Group 17: Other Audits

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.

State-law, tax exemption and mandatory LLP thresholds are not guessed; the module and ICAI guide OR wording is preserved pending current MCA rule verification.

Not scored yet.

AUD-G17-P001 · 2 marks

A municipal payment fits the budget total but not the sanctioned purpose. What is the sound audit response?

A. Check purpose, competent sanction and any valid transfer rather than accept the budget balance alone. B. Use any other State's approval hierarchy without checking jurisdiction. C. Declare every purpose mismatch a complete cash loss. D. Treat every below-budget payment as authorised.

Explanation

Correct answer A: Check purpose, competent sanction and any valid transfer rather than accept the budget balance alone.

Local-body audit tests authorisation and use of provision as well as amount; financial headroom does not establish a valid purpose.

AUD-G17-P002 · 2 marks

Demand is Rs 70 lakh, verified receipts Rs 58 lakh and authorised remissions Rs 3 lakh. Recorded arrears are Rs 5 lakh. What is the unexplained reconciliation difference?

A. Rs 5 lakh because the ledger figure is always conclusive. B. Rs 131 lakh because demand and receipts should be added. C. Rs 12 lakh because authorised remissions must be ignored. D. Rs 4 lakh; expected arrears are Rs 9 lakh.

Explanation

Correct answer D: Rs 4 lakh; expected arrears are Rs 9 lakh.

70-58-3=9 expected;9-5=4 unexplained. This is a gap, not proved theft or additional assessed tax.

AUD-G17-P003 · 2 marks

A road scheme reports 100 sections completed; inspection finds 82 safe for use and 18 blocked. Grant terms require safe delivery. Which conclusion is justified?

A. Exactly 18% ofcash must always be recovered under every scheme. B. All 100 must be called functional because bills were paid. C. Spending and claimed completion do not prove functional delivery; investigate the 18 blocked sections. D. Every blocked section proves the entire project is fraudulent.

Explanation

Correct answer C: Spending and claimed completion do not prove functional delivery; investigate the 18 blocked sections.

Performance and compliance need actual criteria and evidence; no universal recovery formula follows from 18 unusable sections.

AUD-G17-P004 · 2 marks

A donor sends a non-binding grant promise. The NGO has no reasonable assurance of receipt or condition compliance. Under the supplied NPO guide, what follows?

A. Recognise every promise as cash. B. Create a receivable merely because a budget contains it. C. Postpone grant recognition until reasonable assurance is attained. D. Recognise income only on cash in every future case.

Explanation

Correct answer C: Postpone grant recognition until reasonable assurance is attained.

NPO guide 47-48 requires reasonable assurance; the case does not create a universal cash-only rule.

AUD-G17-P005 · 2 marks

The board earmarks unrestricted money for a building, without an external donor restriction. Under the guide, which fund description fits?

A. Designated unrestricted funds. B. Automatically corpus received from a donor. C. Automatically a refundable donor liability. D. Externally restricted solely because the board chose a purpose.

Explanation

Correct answer A: Designated unrestricted funds.

Management designation is not the same as a contributor restriction; inspect the actual resolution and fund terms.

AUD-G17-P006 · 2 marks

A revenue grant is Rs 15 lakh. Under explicit donor terms, Rs 9 lakh of delivered programme cost is eligible and the rest refundable. Rs 4 lakh cash remains; Rs 2 lakh was an advance for next year. What grant balance needs reconciliation?

A. Rs 4 lakh because cash alone determines every liability. B. Zero because all received money is automatically earned. C. Rs 6 lakh, not merely the Rs 4 lakh cash balance. D. Rs 2 lakh because advances erase refund duties.

Explanation

Correct answer C: Rs 6 lakh, not merely the Rs 4 lakh cash balance.

15-9=6; cash 4 plusadvance 2 equals 6. Eligibility and year-end bank balance are different tests.

AUD-G17-P007 · 2 marks

An accountant prepares a proprietor's accounts and checks only bank entries. What output should be avoided?

A. Agreeing additional evidence work for a full audit. B. Written engagement scope and limitations. C. An accurately described account-preparation output. D. A document implying a full financial-statement audit was completed.

Explanation

Correct answer D: A document implying a full financial-statement audit was completed.

Preparation/partial checks are not retrospectively a full audit; written scope prevents misleading assurance.

AUD-G17-P008 · 2 marks

A firm's deed allows salary Rs 1 lakh to X, then divides profit 3:1. Profit before salary is Rs 9 lakh, with no other deductions. What is Y's share?

A. Rs 2.25 lakh by dividing before salary. B. Rs 2 lakh. C. Rs 8 lakh because Y receives all divisible profit. D. Rs 1 lakh because salary belongs to Y.

Explanation

Correct answer B: Rs 2 lakh.

9-1=8 divisible;Ygetsone-fourth=2. Tax/deductibility is not inferred from this exercise.

AUD-G17-P009 · 2 marks

A partner omits a confirmed firm loan because it exceeded deed authority. Obligation and receipt are supplied as real. What is correct?

A. Assume every unauthorised loan was legally discharged. B. Omit every unauthorised obligation. C. Audit and recognise the actual obligation while separately investigating the authority breach. D. Recognise only the excess over the permitted limit.

Explanation

Correct answer C: Audit and recognise the actual obligation while separately investigating the authority breach.

Authority, existence and accounting are separate; inspect deed, terms, bank evidence and partner interests.

AUD-G17-P010 · 2 marks

An LLP partner's contribution opens and closes at Rs 6 lakh, with Rs 2 lakh introduced and Rs 2 lakh withdrawn. What disclosure response fits the guide?

A. Hide movements whenever opening equals closing. B. Show Rs 10 lakh closing by adding withdrawals. C. Omit every partner-fund note because LLPs are not companies. D. Show the gross movements and reconciliation, not just "no change".

Explanation

Correct answer D: Show the gross movements and reconciliation, not just "no change".

Guide partner-fund format separately identifies movements;6+2-2=6 does not mean zero activity.

AUD-G17-P011 · 2 marks

Partners elect an LLP audit but say their solvency-statement signatures are the auditor report. What is missing?

A. A rule permitting partners to replace any independent evidence with signatures. B. Independent audit work and a proper auditor report for the chosen engagement. C. Only an invented new audit threshold. D. A universal ban on voluntary LLP audits.

Explanation

Correct answer B: Independent audit work and a proper auditor report for the chosen engagement.

Partner responsibility and independent audit are distinct; mandatory threshold determination is unnecessary for this elective case.

AUD-G17-P012 · 2 marks

A charity's receipt book has cancelled numbers with no retained copies. Which test best addresses the collection risk?

A. Ignore cancelled numbers because they have no cash-book entry. B. Inspect serial continuity, cancellation support, cash/bank records and independently corroborated collections. C. Treat every cancellation as a proved donation receipt. D. Assume publishing an annual report cures missing records.

Explanation

Correct answer B: Inspect serial continuity, cancellation support, cash/bank records and independently corroborated collections.

Unused/cancelled receipt controls and reconciliation help detect omitted collections; neither cancellation nor omission alone establishes a fixed loss.

AUD-G17-P013 · 2 marks

A charity sells 500 eventtickets at Rs 200, incurs Rs 30000 supported costs and remits Rs 70000 net. Under a supplied gross-presentation criterion, what should be shown?

A. Rs 100000 gross receipts and Rs 30000 separate expenses. B. Rs 130000 gross receipts because costs increase ticket proceeds. C. Rs 30000 income and Rs 100000 expense. D. Rs 70000 gross receipts and no expenses.

Explanation

Correct answer A: Rs 100000 gross receipts and Rs 30000 separate expenses.

500 x 200=100000; 100000-30000=70000 net. Net remittance is not the gross event receipt.

AUD-G17-P014 · 2 marks

A school has monthly class rolls but tests fees only from bank receipts to the fee register. Which additional direction addresses unraised demands?

A. Assume no fee is due whenever no bill exists. B. Trace pupils on class rolls to appropriate fee demands and authorised concessions. C. Trace only bank receipts again with a different colour. D. Charge every pupil without considering valid free studentship.

Explanation

Correct answer B: Trace pupils on class rolls to appropriate fee demands and authorised concessions.

The independent student population can reveal omitted demands; authority and chargeability still need checking.

AUD-G17-P015 · 2 marks

Rules require committee approval for concessions. Parents' notes support hardship, but approval is absent. Which conclusion is proper?

A. Eligibility evidence does not itself establish the required concession authority. B. Every missing approval necessarily creates a collectible fee debt. C. Every concession must be called theft. D. Hardship automatically authorises the clerk to approve.

Explanation

Correct answer A: Eligibility evidence does not itself establish the required concession authority.

Inspect eligibility and authority separately; audit consequences depend on evidence, rules and recoverability.

AUD-G17-P016 · 2 marks

A refundable student deposit is credited to income although no forfeiture condition has arisen. What is the appropriate concern?

A. Refundable deposits can never be liabilities. B. Cash received proves the deposit was earned. C. Every student receipt is automatically capital income. D. Income is overstated and a refundable liability is omitted.

Explanation

Correct answer D: Income is overstated and a refundable liability is omitted.

The module distinguishes refundable caution money from revenue; inspect actual terms and student balances.

AUD-G17-P017 · 2 marks

A hospital vouches bills back to treatments but has not traced treatments to bills. What risk remains?

A. Physical attendance can never be audit evidence. B. The tax-refund status of every patient is automatically established. C. Issued bills must all be duplicated. D. Unbilled chargeable treatments may be missing from revenue.

Explanation

Correct answer D: Unbilled chargeable treatments may be missing from revenue.

Patient-register-to-bill direction helps test completeness; bills-to-register alone does not find omitted bills.

AUD-G17-P018 · 2 marks

A hospital counts 60 expired packs of medicine at Rs 150 each. The supplied framework gives them no usable or recoverable value. What known adjustment follows?

A. Write off all hospital medicines regardless of condition. B. Rs 9000 reduction, separately from any uncertainty on other stock. C. No reduction because quantities physically exist. D. Rs 150 reduction because only one pack matters.

Explanation

Correct answer B: Rs 9000 reduction, separately from any uncertainty on other stock.

60 x 150=9000. Existence does not establish usability/valuation; the criterion is explicitly supplied.

AUD-G17-P019 · 2 marks

A donation is restricted to a ward, but equipment is used at a director's private clinic. Which audit approach is best?

A. Treat the director's verbal convenience as donor consent. B. Automatically accuse the director of a crime without further evidence. C. Inspect donor conditions, title/control, location and recovery/refund implications before accepting the hospital asset claim. D. Accept the donor bank receipt as complete ownership evidence.

Explanation

Correct answer C: Inspect donor conditions, title/control, location and recovery/refund implications before accepting the hospital asset claim.

Hospital restricted-use and asset/register checks require substance and support, not a label or receipt alone.

AUD-G17-P020 · 2 marks

Opening dues Rs 30000; collections against them Rs 18000; authorised old-dues write-off Rs 2000. Current demand Rs 200000 and current collections Rs 170000. What total closing dues follow?

A. Rs 10000 because current dues are ignored. B. Rs 60000 by adding the write-off. C. Rs 40000 before other supported adjustments. D. Rs 30000 because old dues disappear each year.

Explanation

Correct answer C: Rs 40000 before other supported adjustments.

Old 30000-18000-2000=10000;current 200000-170000=30000;total 40000.

AUD-G17-P021 · 2 marks

Club service orders support member charges of Rs 42000 but member accounts contain only Rs 30000. What is the first sound conclusion?

A. All Rs 42000 is necessarily cash theft. B. No gap exists because accounts balance. C. A margin decline proves the same Rs 12000 was stolen twice. D. A Rs 12000 posting gap needs reconciliation; it is not by itself proof of stolen cash.

Explanation

Correct answer D: A Rs 12000 posting gap needs reconciliation; it is not by itself proof of stolen cash.

Order-to-member-account tracing addresses completeness; timing, corrections and payments may explain the gap.

AUD-G17-P022 · 2 marks

A cinema's authorised complimentary tickets are not numbered or logged. Which control most directly repairs the admission trail?

A. Controlled unique identifiers, issue authority and reconciliation to gate admissions. B. Count only cash receipts. C. Let the issuer approve their own unlogged exceptions. D. Remove every complimentary admission even if valid.

Explanation

Correct answer A: Controlled unique identifiers, issue authority and reconciliation to gate admissions.

Free passes and ticket series must be controlled; electronic identification can apply the same traceability principle.

AUD-G17-P023 · 2 marks

A completed film's agreed hire is Rs 2 lakh against a Rs 3 lakh advance. Rs 1 lakh refund is disputed. What is the best accounting-audit approach?

A. Recognise the performed hire separately and assess recoverability of the Rs 1 lakh residual claim. B. Automatically expense all Rs 3 lakh without testing the refund. C. Retain Rs 3 lakh as unused advance forever. D. Recognise an extra Rs 2 lakh receivable because the film ran.

Explanation

Correct answer A: Recognise the performed hire separately and assess recoverability of the Rs 1 lakh residual claim.

Contract/performance establish settlement; residual claim recoverability is a separate supported estimate.

AUD-G17-P024 · 2 marks

Contract cash price Rs 250000, deposit Rs 50000 and future instalments Rs 230000. Under a supplied earned-finance-income policy, what distinction matters?

A. Rs 200000 unpaid cash-price principal and Rs 30000 finance component, with income timing separately tested. B. All Rs 30000 finance income must be earned immediately. C. All Rs 230000 future cash is principal. D. Cash price is Rs 280000 because interest is equipment cost here.

Explanation

Correct answer A: Rs 200000 unpaid cash-price principal and Rs 30000 finance component, with income timing separately tested.

Total consideration 50000+230000=280000;less cash price 250000 gives 30000 finance;250000-50000=200000 principal.

AUD-G17-P025 · 2 marks

A lessor applying AS 19 retains legal title but supplied facts transfer substantially all risks/rewards. What classification reasoning is sound?

A. Evaluate finance-lease substance rather than treat retained title as conclusive operating classification. B. Every retained-title lease is automatically operating. C. Use a universal 90% brightline regardless of source. D. Treat every Ind AS116 lessee identically to this AS 19 lessor.

Explanation

Correct answer A: Evaluate finance-lease substance rather than treat retained title as conclusive operating classification.

Framework applicability and substance matter; the module lists finance indicators, not universal title-only or numerical rules.

AUD-G17-P026 · 2 marks

A housekeeper reports 26 occupiedrooms. Bills cover 22;two are authorised staff rooms. Two chargeable guest rooms have no bills at supplied Rs 4000 tariff. What omission is supported?

A. Zero because billed receipts agree to bank. B. Rs 104000 from all occupied rooms as missing revenue. C. Rs 8000 from the two chargeable rooms. D. Rs 16000 from every unbilled room including staff rooms.

Explanation

Correct answer C: Rs 8000 from the two chargeable rooms.

26-22-2=2 chargeable omissions;2 x 4000=8000. Billing completeness differs from receipt reconciliation.

AUD-G17-P027 · 2 marks

A travel agent settles Rs 72000 net against Rs 80000 gross room charges and authorised 10% commission. Under supplied gross presentation, what follows?

A. Rs 8000 additionalprofit from grossing revenue only. B. Rs 72000 gross revenue with no commission. C. Rs 152000 room revenue by adding settlement and bill. D. Rs 80000 room revenue and Rs 8000 commission; the gross-up alone has no net-profit effect.

Explanation

Correct answer D: Rs 80000 room revenue and Rs 8000 commission; the gross-up alone has no net-profit effect.

80000 x 10%=8000;gross revenue 80000-less commission 8000=net 72000.

AUD-G17-P028 · 2 marks

Cash wages for casual staff lack independent attendance certification. What response is appropriate?

A. Automatically classify every casual worker as fictitious. B. Corroborate actual work, identity, approved rates and payment; assess unsupported amounts and controls. C. Accept busy-season custom as complete evidence. D. Declare a fixed modified opinion without materiality/evidence assessment.

Explanation

Correct answer B: Corroborate actual work, identity, approved rates and payment; assess unsupported amounts and controls.

The hotel module flags inadequate casual-labour records; investigate and assess, not a universal fraud/opinion shortcut.

AUD-G17-P029 · 2 marks

An entity called a welfare society uses a public-trust format without reading its registration or State law. What should come first?

A. Assume automatic tax exemption from welfare objects. B. Verify legal form, jurisdiction, governing documents and actual reporting requirements. C. Apply one State format universally. D. Assume name establishes all applicable law.

Explanation

Correct answer B: Verify legal form, jurisdiction, governing documents and actual reporting requirements.

Trust/society forms and State requirements need grounding; module tax/fallback shortcuts remain visibly held.

AUD-G17-P030 · 2 marks

A society donor gives Rs 5 lakh; Rs 3 lakh eligible delivered cost, Rs 1 lakh future advance and Rs 1 lakh bank balance. Terms require refund of unused grant. What balance must be reconciled?

A. Zero because received grants are always income. B. Rs 2 lakh under the supplied terms, not only cash Rs 1 lakh. C. Rs 4 lakh by adding the same advance twice. D. Rs 1 lakh because advances cannot affect grant obligations.

Explanation

Correct answer B: Rs 2 lakh under the supplied terms, not only cash Rs 1 lakh.

5-3=2 unearned/refundable balance;cash 1 plusadvance 1=2. No universal State-law rate is asserted.

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.