Group 15: Government Audit

30 original practice MCQs. 2 marks each. Separate practice and test sets.

Original practice, not ICAI questions, official suggested answers or an official examiner scheme. Equivalent correct work is credited within the stated caps. Public practice availability is not full official question-bank completion.

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AUD-G15-P001 · 2 marks

An executive claims CAG appointment is valid on a department head's signature alone. Which constitutional requirement matters?

A. Appointment by any finance officer through an ordinary memo. B. Appointment by the President by warrant under hand and seal. C. Appointment by the audited department's contractor. D. Appointment automatically by the longest-serving accountant.

Explanation

Correct answer B: Appointment by the President by warrant under hand and seal.

Article 148(1) states the appointment route; departmental convenience does not replace it.

AUD-G15-P002 · 2 marks

A completed CAG term is followed by an offer of a State ministry office. Which Article 148 safeguard is relevant?

A. The bar on further office under the Government of India or any State after ceasing to hold the CAG office. B. A guaranteed entitlement to the ministry post. C. A bar applying only to Central posts, never State posts. D. A requirement to join the audited department immediately.

Explanation

Correct answer A: The bar on further office under the Government of India or any State after ceasing to hold the CAG office.

Article 148(4) covers both Union and State government office; do not broaden it into a ban on every private activity.

AUD-G15-P003 · 2 marks

A Union audit report reaches the President. Who causes it to be laid before each House of Parliament under Article 151?

A. The President. B. Only the State Governor for every Union report. C. The contractor whose invoice was tested. D. Any company chairman instead of the President.

Explanation

Correct answer A: The President.

Article 151(1) provides the Union-account report route.

AUD-G15-P004 · 2 marks

A State officer says account form is whatever the department likes, without the Article 150 route. What is the prescribed route?

A. The supplier prescribes government account form. B. The CAG alone replaces every presidential role without advice. C. Every local cashier independently prescribes the constitutional form. D. The President prescribes the form on the advice of the CAG.

Explanation

Correct answer D: The President prescribes the form on the advice of the CAG.

Article 150 concerns account form; distinguish it from audit mandate under Article 149.

AUD-G15-P005 · 2 marks

A Union department removes Public Account transactions from audit because they are not voted procurement expense. Which section 13 response is correct?

A. Only voted procurement can ever be audited. B. Public Account labels guarantee all balances correct. C. Section 13 prohibits examination of all refundable deposits. D. Section 13(b) includes covered Public Account and Contingency Fund transactions.

Explanation

Correct answer D: Section 13(b) includes covered Public Account and Contingency Fund transactions.

Non-expense classification does not remove the supplied transactions from section 13(b) coverage.

AUD-G15-P006 · 2 marks

A departmental trading account is excluded because its format resembles commercial accounts. Which duty is relevant?

A. Commercial-looking accounts are always outside government audit. B. Every private shop becomes a government department. C. Section 13(c) includes covered departmental trading, manufacturing and related accounts. D. A profit figure removes all audit responsibility.

Explanation

Correct answer C: Section 13(c) includes covered departmental trading, manufacturing and related accounts.

The statutory scope is departmental accounts of the Union/States, not every privately owned business.

AUD-G15-P007 · 2 marks

A specific non-transferable grant authorises Rs 45 lakh for repairs. Rs 48 lakh is spent on repairs; another purpose saves Rs 8 lakh. No further authority exists. What is correct?

A. Every unspent grant automatically authorises all other expenditure. B. The repair excess must be Rs 8 lakh. C. Repair spending exceeds its supplied provision by Rs 3 lakh; the separate saving is not an automatic cure. D. No excess exists because another purpose saves more than Rs 3 lakh.

Explanation

Correct answer C: Repair spending exceeds its supplied provision by Rs 3 lakh; the separate saving is not an automatic cure.

48 minus 45 equals 3. Audit tests legally available funds and purpose-specific authority; do not invent transfer power.

AUD-G15-P008 · 2 marks

A tender obeys all supplied formal rules but buys unusable equipment. Which approach avoids the wrong conclusion?

A. Audit must ignore all resource use once an invoice is signed. B. Formal compliance necessarily proves all assets useful. C. Examine economy/propriety and service evidence rather than treat formal compliance as proof of useful expenditure. D. Every unusable item necessarily proves criminal fraud.

Explanation

Correct answer C: Examine economy/propriety and service evidence rather than treat formal compliance as proof of useful expenditure.

Performance assesses economy/efficiency/effectiveness; compliance alone does not establish useful public outcomes.

AUD-G15-P009 · 2 marks

A grant of Rs 27 lakh funds Rs 36 lakh total annual expenditure. With no conflicting law, what does the section 14(1) deeming explanation indicate?

A. Only amounts above Rs 1 crore can qualify under 14(1). B. The percentage fails because equality never counts. C. The grant must be exactly 100% of spending. D. Both limbs are met: amount at least Rs 25 lakh and funding share 75%.

Explanation

Correct answer D: Both limbs are met: amount at least Rs 25 lakh and funding share 75%.

27/36=.75; not-less-than thresholds are inclusive. Coverage remains subject to applicable law.

AUD-G15-P010 · 2 marks

A body receives Rs 35 lakh qualifying funds against Rs 50 lakh total expenditure, with no other mandate facts. What is right about the deeming test?

A. Failure proves it can never face any CAG audit. B. Amount alone makes the 75% condition irrelevant. C. It passes the amount limb but its 70% share fails the 75% limb. D. 70% equals 75% whenever government money is involved.

Explanation

Correct answer C: It passes the amount limb but its 70% share fails the 75% limb.

35/50=.70. Failure of this explanation does not negate every other mandate route.

AUD-G15-P011 · 2 marks

A body receives Rs 1.2 crore qualifying grants but only 30% of expenditure. The team relies on 14(2). Which step is needed before taking up that route?

A. Only a contractor's email after audit completion. B. Automatic audit without any approval because money exceeds Rs 1 crore. C. A fiction that 30% satisfies 75%. D. The specified previous approval from the applicable President, Governor or Administrator.

Explanation

Correct answer D: The specified previous approval from the applicable President, Governor or Administrator.

Section 14(2) is a discretionary alternative with a prior-approval requirement, not automatic 14(1) coverage.

AUD-G15-P012 · 2 marks

A qualifying section 14 audit occurred in FY 2023-24. Funding conditions fail in FY 2024-25. Which continuation period is relevant?

A. Immediate cessation the first day funding falls. B. The further two years FY 2024-25 and FY 2025-26, subject to the qualifying audit facts. C. Permanent continuation solely from that one qualifying year. D. Only one week after the first report.

Explanation

Correct answer B: The further two years FY 2024-25 and FY 2025-26, subject to the qualifying audit facts.

Section 14(3) specifies a further two-year continuation, not indefinite audit based solely on one past year.

AUD-G15-P013 · 2 marks

A domestic authority receives a specific-purpose grant and the department accepts unchecked utilisation certificates. Which section 15 focus is correct?

A. Only count certificates, never examine the verification procedures. B. Assume all grant recipients are covered under 14 irrespective of thresholds. C. Treat every paper certificate as proof of completed work. D. Scrutinise how the sanctioning authority satisfies itself that grant conditions are fulfilled.

Explanation

Correct answer D: Scrutinise how the sanctioning authority satisfies itself that grant conditions are fulfilled.

Section 15(1) concerns sanctioning procedures for fulfilment of specific-purpose conditions; evidence matters.

AUD-G15-P014 · 2 marks

A foreign State receives a purpose-specific grant. Can section 15(1) coverage be asserted solely by treating it as an ordinary domestic body?

A. No; that subsection excludes a foreign State or international organisation from this stated body/authority setting. B. No, no domestic grant recipient can ever be scrutinised. C. Yes, every foreign account is covered without any mandate. D. Yes, the explicit exclusion can always be ignored.

Explanation

Correct answer A: No; that subsection excludes a foreign State or international organisation from this stated body/authority setting.

Preserve section 15(1) scope exclusions instead of generalising the domestic-body rule.

AUD-G15-P015 · 2 marks

Books of an ordinary domestic purpose-grant recipient are needed for section 15 scrutiny and no special restriction applies. What notice condition matters?

A. Reasonable previous notice before mandate-linked access to books/accounts. B. Only a social-media announcement counts as statutory notice. C. No notice is ever required under section 15. D. Notice automatically proves grant conditions fulfilled.

Explanation

Correct answer A: Reasonable previous notice before mandate-linked access to books/accounts.

Section 15(1) expressly addresses reasonable previous notice; access and evidence conclusions remain distinct.

AUD-G15-P016 · 2 marks

A grant-funded statutory corporation has a governing law requiring another audit agency. What should the CAG team avoid under section 15(2)?

A. Considering the sanctioning authority's monitoring procedure. B. Assuming unrestricted book access without the specified authorisation and safeguards. C. Checking actual governing law and authorisation. D. Respecting consultation and representation safeguards.

Explanation

Correct answer B: Assuming unrestricted book access without the specified authorisation and safeguards.

The section 15(2) limitation is not erased by merely pointing to a grant.

AUD-G15-P017 · 2 marks

A receipt audit checks deposited cash but not omitted assessments. Which section 16 concern is missing?

A. Only the colour of deposit slips. B. A universal rule prohibiting assessment testing. C. Effective checks on assessment completeness as well as collection and proper allocation. D. An assumption that unrecorded liabilities cannot exist.

Explanation

Correct answer C: Effective checks on assessment completeness as well as collection and proper allocation.

Section 16 is wider than bank deposit reconciliation; evaluate design and actual observation of revenue rules/procedures.

AUD-G15-P018 · 2 marks

A State store shows correct ledger arithmetic but no evidence that materials exist. What section 17 response is appropriate?

A. Every missing verification report proves theft of all materials. B. Seek stock existence/condition evidence and reconcile supported differences within the stores audit mandate. C. Arithmetic correctness proves physical existence. D. Stores can never be audited under section 17.

Explanation

Correct answer B: Seek stock existence/condition evidence and reconcile supported differences within the stores audit mandate.

Stores-account authority does not make arithmetic alone sufficient existence evidence.

AUD-G15-P019 · 2 marks

A document relevant to a properly mandated audit is withheld because only summary totals were requested last year. What section 18 power is relevant?

A. Audit can demand unrelated private records without mandate. B. Last-year summaries permanently bar source-document inspection. C. A withheld contract necessarily proves a criminal act. D. Require relevant accounts/books/papers supporting the covered transactions for inspection.

Explanation

Correct answer D: Require relevant accounts/books/papers supporting the covered transactions for inspection.

Section 18 powers are linked to duties under the Act and relevant evidence; prior summaries do not limit them automatically.

AUD-G15-P020 · 2 marks

A corporation established under Parliamentary law is not a company. Where should actual CAG duties/powers be checked under 19(2)?

A. In the respective governing legislation. B. In any corporation's advertising brochure as overriding law. C. Only in a bank NPA circular. D. In a universal identical scope applying to every entity.

Explanation

Correct answer A: In the respective governing legislation.

Section 19(2) links duties/powers for these statutory corporations to their respective legislation.

AUD-G15-P021 · 2 marks

A Governor considers State-corporation audit necessary in the public interest under 19(3). Which safeguard cannot be skipped?

A. Permanent removal of all auditee representation rights. B. CAG consultation and reasonable opportunity for the corporation to make representations. C. Automatic access based solely on a clerk's note. D. A mandatory supplier vote replacing consultation.

Explanation

Correct answer B: CAG consultation and reasonable opportunity for the corporation to make representations.

Section 19(3) states the request safeguards; public-interest wording is not a licence to omit them.

AUD-G15-P022 · 2 marks

A section 19 corporation report is received by a State Government. What 19 A laying route is appropriate?

A. Only to the corporation's cashier, with no legislative route. B. Before the Legislature of that State as soon as may be. C. Only before each House of Parliament in every State case. D. Before any foreign parliament at the auditor's whim.

Explanation

Correct answer B: Before the Legislature of that State as soon as may be.

Section 19 A distinguishes State from Central laying; do not invent a fixed day count.

AUD-G15-P023 · 2 marks

A body otherwise unentrusted to CAG is proposed for audit under 20(1). Which missing fact matters if only a department email exists?

A. The body name itself creates permanent CAG authority. B. A competent request after CAG consultation and the required agreed terms/safeguards. C. A grant amount alone overrides all 20 requirements. D. A department email alone supplies every statutory condition.

Explanation

Correct answer B: A competent request after CAG consultation and the required agreed terms/safeguards.

Read 20(1) with 20(3); competent request, consultation, public-interest satisfaction and representations matter.

AUD-G15-P024 · 2 marks

The CAG proposes audit of an otherwise unentrusted body because a substantial government amount is advanced. Does the proposal alone authorise 20(2) audit?

A. Yes, the CAG proposal automatically substitutes for empowerment. B. No, section 20 never permits an audit proposal. C. Yes, every private body is permanently included by any proposal. D. No; the competent authority may empower it, with 20(3) safeguards.

Explanation

Correct answer D: No; the competent authority may empower it, with 20(3) safeguards.

A proposal under 20(2) is not self-authorisation; distinguish proposal, empowerment and required safeguards.

AUD-G15-P025 · 2 marks

A public performance report says its limited-assurance procedures guarantee no possible breach anywhere. What is wrong?

A. Any audit removes every inherent limitation. B. Limited assurance exceeds absolute certainty. C. Limited assurance is not absolute; describe the procedures and appropriate assurance conclusion honestly. D. The guarantee becomes valid if printed in bold.

Explanation

Correct answer C: Limited assurance is not absolute; describe the procedures and appropriate assurance conclusion honestly.

CAG 2017 paragraph 2.4.2 distinguishes assurance levels and inherent limitations.

AUD-G15-P026 · 2 marks

An entity prepares financial information and the auditor gathers evidence on it. Which public-sector engagement form applies?

A. Attestation engagement. B. Automatic transfer of reporting responsibility to intended users. C. Direct reporting merely because the report has numbers. D. A purchase order, not an audit engagement.

Explanation

Correct answer A: Attestation engagement.

CAG 2017 paragraph 2.3.3 defines attestation by responsible-party measurement/information.

AUD-G15-P027 · 2 marks

A programme report ranks districts but never states the criteria. Which principle is missing?

A. Suitable criteria made available to intended users so they understand the evaluation. B. Keeping benchmarks secret always improves accountability. C. Numbers eliminate the need for subject-matter definition. D. Criteria may be irrelevant if rankings look neat.

Explanation

Correct answer A: Suitable criteria made available to intended users so they understand the evaluation.

Paragraph 2.3.2 addresses criteria relevance/objectivity/reliability and availability to users.

AUD-G15-P028 · 2 marks

A service programme spends Rs 48 lakh to produce 800 verified service units. No suitable benchmark is supplied. What is the safest indicator statement?

A. Rs 60000 per unit necessarily proves fraud. B. Rs 6000 per verified unit is a resource/output indicator, not by itself an efficiency verdict. C. The spend alone proves maximum efficiency. D. Every unit must be an outcome because money was spent.

Explanation

Correct answer B: Rs 6000 per verified unit is a resource/output indicator, not by itself an efficiency verdict.

4800000/800=6000. Efficiency assessment needs appropriate criteria and reliable comparable facts.

AUD-G15-P029 · 2 marks

A flood-warning programme targets 500 settlements warned in time.300 verified timely warnings occur;50 additional warnings arrive too late. Which target measure is justified?

A. 60% timely-warning attainment, with late warnings separately explained. B. Zero because no programme can ever achieve partial effectiveness. C. 70% timely attainment because late counts automatically meet the target. D. 100% attainment because any warning equals an outcome.

Explanation

Correct answer A: 60% timely-warning attainment, with late warnings separately explained.

300/500=.60. Use the supplied timely-warning criterion;350 total warnings are not 350 timely warnings.

AUD-G15-P030 · 2 marks

A public-audit recommendation is marked implemented solely because an official signs a promise. Which follow-up is needed?

A. Follow-up is prohibited once the report is issued. B. A promise necessarily equals corrected records. C. Verify actual correction/evidence and report supported implementation status. D. Every unsigned ledger correction is guaranteed correct.

Explanation

Correct answer C: Verify actual correction/evidence and report supported implementation status.

CAG 2017 paragraph 1.4.1.5 calls for follow-up of actual action and implementation, not a promise-as-completion claim.

Official concept links appear with each question. The source hold is included in the review pack. No blanket 2026 statutory completeness is claimed; supplied mandate/criteria and visible source holds apply.