CA Final Advanced Auditing MCQs 2026: Practice Questions

CA Final Advanced Auditing MCQs 2026 were included in Paper 3: Advanced Auditing, Assurance and Professional Ethics of the CA Final May 2026 examination. The MCQ section tested candidates on auditing standards, professional ethics, regulatory requirements, and practical audit situations.

The paper included questions based on areas such as engagement quality control, laws and regulations, CARO 2020, subsequent events, auditor's expertise, digital auditing, service organisations, internal audit, BRSR, forensic accounting, bank audit and government audit. These questions required candidates to apply the relevant auditing requirements to the situations given.

The May 2026 MCQs can be used as a practice set for upcoming CA Final attempts. Solving these questions can help you understand how auditing concepts and professional requirements are presented in case-based questions.

CA Final Advanced Auditing MCQs 2026 Overview

CA Final Advanced Auditing MCQs 2026 were part of Paper 3: Advanced Auditing, Assurance and Professional Ethics in the May 2026 examination. The paper was conducted on 6 May 2026. Part I consisted of multiple-choice questions, while Part II contained descriptive questions.

The question paper instructions stated that MCQ answers had to be marked on the OMR answer sheet. Answers written in the descriptive answer book were not evaluated.

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CA Final Advanced Auditing MCQs Based on Case Scenarios

The May 2026 paper used integrated case scenarios to test the application of auditing standards. Instead of asking only direct theoretical questions, several MCQs presented facts involving companies, auditors and specific audit situations.

The important areas tested included:

• Engagement Quality Control Review

• SA 250 and compliance with laws and regulations

• CARO 2020

• Subsequent events under SA 560

• Use of an auditor's expert under SA 620

• Digital auditing and social engineering

• Service organisations under SA 402

• Internal auditors under SA 610

• Professional ethics

• BRSR disclosures

• BRSR assurance and professional independence

• Forensic accounting

• Consolidation and subsequent events

• Bank audit and asset classification

• Government audit and Estimates Committee

CA Final Auditing Practice Questions PDF

Students preparing for upcoming CA Final attempts can use the May 2026 Paper 3 question paper as a revision resource. The MCQs cover different sections of Advanced Auditing and Professional Ethics and include both conceptual and situation-based questions.

The questions below have been rewritten in fresh language while retaining the concepts, facts, and answer choices tested in the examination. This helps maintain the original meaning without reproducing the wording of the question paper.

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CA Final Advanced Auditing MCQs 2026 With Answers

Q1. Engagement Quality Control Review

Myra Developers Ltd. is a listed entity. During the audit, the Engagement Quality Control Reviewer reviews the financial statements, the proposed auditor's report and significant judgments. However, the reviewer does not specifically assess and document the engagement team's evaluation of the firm's independence.

Which requirement has not been properly addressed?

A. Review of the financial statements and proposed auditor's report
B. Evaluation and documentation of the engagement team's independence assessment
C. Escalation of disagreements with the engagement partner
D. Review of selected documentation relating to significant judgments

Answer: B

Q2. Laws and Regulations in an Audit

An entity has failed to renew certain environmental operating licences. The regulator has issued a Show Cause Notice, but no financial penalty has been imposed by the reporting date.

How should the auditor's responsibility be classified?

A. Perform specified procedures such as inquiry and inspection to identify non-compliance that may materially affect the financial statements.
B. Obtain sufficient appropriate audit evidence directly proving compliance with the environmental regulations.
C. Treat the regulations as having a direct effect on financial statement amounts and conduct extensive substantive testing.
D. No audit responsibility arises because no financial penalty has been quantified.

Answer: A

Q3. CARO 2020 Reporting

Myra Developers Ltd. provided an interest-free loan of ₹15 crore to Emerald Ventures Private Ltd. The Managing Director's spouse owns 30% of Emerald Ventures. The transaction was not placed before the Board for approval.

What should the auditor report under CARO 2020?

A. Report whether Sections 185 and 186 have been complied with and provide details where there is non-compliance.
B. No reporting is required because the loan is below a specified percentage of total assets.
C. Report the transaction only under the related-party transactions clause if it was not at arm's length.
D. No reporting is necessary because the shares are held by the spouse and not directly by the Managing Director.

Answer: A

Q4. Subsequent Event After the Audit Report

The auditor signed the audit report on 15 May 2026. Before the financial statements were issued, a major fire caused significant damage to inventory and equipment. Management refused to amend the financial statements or provide appropriate disclosure.

What should the auditor do?

A. Withdraw the previously signed audit report through a public notice.
B. Issue a new qualified audit report dated 22 May 2026.
C. Inform those charged with governance and take appropriate steps to prevent reliance on the earlier report if the financial statements are issued without necessary amendment.
D. Mention the event only in the audit report for the following financial year.

Answer: C

Q5. Using the Work of an Auditor's Expert

Myra Developers Ltd. used a valuation expert for Service Concession Assets. The auditor verified the expert's credentials and reviewed earlier assignments but did not examine the discount rates and growth assumptions used in the current valuation model.

Which statement is appropriate?

A. The auditor failed to properly evaluate the expert's work, including the relevance and reasonableness of significant assumptions and methods.
B. The auditor can rely on the expert's professional membership without reviewing the assumptions.
C. The Engagement Quality Control Reviewer must independently recalculate the entire valuation model.
D. Reviewing the expert's earlier assignments is sufficient to validate the current valuation.

Answer: A

CA Final Audit MCQs on Digital Auditing and Internal Controls

The second integrated scenario focused on Horizon Tech-Solutions Ltd. It included incidents involving email impersonation, fraudulent SMS messages and disclosure of a password over a telephone call.

Q6. Social Engineering Attacks

The company's employees faced three separate incidents: an email impersonating the Chairman, SMS messages asking employees to reset credentials and a phone call through which an employee disclosed an administrative password.

Which classification is appropriate?

A. Whaling, Smishing and Vishing respectively
B. Spear-phishing, Smishing and Vishing respectively
C. Whaling, Whaling and Smishing respectively
D. Spear-phishing for all three incidents

Answer: B

Q7. Service Organisation and Type 2 Report

Horizon Tech-Solutions Ltd. outsourced its payroll processing to Data-Syne Private Ltd. Payroll represented a significant portion of the company's expenditure. The audit assistant included a reference to the service auditor's Type 2 report in an otherwise unmodified audit report.

What should the engagement partner do?

A. Remove the reference and perform the required procedures to obtain an understanding of the controls at the service organisation.
B. Retain the reference because payroll is material.
C. Shift the reference to an Emphasis of Matter paragraph.
D. Issue a qualified opinion solely because the company uses a service organisation.

Answer: A

Q8. Use of Internal Auditors

The engagement partner assigned internal auditors to trace transactions from the CRM to the general ledger, attend physical verification of high-value hardware and evaluate management's assessment of going concern.

Which assignment is not appropriate for internal auditors?

A. Tracing transactions from the CRM to the general ledger
B. Attending the physical verification of hardware
C. Observing routine verification procedures
D. Evaluating the appropriateness of management's going concern assessment

Answer: D

CA Final Advanced Audit Questions on Professional Ethics

Professional ethics formed another part of the May 2026 MCQ section. One question considered whether a practising Chartered Accountant could accept a Whole-time Director position in an educational trust.

Q9. Whole-time Director Position

CA Anaya, a partner in practice, receives an offer to become a Whole-time Director of a non-profit educational trust. She does not have a substantial financial interest in the trust.

What is the appropriate requirement?

A. She must resign from the partnership before accepting the position.
B. She can accept the role without informing the Council because the entity is a non-profit organisation.
C. She can accept the position only after obtaining specific and prior approval of the Council.
D. General permission applies if she informs the Council within 30 days.

Answer: C

CA Final Advanced Auditing MCQs 2026 on BRSR

The third case scenario dealt with Green-Horizon Infrastructure Ltd. The company was a listed entity and had memberships in industry associations. It had also provided inputs relating to legislative changes.

Q10. BRSR Principle-wise Disclosures

How should the information relating to industry association memberships and inputs provided on legislative matters be classified under BRSR?

A. Both are Leadership Indicators and require mandatory disclosure.
B. Membership is a Leadership Indicator with optional disclosure, while policy inputs are Essential Indicators with mandatory disclosure.
C. Membership is an Essential Indicator with optional disclosure, while policy inputs are Leadership Indicators with mandatory disclosure.
D. Membership is an Essential Indicator with mandatory disclosure, while policy inputs are Leadership Indicators with optional disclosure.

Answer: D

Topics Covered in CA Final Advanced Auditing MCQs 2026

The May 2026 MCQs covered multiple areas from Advanced Auditing, Assurance and Professional Ethics. Students preparing for the next attempt should revise the concepts along with their practical application.

Important areas include:

• SA 220 and Engagement Quality Control Review

• SA 250 and laws and regulations

• CARO 2020

• SA 560 and subsequent events

• SA 620 and auditor's expert

• Digital auditing and social engineering

• SA 402 and service organisations

• SA 610 and internal auditors

• Professional ethics and Council regulations

• BRSR and Principle 7

• BRSR assurance

• Forensic accounting

• Consolidated financial statements

• Ind AS 10 and subsequent events

• Bank audit and NPA classification

• Government and parliamentary audit