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100+ Free CA Inter Auditing and Ethics Practice Questions

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2026 Statistics

Key Facts: CA Inter Auditing and Ethics Exam

100 marks

Total Paper Marks

ICAI Intermediate Paper-5 Syllabus

30%

Compulsory MCQ Weight

ICAI Exam Pattern

3 hours

Exam Duration

ICAI Intermediate Paper-5 Syllabus

40%

Minimum Marks to Pass Paper

ICAI Exam Regulations

12

Official Syllabus Chapters

ICAI Intermediate Paper-5 Study Material

2023

New Scheme Notified

ICAI New Scheme of Education and Training

CA Intermediate Paper 5 (Auditing and Ethics) is a 100-mark, 3-hour Group II paper under the ICAI New Scheme 2023. It is assessed about 30% through compulsory MCQs with no negative marking and 70% through descriptive questions. The syllabus spans 12 chapters from the nature and scope of audit through risk assessment, audit evidence, audit of financial statement items, documentation, completion, the audit report, special and bank audits, ethics, and the Standards on Auditing. To pass, a student needs at least 40% in the paper and 50% aggregate in the group. This free bank offers 100 MCQs mapped to the official ICAI chapters.

Sample CA Inter Auditing and Ethics Practice Questions

Try these sample questions to test your CA Inter Auditing and Ethics exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1As per SA 200, what is the overall objective of an independent auditor when conducting an audit of financial statements?
A.To detect every fraud and error in the entity's books of account
B.To guarantee the absolute accuracy and future viability of the entity
C.To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement and to report on them
D.To prepare the financial statements in accordance with the applicable financial reporting framework
Explanation: SA 200 states that the overall objectives of the auditor are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion, and to report on the financial statements. Reasonable assurance is a high but not absolute level of assurance.
2The concept of 'reasonable assurance' in an audit recognises that there are inherent limitations of an audit. Which of the following is NOT an inherent limitation of an audit?
A.The use of testing and sampling rather than examining every transaction
B.The persuasive rather than conclusive nature of most audit evidence
C.The nature of fraud, which may involve sophisticated and carefully organised schemes designed to conceal it
D.The auditor's failure to plan the audit and obtain the engagement letter on time
Explanation: Inherent limitations arise from the nature of financial reporting, the nature of audit procedures (testing, persuasive evidence), and the need for the audit to be conducted within a reasonable time and cost. Failure to plan or obtain an engagement letter is a deficiency in the auditor's conduct, not an inherent limitation of the audit itself.
3Which of the following best describes the relationship between auditing and accounting?
A.Auditing precedes accounting in the sequence of work
B.Accounting is the process of recording, classifying and summarising transactions, while auditing is the critical and analytical examination of those records
C.Accounting is analytical and critical in nature, while auditing is constructive
D.Auditing and accounting are the same function performed by the same person
Explanation: Accounting is a constructive activity that records, classifies and summarises business transactions to prepare financial statements. Auditing is analytical and critical: it begins where accounting ends and examines whether the accounts present a true and fair view. Hence auditing follows accounting.
4An audit conducted to verify that an organisation is complying with rules, regulations and procedures laid down by management is best described as a:
A.Compliance audit
B.Cost audit
C.Tax audit
D.Forensic audit
Explanation: A compliance audit examines whether the entity has adhered to specific laws, regulations, policies and procedures. The auditor reports on the degree of conformity with the prescribed criteria.
5The expression 'true and fair view' in the context of financial statements implies that the auditor must be satisfied that, among other things:
A.The financial statements are mathematically accurate to the last rupee
B.There is no misstatement and every figure is exactly correct
C.The financial statements reflect the substance of transactions and are free from material misstatement, with adequate disclosure
D.All the directors of the company have personally certified the accounts
Explanation: A true and fair view requires that the financial statements do not contain material misstatements, that the assets and liabilities are properly valued and disclosed, and that the statements reflect the substance of the underlying transactions. It does not demand absolute arithmetical exactness.
6Which one of the following is an advantage of an independent audit of financial statements?
A.It eliminates the need for the entity to maintain books of account
B.It provides assurance of absolute accuracy and detection of all frauds
C.It transfers the responsibility for preparing the financial statements from management to the auditor
D.It enhances the credibility of the financial statements for users such as banks, investors and tax authorities
Explanation: An independent audit lends credibility and reliability to financial statements, which benefits stakeholders such as lenders, investors, regulators and tax authorities who rely on audited accounts for decision-making.
7Professional scepticism, as required throughout the audit, means that the auditor should:
A.Assume that management is dishonest and approach every assertion as fraudulent
B.Accept management's representations without further corroboration to save time
C.Maintain an attitude that includes a questioning mind and a critical assessment of audit evidence, being alert to conditions indicating possible misstatement
D.Rely solely on the work performed in the prior year's audit
Explanation: Professional scepticism, defined in SA 200, is an attitude that includes a questioning mind, being alert to conditions that may indicate possible misstatement due to fraud or error, and a critical assessment of audit evidence. It does not require assuming management dishonesty.
8The scope of an audit of financial statements is determined by:
A.The personal preference of the auditor alone
B.Only the wishes of the management of the entity
C.The Standards on Auditing, relevant laws and regulations, and the terms of the engagement
D.The size of the audit fee agreed with the client
Explanation: Under SA 200, the scope of an audit is governed by the requirements of the Standards on Auditing, relevant laws or regulations, and the terms of the audit engagement. The auditor cannot reduce the scope merely at management's request when law requires otherwise.
9As per SA 300, the audit strategy and the audit plan are related in that:
A.The overall audit strategy sets the scope, timing and direction of the audit and guides the development of the more detailed audit plan
B.The audit plan is broader and the audit strategy is a detailed sub-set of it
C.The audit strategy and audit plan are identical documents with different titles
D.The audit plan is prepared only after the audit report is signed
Explanation: SA 300 requires the auditor to establish an overall audit strategy that sets the scope, timing and direction of the audit and that guides the development of the audit plan. The audit plan is more detailed than the strategy and covers the nature, timing and extent of planned procedures.
10An audit programme is best described as:
A.A detailed plan of the auditing work to be performed, specifying the procedures to be followed in verification of each item and the estimated time required
B.A statement of the audit fee and out-of-pocket expenses
C.A list of all the clients of the audit firm
D.The auditor's report appended to the financial statements
Explanation: An audit programme is a detailed written plan of the work to be done. It sets out the audit procedures to be applied for each area, the responsibilities of staff, and the time budget, ensuring that no material area is overlooked.

About the CA Inter Auditing and Ethics Exam

CA Intermediate Paper 5: Auditing and Ethics is a Group II paper under the ICAI New Scheme 2023 that tests the nature and scope of audit, planning, risk assessment, audit evidence, audit of financial statement items, documentation, reporting, special and bank audits, the Standards on Auditing, and the ICAI Code of Ethics.

Assessment

Question count not published by the exam provider

Time Limit

3 hours

Passing Score

40% in Paper 5 and 50% aggregate across the group

Exam Fee

No separate per-paper fee; covered within CA Intermediate registration and examination fees (Institute of Chartered Accountants of India (ICAI))

CA Inter Auditing and Ethics Exam Content Outline

8%

Nature, Objective and Scope of Audit

Meaning and objectives of audit, reasonable assurance, inherent limitations, professional scepticism, true and fair view, and the relationship between auditing and accounting under SA 200.

8%

Audit Strategy, Planning and Programming

Overall audit strategy and detailed audit plan under SA 300, audit programme, benefits of planning, and knowledge of the client's business.

10%

Risk Assessment and Internal Control

Audit risk, inherent and control risk, materiality under SA 320, components of internal control under SA 315, walk-through tests, fraud under SA 240, and deficiencies under SA 265.

11%

Audit Evidence

Sufficient appropriate evidence under SA 500, external confirmations (SA 505), inventory (SA 501), analytical procedures (SA 520), sampling (SA 530), written representations (SA 580), vouching and verification.

11%

Audit of Items of Financial Statements

Verification and vouching of share capital, borrowings, property, inventory, receivables, payables, investments, cash, contingent liabilities, and revenue with cut-off assertions.

6%

Audit Documentation

Working papers under SA 230, permanent and current audit files, ownership, retention period under SQC 1, file assembly, and the purpose of documentation.

7%

Completion and Review

Subsequent events under SA 560, adjusting and non-adjusting events, going concern under SA 570, written representations, and overall analytical review at completion.

9%

Audit Report

Forming an opinion under SA 700, modified opinions under SA 705, key audit matters (SA 701), emphasis of matter (SA 706), CARO, and reporting duties under Section 143 of the Companies Act, 2013.

7%

Special Features of Audit of Different Types of Entities

Audit of not-for-profit organisations, hospitals, educational institutions, partnership firms, LLPs, joint audit under SA 299, and entity-specific revenue verification.

7%

Audit of Banks

Income recognition and asset classification, NPA norms, classification of advances, RBI guidelines, appointment of bank auditors, and the Long Form Audit Report.

9%

Ethics and Terms of Audit Engagements

ICAI Code of Ethics fundamental principles, threats to independence and safeguards, engagement letters and preconditions under SA 210, and professional misconduct under the CA Act, 1949.

7%

Standards on Auditing (SAs)

Structure of the SA series, using the work of internal auditors (SA 610) and an auditor's expert (SA 620), responses to assessed risks (SA 330), and governance communication (SA 260).

How to Pass the CA Inter Auditing and Ethics Exam

What You Need to Know

  • Passing score: 40% in Paper 5 and 50% aggregate across the group
  • Assessment: Question count not published by the exam provider
  • Time limit: 3 hours
  • Exam fee: No separate per-paper fee; covered within CA Intermediate registration and examination fees

Keys to Passing

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

CA Inter Auditing and Ethics Study Tips from Top Performers

1Learn the Standards on Auditing by series and objective, since most MCQs test the core principle of each SA rather than its full text.
2For audit of banks, memorise the 90-day NPA rule and the standard, sub-standard, doubtful and loss classification, which are frequently examined.
3Practise distinguishing the four opinion types (unmodified, qualified, adverse, disclaimer) using the material versus pervasive framework of SA 705.
4Tie each ethics question to one of the five fundamental principles and the five threats to independence.
5Use cut-off, completeness, existence and valuation assertions as a checklist when answering audit-of-items questions.
6Because the MCQ section has no negative marking, attempt every MCQ even when unsure.

Frequently Asked Questions

What is the exam pattern for CA Intermediate Paper 5: Auditing and Ethics?

Paper 5 is a 100-mark, 3-hour paper under the ICAI New Scheme 2023. About 30 marks are compulsory MCQs with no negative marking and the remaining 70 marks are descriptive questions, all within Group II of the CA Intermediate course.

How many MCQs are in CA Inter Auditing and Ethics?

ICAI does not publish a fixed number of MCQs; the MCQ portion carries about 30 marks of the 100-mark paper and is compulsory with no negative marking. This free bank provides 100 MCQs mapped to the official chapters for practice.

What is the passing requirement for CA Inter Paper 5?

A student must score at least 40% in Paper 5 individually and 50% in aggregate across the group, as per ICAI examination regulations. A paper scoring 60 or more marks earns an exemption that can be carried forward.

Which Standards on Auditing are covered in CA Inter Auditing and Ethics?

The syllabus covers a wide range of SAs, including SA 200, 210, 230, 240, 260, 265, 299, 300, 315, 320, 330, 500, 501, 505, 520, 530, 560, 570, 580, 610, 620, and the SA 700 series (700, 701, 705, 706).

Does the CA Inter audit paper include audit of banks?

Yes. Paper 5 covers the audit of banks, including RBI income recognition and asset classification norms, NPA rules, classification of advances, appointment of bank auditors, and the Long Form Audit Report.

What ethics topics are tested in CA Inter Paper 5?

The ethics component covers the ICAI Code of Ethics fundamental principles (integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour), threats to independence, and professional misconduct under the Chartered Accountants Act, 1949.

Is there negative marking in the CA Inter Paper 5 MCQ section?

No. ICAI has confirmed that there is no negative marking on the MCQ portion of CA Intermediate papers, including Paper 5: Auditing and Ethics.

Which syllabus scheme applies to CA Inter Auditing and Ethics?

Paper 5 follows the ICAI New Scheme of Education and Training notified in 2023, which became applicable from the CA Intermediate examinations held in 2024 onward.