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Free Practice Questions for Sri Lanka Audit Officer Exam

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Key Facts: Sri Lanka Audit Officer Exam Exam

244

Audit Officer vacancies advertised in the 2026 open competitive examination

Gazette Part I Sec. (IIA), 11 September 2026

6 papers, 3 sat

Papers prescribed by the Appendix 01 syllabus, of which each applicant sits three including IQ

Gazette Part I Sec. (IIA), 11 September 2026

Rs. 1,200

Examination fee, payable online and not refundable or transferable

Gazette Part I Sec. (IIA), 11 September 2026

40% and 50%

Minimum mark in each paper sat and minimum overall average required to reach the interview

Gazette Part I Sec. (IIA), 11 September 2026

22 to 28 years

Age limits on the closing date of 12 October 2026, extended to 45 for serving public officers

Gazette Part I Sec. (IIA), 11 September 2026

10%

Maximum share of Audit Officer posts filled through the taxation and information technology degree route

Gazette Part I Sec. (IIA), 11 September 2026

Rs. 64,610

Initial salary step for Audit Officer Class III Grade II on salary code AS 01-2025

Gazette Part I Sec. (IIA), 11 September 2026

3 languages

Sinhala, Tamil and English media in which the written examination is conducted

Gazette Part I Sec. (IIA), 11 September 2026

Sri Lanka's Audit Officer open competitive examination is set by the Audit Service Commission and run by the Department of Examinations in Sinhala, Tamil and English. Six papers are prescribed and every applicant sits three of them, always including the IQ paper: applicants qualifying through an accountancy route add at least one of Financial Accountancy or Auditing, while applicants qualifying through a taxation or IT degree may take the ICT papers. Each paper carries 100 marks, 40% is needed in every paper sat and a 50% overall average to reach the interview, and appointment is strictly on total marks. These 100 free practice questions are an independent English-language MCQ study aid covering all six official papers.

Sample Sri Lanka Audit Officer Exam Practice Questions

Try these sample questions to review concepts for the Sri Lanka Audit Officer Exam exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under the fundamental accounting equation, how is equity defined, and what is the effect on equity when a business entity pays an outstanding trade creditor Rs. 45,000 by cheque?
A.Equity = Assets - Liabilities; equity decreases by Rs. 45,000
B.Equity = Assets + Liabilities; equity increases by Rs. 45,000
C.Equity = Liabilities - Assets; equity remains unchanged
D.Equity = Assets - Liabilities; equity remains unchanged
Explanation: Equity represents the residual interest in the assets of the entity after deducting all its liabilities (Equity = Assets - Liabilities). When paying an account payable/trade creditor of Rs. 45,000 by cheque, bank balances (assets) decrease by Rs. 45,000 and trade payables (liabilities) decrease by Rs. 45,000 simultaneously. Because both assets and liabilities decrease by the exact same amount, net assets (Equity) remain completely unchanged.
2In a bank reconciliation statement, what is the standard treatment of unpresented cheques when reconciling from the adjusted cash book balance to the bank statement balance?
A.Deducted from the cash book balance
B.Ignored because they are permanent timing differences
C.Debited to the bank charges account in the general ledger
D.Added to the cash book balance
Explanation: Unpresented cheques are cheques drawn and issued by the entity that have been credited (deducted) in the cash book but have not yet been presented to or cleared by the bank. When starting from the adjusted cash book balance to reach the balance as per the bank statement (or vice versa), unpresented cheques must be added back to the cash book balance because the bank's records do not yet reflect that deduction.
3On 31 December, an entity's bank column in the cash book shows a debit balance of Rs. 180,000 before adjustments. Investigation reveals: bank charges of Rs. 4,500 and a direct debit for utility bills of Rs. 14,500 have not been recorded in the cash book; a direct credit by a trade debtor of Rs. 35,000 is unrecorded; and a customer's cheque of Rs. 6,000 was dishonored by the bank. What is the adjusted cash book balance to be reported on the statement of financial position?
A.Rs. 170,000
B.Rs. 180,000
C.Rs. 190,000
D.Rs. 200,000
Explanation: To determine the adjusted cash book balance: Starting balance (Dr) = Rs. 180,000. Add unrecorded direct credit from trade debtor = +Rs. 35,000. Subtract unrecorded bank charges = -Rs. 4,500. Subtract unrecorded direct debit for utilities = -Rs. 14,500. Subtract dishonored customer cheque (which reverses the earlier cash book debit) = -Rs. 6,000. Adjusted cash book balance = 180,000 + 35,000 - 4,500 - 14,500 - 6,000 = Rs. 190,000.
4According to LKAS 2 (Inventories), inventories must be measured at:
A.The lower of cost and net realizable value
B.Fair value less costs of disposal
C.Replacement cost or historical cost, whichever is higher
D.Present value of future cash flows
Explanation: LKAS 2 paragraph 9 prescribes that inventories shall be measured at the lower of cost and net realizable value (NRV). Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
5A trading firm holds 1,200 units of Product Gamma at an original purchase cost of Rs. 450 per unit. Due to a market downturn, the expected normal selling price is Rs. 480 per unit, but the firm must incur packaging and freight costs of Rs. 50 per unit and a selling commission of 5% of the selling price. Under LKAS 2, what is the total inventory carrying amount for Product Gamma on the reporting date?
A.Rs. 450,000
B.Rs. 487,200
C.Rs. 516,000
D.Rs. 540,000
Explanation: First, calculate Net Realizable Value (NRV) per unit: Selling price = Rs. 480. Estimated costs to sell = Rs. 50 (packaging/freight) + 5% of Rs. 480 (Rs. 24) = Rs. 74. NRV per unit = Rs. 480 - Rs. 74 = Rs. 406. Since the NRV (Rs. 406) is lower than the historical cost (Rs. 450), the inventory must be written down to its NRV. Total carrying amount = 1,200 units * Rs. 406 = Rs. 487,200.
6Under LKAS 16 (Property, Plant and Equipment), which of the following expenditures incurred during the acquisition and commissioning of heavy machinery must be expensed immediately rather than capitalized as part of the asset's initial cost?
A.Site preparation costs to build a reinforced concrete foundation
B.Professional architectural and engineering fees for installation design
C.Costs of testing whether the asset is functioning properly, with any proceeds from selling items produced during testing recognized in profit or loss
D.Administration and general overhead costs, and costs of training staff to operate the new machinery
Explanation: Under LKAS 16 paragraph 19, costs that are not directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management must be recognized as an expense when incurred. These include staff training costs and general administration overheads.
7An entity acquires an industrial motor vehicle on 1 January Year 1 for Rs. 4,000,000. It adopts the reducing balance method of depreciation at an annual rate of 20%. What is the accumulated depreciation and the carrying amount of the vehicle at 31 December Year 3?
A.Accumulated depreciation: Rs. 1,952,000; Carrying amount: Rs. 2,048,000
B.Accumulated depreciation: Rs. 2,400,000; Carrying amount: Rs. 1,600,000
C.Accumulated depreciation: Rs. 2,000,000; Carrying amount: Rs. 2,000,000
D.Accumulated depreciation: Rs. 1,600,000; Carrying amount: Rs. 2,400,000
Explanation: Under the reducing balance method at 20%: Year 1 depreciation = 20% of 4,000,000 = Rs. 800,000, leaving carrying amount = Rs. 3,200,000. Year 2 depreciation = 20% of 3,200,000 = Rs. 640,000, leaving carrying amount = Rs. 2,560,000. Year 3 depreciation = 20% of 2,560,000 = Rs. 512,000, leaving carrying amount = Rs. 2,048,000. Total accumulated depreciation = 800,000 + 640,000 + 512,000 = Rs. 1,952,000.
8A company revalues an office building on 31 December. Immediately prior to revaluation, the building had a historical cost of Rs. 25,000,000 and accumulated depreciation of Rs. 5,000,000. An independent chartered valuer determines its fair value to be Rs. 28,000,000. There had been no prior downward revaluations. Under LKAS 16, what is the accounting entry to record the revaluation surplus?
A.Credit Profit or Loss by Rs. 8,000,000
B.Credit Retained Earnings directly by Rs. 3,000,000
C.Credit Revaluation Surplus in Other Comprehensive Income by Rs. 3,000,000
D.Credit Revaluation Surplus in Other Comprehensive Income by Rs. 8,000,000
Explanation: Carrying amount before revaluation = Cost (Rs. 25,000,000) - Accumulated Depreciation (Rs. 5,000,000) = Rs. 20,000,000. Fair value = Rs. 28,000,000. The revaluation gain is Rs. 28,000,000 - Rs. 20,000,000 = Rs. 8,000,000. Under LKAS 16.39, an increase in an asset's carrying amount arising on revaluation shall be recognized in Other Comprehensive Income (OCI) and accumulated in equity under the heading of Revaluation Surplus, provided no prior deficit had been expensed to profit or loss.
9Under LKAS 38 (Intangible Assets), which of the following is a mandatory condition for capitalizing an expenditure incurred during the development phase of an internal project?
A.The entity demonstrates technical feasibility of completing the intangible asset so that it will be available for use or sale
B.The expenditure must have been incurred during the research stage
C.The asset has already generated positive cash flows in the prior fiscal year
D.The fair value of the asset can be determined by an active secondary trading market
Explanation: Under LKAS 38 paragraph 57, an intangible asset arising from development must be capitalized only if the entity can demonstrate all six PIRATE criteria: Probable future economic benefits, Intention to complete and use or sell, Resources (adequate technical/financial) available, Ability to use or sell, Technical feasibility of completion, and Expenditure reliably measurable.
10What are the five steps prescribed by SLFRS 15 (Revenue from Contracts with Customers) for recognizing revenue?
A.1. Issue invoice; 2. Deliver goods; 3. Receive cash; 4. Deposit in bank; 5. Record revenue in sales ledger
B.1. Receive customer purchase order; 2. Check inventory; 3. Ship goods; 4. Approve credit terms; 5. Record profit
C.1. Estimate contract costs; 2. Determine markup; 3. Draft agreement; 4. Transfer legal title; 5. Recognize revenue
D.1. Identify the contract; 2. Identify performance obligations; 3. Determine transaction price; 4. Allocate transaction price; 5. Recognize revenue when performance obligations are satisfied
Explanation: SLFRS 15 establishes a standardized core five-step model: Step 1: Identify the contract(s) with a customer; Step 2: Identify the performance obligations in the contract; Step 3: Determine the transaction price; Step 4: Allocate the transaction price to the performance obligations in the contract; Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

About the Sri Lanka Audit Officer Exam Exam

The Open Competitive Examination for Recruitment of Audit Officers to Class III of Grade II of the Sri Lanka State Audit Service is the entry route to field and office-based audit work in Sri Lanka's National Audit Office. The Sri Lanka State Audit Service absorbed the former Sri Lanka Audit Service and Audit Examiners' Service following the National Audit Act, No. 19 of 2018, and recruitment now runs under the Service Minute published in Extraordinary Gazette No. 2366/31 of 12 January 2024. The 2026 round, gazetted on 11 September 2026, covers 244 vacancies, with applications open from 14 September to 12 October 2026 and the written examination expected in Colombo in December 2026.

Exam sponsor: Called by the Audit Service Commission under section 7.2 of the Sri Lanka State Audit Service Minute (Extraordinary Gazette No. 2366/31 of 12 January 2024) and conducted by the Commissioner General of Examinations, Department of Examinations, Sri Lanka.. The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Assessment

Six papers are prescribed by Appendix 01 of the Sri Lanka State Audit Service Minute: IQ; Creative, Analytical and Communication Skills; Financial Accountancy; Auditing; Knowledge of Information and Communication Technology; and Aptitude Test for Information and Communication Technology Management. Each carries 100 marks. Every applicant sits three papers. Applicants under section 7.2.1.1.1 (a) sit three papers including the IQ paper and at least one of Financial Accountancy or Auditing; applicants under section 7.2.1.1.1 (b) sit three papers including the IQ paper. A general interview follows, at which no marks are awarded.

Time Limit

IQ 1 hour 30 minutes; Creative, Analytical and Communication Skills, Financial Accountancy and Auditing 3 hours each; Knowledge of ICT and the ICT Management aptitude test 2 hours each.

Passing Score

A minimum of 40% of the marks allocated for each question paper sat, plus an overall average of at least 50% for the examination, is required to be called for interview. The interview verifies educational qualifications and service records and carries no marks. Selection is by highest total marks across the three papers, subject to the number of vacancies and the recruitment category.

Exam / Certification Fees

Rs. 1,200, payable online by credit card, internet-enabled debit card, Bank of Ceylon online banking or at any Bank of Ceylon branch. The fee is not refundable or transferable.

Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

100 marks

IQ

Compulsory for every applicant. Analytical skill, comprehension, interpretation and the ability to reach conclusions on numerical, linguistic and graphical structures and interrelations, in 1 hour 30 minutes.

100 marks

Creative, Analytical and Communication Skills

Reasoning and creative ability in analysing and presenting information on a chosen topic, and comprehending a complex paragraph, document or memorandum and expressing its core ideas briefly and accurately in the applicant's own words, in 3 hours.

100 marks

Financial Accountancy

Conceptual and regulatory frameworks including the Companies Act, No. 07 of 2007 and the Sri Lanka Accounting and Auditing Standards Act, No. 15 of 1995; Sri Lanka Accounting Standards; company financial statements; cash flow statements; ratio analysis; and consolidated financial statements, in 3 hours.

100 marks

Auditing

Business environment, governance and risk, internal control, assurance engagements, the audit process, audit evidence, the audit report, ethics and audit quality, in a 3-hour essay-type paper.

100 marks

Knowledge of Information and Communication Technology

ICT management, resolving information technology issues, IT project management, system analysis, planning and software development, in 2 hours with all questions to be answered.

100 marks

Aptitude Test for Information and Communication Technology Management

Aptitude for ICT management drawing on software development, installation and maintenance and new trends in information and communication technology, in 2 hours with all questions to be answered.

Preparing for the Sri Lanka Audit Officer Exam Exam

What You Need to Know

  • Passing score: A minimum of 40% of the marks allocated for each question paper sat, plus an overall average of at least 50% for the examination, is required to be called for interview. The interview verifies educational qualifications and service records and carries no marks. Selection is by highest total marks across the three papers, subject to the number of vacancies and the recruitment category.
  • Assessment: Six papers are prescribed by Appendix 01 of the Sri Lanka State Audit Service Minute: IQ; Creative, Analytical and Communication Skills; Financial Accountancy; Auditing; Knowledge of Information and Communication Technology; and Aptitude Test for Information and Communication Technology Management. Each carries 100 marks. Every applicant sits three papers. Applicants under section 7.2.1.1.1 (a) sit three papers including the IQ paper and at least one of Financial Accountancy or Auditing; applicants under section 7.2.1.1.1 (b) sit three papers including the IQ paper. A general interview follows, at which no marks are awarded.
  • Time limit: IQ 1 hour 30 minutes; Creative, Analytical and Communication Skills, Financial Accountancy and Auditing 3 hours each; Knowledge of ICT and the ICT Management aptitude test 2 hours each.
  • Exam / certification fees: Rs. 1,200, payable online by credit card, internet-enabled debit card, Bank of Ceylon online banking or at any Bank of Ceylon branch. The fee is not refundable or transferable. Official sources

Using Our Practice Resources

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
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Sri Lanka Audit Officer Exam: Suggested Study Strategy

1Confirm which three papers your qualification category requires before you start studying. The IQ paper is compulsory for everyone, so build regular practice in numerical, verbal and graphical reasoning into your schedule from the outset.
2For Financial Accountancy, work through the whole of the published scope rather than the topics you find easiest: the conceptual and regulatory frameworks, Sri Lanka Accounting Standards, cash flow statements, ratio analysis with a short report to management, and consolidated financial statements with adjustments.
3The Auditing paper is entirely essay-type, so practise writing full answers by hand under timed conditions on governance and risk, the five elements of internal control, the audit process from risk assessment to reporting, ethics and audit quality.
4The Creative, Analytical and Communication Skills paper rewards precis and structure, not length. Practise reducing a complex memorandum to its core ideas in your own words, and plan every answer before writing.
5Note the 40% per-paper minimum alongside the 50% overall average: a strong total will not save you if one paper falls below 40%, so give your weakest paper proportionate study time.

Frequently Asked Questions

How many papers does an Audit Officer applicant actually sit?

Three. The Appendix 01 syllabus prescribes six papers in total, but each applicant sits only three of them and the IQ paper is compulsory for everyone. Applicants qualifying under section 7.2.1.1.1 (a) of the Service Minute must include at least one of Financial Accountancy or Auditing among their three; applicants qualifying under section 7.2.1.1.1 (b) sit three papers including IQ. The category is chosen on the application form and cannot be changed afterwards.

What are the eligibility requirements for the 2026 examination?

Applicants must be Sri Lankan citizens aged 22 to 28 on the closing date of 12 October 2026, or up to 45 if already in the public service. They must hold an accountancy, commerce, business or state management degree with Accountancy or Auditing as a main subject, a CA Sri Lanka qualification at Licentiate II, Intermediate or Business Level II or above, a CMA Sri Lanka qualification at Management Level or above, or a Higher Diploma or Higher National Diploma in Accountancy or Commerce. A separate route admits degrees in Taxation, Information Technology, Computer Science, Computer Engineering Science or Computer Technology, capped at 10% of the posts.

What marks are needed to pass and be appointed?

An applicant must obtain at least 40% of the marks allocated for each paper sat and an overall average of at least 50% to be called for interview. The interview verifies educational qualifications and service records and carries no marks. Appointment is then made in order of total marks across the three papers, subject to the vacancies available and the recruitment category.

In which languages is the examination held?

The examination is conducted in Sinhala, Tamil and English. An applicant must sit in the medium in which they passed the qualifying examination, or in an official language, must answer every paper in that same language, and cannot change the medium after applying. The online application itself must be completed in English.

Does this question bank simulate the official examination format?

No. The official papers use multiple-choice, short-answer, structured essay and full essay questions, and the Auditing paper is entirely essay-type. This bank is an independent English-language multiple-choice study adaptation by OpenExamPrep, written to the six papers of the Appendix 01 syllabus so that candidates can rehearse the underlying knowledge and reasoning. It is not an official paper, a translation, or a substitute for practising written essay and precis answers under timed conditions.