Review is conducted
c. a Peer Review is conducted d. a System Analysis is conducted
55. Pick the correct one
a. In cases, where the performance audits are conducted by different teams, within the
administrative and technical control of one or more AG, one or more mid-term workshops may assist
in ensuring consistency of approach and techniques.

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 b. The quality control and supervision on the implementation of the performance audit by the
Department's Senior Management is provided through approval of the audit implementation
guidelines, periodic work-in-progress reports and guidance during the mid-term workshops.
c. Both A&B
d. None of the given
56. Three elements of compliance audit are except
a. Three parties in the audit i.e. the auditor, the responsible party, intended user
b. Subject matter
c. Authorities and criteria to assess the subject matter.
d. Suggestive and corrective matter
57. Application of relevant training, knowledge, skills and experience, within the context provided by
auditing standards, so that informed decisions can be taken about the courses of action that are
appropriate given the circumstances of audit is known as
a. Best Judgement b. Professional Judgement
c. Professional Scepticism d. Analytical Judgement
58. Fraud in compliance auditing relates mainly to
a. the abuse of public authority b. fraudulent reporting on compliance issues
c. Both A&B d. None of the given
59. Pick the incorrect one
a. The risk profile of the audit units should be considered vis-à-vis the audit capacity of the field
office- in terms of availability of resources, and an annual Audit plan of compliance audits to be taken
up and completed during the year should be prepared by each field office.
b. The Annual Audit Plan of each office would therefore indicate the Apex Auditable entities/Audit
Units for which compliance audits would be conducted.
c. The risk profile of the audit units would have to be reviewed and updated once in every five year.
d. None of the given
60. When compliance audit is planned and conducted based on a top down and department centric
approach, sampling for selection of transactions may have to be conducted at multiple levels.
a. Selection of transactions from the selected Audit Units falling directly under the chain of command
of the selected Apex Auditable Entity
b. Selection of transactions from the Implementing Units
c. None of the above
d. Both A&B
61. Importance of auditing standard except
a. The auditing standards governing the conduct of an audit determine what the auditor must do
b. The auditing standards governing the conduct of an auditable entity determining what the
auditable entity must do in compliance of extant rules and regulations.
c. To give necessary reassurance to people making use of the accounts when audit is conducted in
accordance with certain standards
d. None of the given
62. The external peer review will issue their report to
a. the senior management of SAI and DG/AG should be made the point of contact for peer review
and responsible for taking corrective actions.
b. Head of the field audit offices and DG/Sr. Audit officer should be made the point of contact for
peer review and responsible for taking corrective actions.
c. DoPT and the senior management of SAI should be made the point of contact for peer review and
responsible for taking corrective actions.
d. the CAG and Dy. CAG/Addl. CAG should be made the point of contact for peer review and
responsible for taking corrective actions.
63. Type of audit that is wide-ranging in nature and is more open to judgment and interpretation is
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 a. Performance audit b. Compliance Audit
c. Financial Audit d. Financial and Performance Audit
64. Pick the correct one
a. Reports on irregularities (illegal/fraudulent acts) may be prepared irrespective of a qualification of
the auditor’s opinion
b. When national security or interest is involved, the CAG may make a separate unpublished report
including such confidential or sensitive material but the same shall only be made available to person
authorised by law or regulation
c. Both A&B
d. None of the given
65. Quality assurance in strategic planning is enhanced by except
a. maintenance of a comprehensive database
b. Periodical meeting of senior management with DG/AG/Pr.AG on the subject
c. Technical inspection and peer review
d. High expectation of intended user from the SAI’s report.
66. Pick the incorrect one
a. The distinguishing factor between fraud and error is whether the underlying action is intentional
or unintentional
b. Fraud has a legal (criminal) connotation, so auditors must be conclusive in legal determinations of
fraud has actually occurred rather than reporting suspected or presumptive fraud.
c. While Audit looks at records, fraud examination goes beyond audit. Hence, Audit can put red flags
(an indication that further scrutiny of the items would be required) which need further investigation
by appropriate agencies and reporting the result to Audit
d. None of the above
67. Who is expected to document the system established for prevention, detection, response, follow-up
and reporting of fraud and corruption?
a. Audit b. Intended User
c. Management d. All of the above.
68. Fraudulent Financial Statement includes
a. Manipulation, falsification (including forgery), or alteration of accounting records or supporting
documentation from which the financial statements are prepared
b. Misrepresentation in, or intentional omission from, the financial statements of events,
transactions or other significant information
c. Intentional misapplication of accounting principles relating to the amounts, classification, manner
of presentation, or disclosure etc.
d. All of the above
69. Active Internal Control with regard to fraud and corruption
i. Signatures and document countersigning procedures
ii. Segregation of duties and functions
iii. Physical asset control
iv. Real time inventory control
v. Document matching and cross linking of documents

a. i, ii, iii and iv b. ii, iii, iv and v

c. i, ii, iv and v d. All of the above
70. All significant cases of fraud and corruption should be followed up with the
a. Secretary of the Administrative Department concerned
b. Secretary of Finance Department/Ministry as the case may be
c. Chief Secretary/Cabinet Secretary as the case may be
d. All of the above
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71. Pick the incorrect one
a. Quality of information should be Appropriate, Timely, Latest, Accurate and Accessible
b. Effective communication should occur in top to down direction
c. One of the most critical communication channels is that between tie management and its staff.
Management must be kept up to date on performance, developments, risks and tie functioning of
internal control
d. None of the given
72. Pick the correct one
a. Internal auditors examine the effectiveness of internal control and recommend improvements,
and have primary responsibility for establishing or monitoring It.
b. The objective of internal auditing is to assist members of the organisation in the effective discharge
of their responsibilities
c. Accordingly, an internal auditor has not to go, beyond the books of account and records and
appraise the various functions of the organization
d. All of the above
73. Pick the correct one
i. External auditors play an important role in the internal control process. However, they are not
responsible for establishment or operation of the organisation’s internal control.
ii. CAG as an external auditor, encourages arid supports the establishment of effective internal control in
the government
iii. In view of the large size and complexity of modern government ministries/department, effective internal
control systems ore essential for their proper administration.
iv. In view of the huge volume of transactions, it will be Impossible for the external auditor to carry out a
detailed audit of a large number of transactions within the constraints of limited time and resources

a. i, ii and iii b. ii, iii and iv

c. i, iii and iv d. All of the above
74. Audit methodology for evaluation of the adequacy of existing internal control arrangements
a. start with higher level controls„ for example, strategic planning, which affect the whole system,
and work down to the lower level controls such as those over individual transactions
b. There is no absolute measure of what constitutes adequate control. Auditors must use their
judgement in determining which level of control is appropriate in the light of their evaluation of
the risk and materiality involved
c. Risk may be viewed as the chance or probability of one or more of management’s objective not
being met
d. All of the above
75. a. Are the structure, policies, and procedures that apply to separate, individual application systems,
and are directly related to individual computerized applications.
b. These controls are generally designed to prevent, detect, and correct errors and irregularities as
information flows through information systems.
The above reflect
a. General Control b. Application Control
c. Management Control d. Preventive Control
76. Pick the correct one
a. When compliance audit is part of a performance audit, compliance is seen as one of the aspects
of economy, efficiency and effectiveness.
b. Non-compliance may be the cause of, an explanation for, or a consequence of the state of the
activities that are the subject of performance audit.

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 c. In combined audits of this kind, auditors shall use their professional judgement to decide whether
performance or compliance is the primary focus of the audit and whether to apply the performance
audit standards, compliance audit standards or both.
d. All of the above
77. Audit of accounts of District and Regional Councils of autonomous regions has been envisaged in
a. the Sixth Schedule of the Constitution b. the Ninth Schedule of the Constitution
c. the Eleventh Schedule of the Constitution d. the Twelfth Schedule of the Constitution
78. SAI is free from direction or interference from the Legislature or the Executive in
i. Selection of audit issues
ii. Planning, programing, conduct, reporting and follow up of audits
iii. Organisation and management of its office.
iv. Accepting specific requests for audits made by Legislature as expressed as a whole or through one
of its committees or by the Government while retaining its right to decline such requests.

a. i, ii and iii b. ii, iii and iv

c. i, ii and iv d. All of the above
79. Pick the correct one regarding the accountability and transparency of the SAI
a. Accountability refers to the SAI’s timely, reliable, clear and relevant public reporting on its status,
mandate, strategy, activities and performance as also of the audit findings, conclusions and public
access to information about the SAI.
b. Transparency refers to the legal and reporting framework, organisational structure, strategy,
procedures and actions to ensure that the SAI meets its legal obligations with regard to its audit
mandate and reporting and that the SAI and its personnel can be held responsible for their actions.
c. None of the given
d. Both A&B
80. General principles of public sector auditing include
i. Auditors hall comply with the relevant ethical requirements and be independent
ii. Auditors shall maintain appropriate professional behaviour by applying professional scepticism,
professional judgment and due care throughout the audit
iii. Auditors shall perform the audit in accordance with professional standards on quality control
iv. Auditors shall possess or have access to the necessary skills
v. Auditors shall manage the risks of providing a report that is inappropriate in the circumstances of
the audit

a. i, ii, iii and iv b. i, ii, iv and v

c. i, iii, iv and v d. All of the above
81. Pick the correct one
i. The printed copies of the Reports along with the Finance Accounts and Appropriation Accounts
should be submitted to the Comptroller and Auditor General for his countersignature so that these
are available for presentation to the Parliament/Legislature as early as possible
ii. Simultaneous presentation of the Accounts (Finance and Appropriation Accounts) with the Audit
Reports to the State Legislatures has been dispensed with by the Headquarter
iii. Five copies of the Reports of the State and Union Territory Governments and eight copies of the
Reports of the Union Government should bear in the last page, the signature in original of the
Authority responsible for authenticating the Reports in question
iv. The Chairman, Audit Board, Accountant General (Audit), Director General of Audit or the Principal
Director of Audit, as the case may be, actually in position at the time the Reports are finally printed
are responsible for their authentication even if these had been finalised during the incumbency of
their predecessors and should, therefore, sign the printed copies.

a. i, ii and iii b. i, ii and iv

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 c. ii, iii and iv d. All of the above
82. Pick the incorrect one
a. The Audit Board reviews, on a selective basis every year, the functioning and performance of the
Central Government Companies/Corporations.
b. The concerns selected for comprehensive appraisal should be those that have been functioning at
least during the preceding seven years or those that present special features requiring to be
commented upon.
c. Depending upon the requirements of performance appraisal of the selected undertakings, the
Audit Board meets in groups.
d. Each group consists of the Chairman and two whole-time Members who are officers of the Indian
Audit and Accounts Department appointed by the CAG and two part time Members appointed by
the Government of India after consultation with, and with the concurrence of, the CAG.
83. Pick the incorrect one
a. The Test Audit Note should be sent to the Divisional Officer for remarks and return, and the points
raised therein should be dealt with and settled in the manner prescribed for Audit Notes
b. Parts I and II of the Inspection Report treated as Objection Statements should be forwarded in
duplicate to the Divisional Officer with a copy to the Superintendent Engineer, in a tabular form
providing separate columns against each item for incorporation of the replies and explanations of
the Divisional officer, remarks of the Superintending Engineer, and final disposal by the Audit Office.
c. Serious irregularities may be brought to the notice of the CAG. A Factual Note/ Statement is to be
issued to the Government and the Head of the Department in respect of cases proposed to be
included in the Audit Report
d. None of the given
84. Who submits an annual review of Public Works Divisions and Forest Division and to whom?
a. AG (Audit)-State Government b. AG (A&E)- State Government
c. AG (Audit)-Central Government b. AG (A&E)- Central Government
85. All orders relating to grant of land, assignment of revenue or concession, grant, lease or licence of
mineral or forest rights or a right of water power, or any easement or privilege in respect of any such
concession or which in any way involve relinquishment of revenue shall be accorded sanction by
a. the President/Governor b. the Finance Ministry/Department
c. the Parliament/Legislature d. the CAG
86. To examine reports of project entities, the Ministry of Environment and Forests has
a. six regional offices b. four regional offices
c. five regional offices d. a regional office in each State
87. Audit certificate in respect of the Externally aided Project (EAP) should be issued to
a. the Funding Agency under intimation to Project implementing authority
b. the Project implementing authority under intimation to the Funding Agency
c. the Ministry of Finance (Dep of Economic Affairs) under intimation to Project implementing
authority
d. the Project implementing authority under intimation to Ministry of Finance (Dep of Economic
Affairs).
88. Conditions must be fulfilled before it would be justifiable for the Government of India to spend loan
funds on unproductive purposes.
a. The objects for which the money is wanted are so urgent and vital that the expenditure can be
neither avoided, postponed nor distributed over a series of years
b. the amount is too great to be met from current revenues
c. Either of a and b
d. Both a & b
89. Who maintains the records relating to the loans given by the Government?
a. Departmental Officer
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Prepared by Deepak Kumar Rahi, AAO (Panta/Bihar)
 b. the departmental officers and the Pay and Accounts Officers
c. the departmental officers, the Pay and Accounts Officers and the Accountant General (A&E)
d. the departmental officers, the Pay and Accounts Officers, the Public Debt Officer and the AG (A&E)
90. Pick the incorrect one
a. It is not legitimate to make capital bear the charges for interest on money borrowed to finance
the construction of a new project before the project becomes revenue earning.
b. The charge of interest to capital in Government accounts is justified only when there would be
undue disturbance in the Government's budgetary position by taking interest to revenue.
c. The writing back of capitalised interest should be the first charge on any capital receipts or surplus
revenues derived from a project when commissioned.
d. None of the above
91. Pick the correct one in respect of certificate of payment in lieu of vouchers
i. Cases where certificates of payments are received in lieu of lost vouchers or payees’ receipts should
be audited in detail, as a special case, in the same manner as the original vouchers, if they have been
selected for audit.
ii. Acceptance of certificates of payments in lieu of wanting paid vouchers will be done, in accordance
with the monetary limits prescribed, by the Branch Officer or Group Officer in the Accounts and
Entitlement office after exercising the primary accounting checks in the same manner as in the case
of original vouchers.
iii. Particulars of certificates of payments so accepted will be recorded in a register maintained for
the purpose.
iv. Unusual features or malafides related to the non-production of original vouchers noticed in the
course of audit of these certificates should be brought to the notice of the Accountant General
(Audit) for further investigation, if considered necessary.

a. i, ii and iii b. i, iii and iv

c. ii, iii and iv d. All of the above.
92. Pick the correct one
a. Professional judgement represents the application of the individual knowledge, skills and
experience of an auditor involved with an assignment and not the collective professional judgement
of the all the personnel involved with an assignment.
b Professional judgement represents collaboration with other stakeholders, outside experts and the
management in the audit institution.
c. Both a & b
d. All of the above
93. Reporting standards include element
i. Reporting standards shall be meant to assist, and not to supersede, prudent judgement of the
auditor in framing and reporting audit findings, conclusions and recommendations.
ii. The reports should be complete, accurate, objective, convincing, clear, concise, constructive and
timely.
iii. In formulating the audit opinion or report, the auditor should inter alia give due regard to the
materiality of the matter keeping in view the amount, nature and context
iv. Performance audits, besides reporting on individual cases of non-compliance and abuse, also
require reporting on weaknesses that exist in systems of financial management and internal control

a. i, ii and iii b. i, ii and iv

c. ii, iii and iv d. All of the above
94. Audit of receipts includes an examination of the systems and procedures and their efficacy in respect
of
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 i. appropriate action to safeguard the interests of the Government on the orders passed by
departmental appellate authorities
ii. amounts that may have fallen into arrears, maintenance of records of arrears and action taken
for the recovery of the amounts in arrears
iii. other ancillary and non-assessment functions including expenditure incurred by the departments
iv. amounts of refunds, rebates, drawbacks, remissions and abatements to see that these are
correctly assessed and accounted for
v. any other matter, as may be determined by the Government

a. ii, iii, iv and v b. i, ii, iii and iv

c. i, ii, iv and v d. All of the above
95. Audit Report pertaining to financial audit is also called
a. Special Audit report b. Supplementary Audit report
c. Staff Appraisal Report d. Separate Audit report
95. Pick the correct about meeting of Audit Board
i. One or two technical experts in the related field appointed by the CAG in consultation with the
administrative ministry may be co-opted as special invitees.
ii. An officer shall be appointed to act as Secretary to the Audit Board who shall keep the minutes of
the meetings of the Audit Board.
iii. The meetings of the Audit Board shall be held with the available members and there shall be no
requirement of a quorum.
iv. The Audit Board may at its discretion confine itself to making recommendations for the selection
of topics for performance audit and the audit may, thereafter, be conducted by the AG (Audit)
without any further reference to the Audit Board.

a. ii, iii and iv b. i, ii and iv

c. i, ii and iii d. All of the above
96. Where external agency or expert is engaged, the following will apply except
a. The engagement letter appointing an agency or expert shall clearly specify the terms of reference
including the duties, obligations and powers of the agency or expert so associated.
b. The audit office shall inform the concerned Government department and the auditable entity
regarding the association of the external agency or expert as soon as the engagement letter is issued
and before the external agency or expert commences work, including the terms of reference
containing the duties, obligations and powers of the agency or expert so associated.
c. The audit office shall be responsible for the opinions formed, or the conclusions reached, or the
recommendations made in its report on the basis of the work of the external agency or expert.
d. None of the given
97. DPC Act, 1971 came into force effective from
a. 1st April 1971 b. 1st April 1972
c. 15th December 1971 d. 25th December 1971
98. Under Section 15 (2) of the DPC Acts
a. The President/Governor/Administrator may, after the consultation with the CAG, authorise him
to carry out the audit of a body or authority receiving Government grant for any specific purpose.
b. The President/Governor/Administrator may, after the consultation with the CAG, appoint him the
sole auditor of a body or authority receiving Government grant for any specific purpose
c. The President/Governor/Administrator may, after the consultation with the CAG, relieve him from
scrutinising the procedures by which the sanctioning authority satisfies itself as to the fulfilment of
the conditions subject to which such grants or loans were given

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 d. The President/Governor/Administrator may, after the consultation with the CAG, relieve him from
audit of a body or authority receiving Government grant for any specific purpose.
99. Pick the correct one
a. Declaration regarding cessation of the Government of India (Audit & Accounts) Order, 1936 as
adopted by the India (Provisional Constitution) Order, 1947 on the commencement of the Act has
been given in Section 26 of DPC Act, 1971
b. CAG (Conditions of Service) Act, 1953 has been repealed by Section 25 of DPC Act, 1971
c. Both A&B
d. None of the given
100. The C&AG’s (D.P.C.S.) Act was passed by Parliament in 1971 to regulate the duties powers and
conditions of service of the C&AG of India under Articles
a. 148 to 152 b. 148 (3) and 149
c. 148 to 151 b. 148 and 149 (3)

Pattern
Sl. No. Topic No. of Ques Ques. Sl. No.
1. PPP 10 1-10
2. Regulation on Audit and Accounts 15 11-20 & 92-96
3. FAA Manual 15 21-35
4. MSO Audit 23 36-47 & 81-91
5. Performance Audit 8 48-55
6. Compliance Audit 5 56-60
7. AQMF 5 61-65
8. Fraud & Corruption 5 66-70
9. Internal Control 5 71-75
10. Auditing Standard 5 76-80
11. DPC Act 4 97-100
TOTAL 100

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