Auditing – Commerce & Accountancy Optional PYQs (1995–2026)

Here are all 63 Auditing questions asked in UPSC Commerce & Accountancy Optional Paper I from 1995 to 2026, arranged under the 2 topics of the official syllabus. Within each topic the latest questions come first.

Each question ends with a code such as [2024/15m/3b] – the year, the marks, the word limit (where UPSC set one) and the question number in the paper.

4.1] Company audit

45 questions

1. How is special investigation different from regular investigation? Discuss the Key Points that an Investigator must consider in special investigation. [2026/15m/2c]

2. State the duties of an Auditor with regard to payment of dividend. Discuss the audit procedure to be followed by the Auditor in respect of checking of payment of dividend. [2025/15m/4a]

3. Discuss the important points that an Investigator must consider in the beginning and during the conduct of an Investigation. How should an investigator draft his report? [2025/15m/4b]

4. What are the key differences between Special Audit and Accounts Investigation? Give your viewpoint along with examples. [2024/15m/3c]

5. “An audit is not essentially an investigation.” Why? Explain the general procedure followed in an investigation. [2023/15m/3c]

6. What is Interim Dividend? Specify the duties of an auditor in this regard. [2022/10m/150w/1c]

7. What is tax audit? Explain its objectives. Who can be a tax auditor? [2021/15m/4c]

8. What is divisible profit? How could an auditor ensure that the dividend is not paid out of capital? [2020/15m/4c]

9. Explain how investigation is different from that of Auditing. Under what circumstances the Central Government can order for investigation of a company? [2019/15m/4c]

10. Explain the major provisions of compulsory tax audit for claiming deduction under section 35 D and 35 E. [2018/10m/150w/1d]

11. State the points to be considered while determining divisible profits in case of a company. What are the auditor’s duties in regard to payment of dividends by a company? [2018/15m/3b]

12. A bank has received an application from a customer for a loan. You have to investigate on behalf of the bank the accounts of the customer. Highlight those points you would like to concentrate upon. [2017/15m/4a]

13. “Audit of divisible profits enables the stakeholders to judge the philosophy of majority shareholders.” Comment. [2016/10m/150w/1e]

14. What are the objectives and functions of Auditing and Assurance Standards Board (AASB)? Explain. [2015/10m/150w/1c]

15. What is the need and importance of sampling in audit? Briefly outline the analytical procedures to be adopted while conducting audit. [2015/15m/3b]

16. Distinguish between Divisible profits and Dividends. [2015/10m/4b]

17. What are the main provisions of Companies Act, 2013 with respect to the audit related to Dividends? [2014/10m/150w/1d]

18. Audit procedures to detect cash defalcations. [2013/10m/150w/1e]

19. “An auditor expresses an opinion on a company’s financial statements taken as a whole, not on individual items on the statements.” Explain the above statement with examples. [2013/10m/4b]

20. How should an auditor evaluate cost of gathering evidences for purpose of audit? [2013/10m/4c]

21. “To arrive at a comprehensive opinion, the auditor reviews evidence that may be classified into three major groups.” What are these groups and how do you relate the components of the groups to the purposes of the audit? [2012/20m/3b]

22. “Dividend cannot be paid out of capital.” Explain it. Is there any exception to this rule of law? How will you, as an auditor, ensure that the dividend has not been paid out of capital? [2011/15m/150w/5a]

23. What is a Qualified Audit Report? Prepare a qualified audit report highlighting atleast three qualifications. [2011/25m/6b]

24. In DJA Company Limited, two public financial institutions–Life Insurance Corporation of India and Industrial Development Bank of India–hold 20% and 40% of the paid-up share capital respectively. The Company at its Annual General Meeting passed an ordinary resolution appointing X as an auditor for the year 2010–11. Representatives of the Industrial Development Bank of India remained absent in the meeting. A group of members of the Company objects to the appointment of X as auditor of the Company on the ground that it is violative of the provisions of the Companies Act, 1956. Examine the validity of X as an auditor of the Company and state whether contention of the members shall be tenable. [2010/20m/3b]

25. What are divisible profits? Explain various provisions of Companies Act regarding distribution of dividends. What is duty of an auditor in this regard? [2009/30m/6b]

26. Discuss appointment of an auditor under Companies Act, 1956. [2007/20m/200w/1d]

27. Under what circumstances may an auditor be held liable criminally? Explain the provisions of Companies Act 1956 in this regard. [2007/30m/4b]

28. Critically examine the terms ‘true’ and ‘fair’ that are used in Auditor’s Report. [2006/20m/200w/1d]

29. Explain the Civil Liability of a Company Auditor. [2006/30m/4a]

30. What is cost audit? Distinguish between Cost Audit and Financial Audit. [2005/30m/4a]

31. “An auditor’s role is that of a watch-dog and not a bloodhound.” Comment. [2004/20m/200w/1d]

32. How will you audit the cash transactions of a Company? [2003/20m/200w/1d]

33. Write a note on the powers and duties of a company auditor. [2003/30m/3a]

34. What do you mean by verification and valuation of assets? How should the goodwill be verified by an auditor? The goodwill has emerged on the absorption of an existing company. [2002/30m/4a]

35. Explain the rights of a company auditor. [2001/20m/200w/1c]

36. If an auditor is not appointed in the Annual General Meeting, how is he subsequently appointed? How can a company auditor be removed before the expiry of his term? [2001/30m/4a]

37. Prepare an auditors report with four qualifications. [2000/30m/4a]

38. Valuation of stock for accounting and audit purposes. [1999/20m/200w/1d]

39. Valuation and Verification in auditing. [1999/30m/3b]

40. What are the provisions relating to appointment of an auditor under Companies Act, 1956? [1998/20m/200w/1d]

41. Elucidate the duties of a company auditor as given under Section 227 of the Companies Act. [1997/20m/200w/1d]

42. Examine the significance of audit note book and audit working papers as a proof of defence against the negligence of auditors. [1996/20m/200w/1b]

43. Is auditor liable for misstatement in prospectus? Discuss the nature and extent of auditor’s liability in this regard. [1996/20m/200w/5d]

44. Explain the different kinds of errors and frauds in accounts that an auditor may have to deal with. [1995/20m/200w/1c]

45. Discuss fully a company auditor’s liability for negligence under the Law of Agency. Would it make any difference if the audit work is done free of charge? [1995/30m/4a]

4.2] Audit of banking, insurance and non-profit organisations

18 questions

1. Explain the major points to be considered by an auditor while auditing the accounts of a charitable trust. [2026/10m/150w/1e]

2. Discuss the key points that an Auditor would take into consideration while auditing the books of accounts of an insurance company. [2025/10m/150w/1a]

3. Discuss the main aspects of audit of a banking company in India. [2024/10m/150w/1c]

4. Discuss in detail the important checklist points for a smooth and effective audit of non-profit making organisations. How is it different from the audit of modern day business organisations? [2024/15m/4c]

5. Explain the major points to be considered by an auditor while auditing the accounts of a non-profit organization. [2023/10m/150w/1c]

6. Discuss the major points to be considered by an auditor while conducting the audit of charitable institutions. [2022/15m/4c]

7. Discuss the key aspects in respect of audit of insurance company. [2021/10m/150w/1e]

8. Discuss the special points that an auditor would take into consideration while auditing the accounts of a banking company. [2020/10m/150w/1e]

9. Explain five major points that an auditor shall keep in mind while conducting audit of a Charitable Trust. [2019/10m/150w/1e]

10. “The audit of banks is the audit of balance sheet and advances.” Explain. Distinguish between performing and non-performing assets. [2018/20m/4b]

11. “Verification of Advances is an important function of an auditor of a Bank.” Explain. [2017/10m/150w/1e]

12. An NGO operating in Delhi had collected large scale donations for flood victims. The donations so collected were sent to different NGOs operating in Bihar for relief operations. The NGO operating in Delhi has appointed you to audit its accounts for the year in which it collected and remitted donations for flood victims. Draft a programme for audit of receipts of donations and remittance of the collected amount to different NGOs. Mention five points each, peculiar to the situation, which you would like to incorporate in your audit programme for audit of the said receipts and remittances of donations. [2016/15m/3c]

13. Enumerate the steps to be taken by an auditor before declaring an account as Non-Performing Asset (NPA) in a bank audit. [2016/15m/4c]

14. Explain the audit procedure for conducting the audit of a Non-governmental Organization (NGO). [2009/20m/200w/1b]

15. Define audit. What special points will you keep in mind in the audit of a banking company? [2005/20m/200w/1c]

16. What are the distinguishing features of the audit of non-profit organizations like hospital or university? [2000/20m/200w/1d]

17. Explain briefly the special points to be borne in mind while auditing the account of a charitable society. [1998/30m/4a]

18. Discuss the main points kept in mind while auditing the accounts of a hospital. [1997/30m/4a]

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Last updated: 30 October 2026