JAIIB Exam 2025 – AFM Important Questions MCQs Quiz-11

05/03/2025

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JAIIB Exam 2025 AFM Important Questions MCQs Quiz-11

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB AFM MCQ-based quizzes on a regular basis. You can attempt the quizzes regularly to prepare for the upcoming JAIIB exam. The quizzes will be provided module-wise and unit-wise. You can attempt the JAIIB AFM quizzes from the links below and improve your preparation by practicing regularly. These quizzes will help you boost your score in the JAIIB exam and guide you to clear the exam on your first attempt.

Q.1 Which of the following statements best reflects the role of audit as defined in An Introduction to Indian Government Accounts and Audit and its alignment with the Companies Act, 2013?
A. Audit primarily serves as a tool for internal financial control, ensuring that company executives have complete discretion over financial decisions without external oversight.
B. Audit acts as a safeguard against financial irregularities, ensuring that accounts accurately represent financial facts and expenditures comply with principles of regularity and propriety, as mandated by the Companies Act, 2013.
C. The Companies Act, 2013 considers audit an optional function, allowing companies to decide whether financial statements require independent verification.
D. The role of an auditor, as defined in Indian government accounts, is strictly limited to government institutions and does not extend to corporate entities under the Companies Act, 2013.

Q.2 Which of the following statements best reflects the impact of Computer Aided Audit Techniques (CAATs) on modern auditing?
A. CAATs have eliminated the need for auditors to evaluate internal controls and accounting systems, as computerized data processing ensures accuracy and reliability.
B. CAATs have replaced traditional auditing entirely, making manual auditing techniques obsolete and eliminating the need for professional judgment in audit procedures.
C. The introduction of CAATs has removed all inherent limitations of auditing, ensuring that auditors can examine every transaction and provide absolute assurance rather than just an opinion.
D. The use of CAATs has transformed audit procedures from manual verification (‘ticks’) to digital analysis (‘clicks’), enabling auditors to conduct more efficient and effective audits within a computerized environment.

Q 3 Which of the following statements best describes the role of Internal Audit in banks as emphasized by the Reserve Bank of India (RBI)?
A. A strong Internal Audit function is essential for enhancing the effectiveness of a bank’s internal control system by proactively identifying emerging risks and ensuring appropriate mitigation measures are in place.
B. Internal Audit in banks primarily serves as a post-mortem exercise, reviewing past transactions without actively contributing to risk identification or internal control improvements.
C. The role of Internal Audit in banks is limited to ensuring regulatory compliance and does not extend to assessing risk management frameworks or internal control mechanisms.
D. With advancements in banking technology, the need for an Internal Audit function in banks has significantly reduced, as automated systems now provide complete control over financial risks.

Q.4 Which of the following statements best describes the independence and authority of the internal audit function in a bank?
A) The Head of Internal Audit (HIA) must report only to the business verticals to ensure practical insights.
B) The HIA should be a senior executive with the authority to communicate with any staff member and access all necessary records.
C) The HIA’s role should be rotational, and they must not serve for more than one year.
D) The internal audit function should have limited access to confidential records to prevent misuse.

Q.5 What is the recommended minimum tenure for the appointment of the Head of Internal Audit (HIA) in banks where internal audit is not a specialized function?
A) One year
B) Two years
C) Three years
D) Five years

Q.6 Which of the following best describes the purpose of Concurrent Audit in banks?
A) To replace the statutory audit by ensuring that all transactions are verified annually.
B) To examine transactions as they occur or as close to their occurrence as possible.
C) To perform a one-time audit at the end of the financial year to detect irregularities.
D) To review financial statements after they are finalized by the bank’s management

Q.7 Which of the following activities is NOT a primary focus of Concurrent Audit in banks?
A) Checking daily maximum cash balance adherence compliance.
B) Ensuring KYC norms are followed.
C) Performing statutory audit procedures for financial reporting.
D) Verifying proper documentation of new loan disbursements.

Q.8 What is one of the primary objectives of Internal Audit in banks?
A) To replace statutory audits conducted by external agencies.
B) To ensure public confidence by detecting frauds, errors, and irregularities.
C) To focus solely on financial reporting without considering governance risks.
D) To conduct one-time audits at the end of the financial year.

Q.9 Which of the following is NOT a key aspect of Internal Audit in banks?
A) Evaluating and improving the effectiveness of risk management.
B) Conducting independent risk-based internal audit procedures.
C) Verifying statutory compliance for annual tax filings.
D) Analyzing financial information using non-financial data

Q.10 What is the primary objective of Information Systems (IS) Audit in banks?
A) To ensure that statutory audits include IT-related controls and compliance.
B) To independently assess the effectiveness of internal controls in managing IT risks.
C) To replace internal audit functions with a focus solely on cybersecurity.
D) To conduct periodic checks on IT hardware without considering software risks

Q.11 According to RBI guidelines, which of the following is NOT a key focus area of Information Systems (IS) Audit in banks?
A) Business Continuity Planning
B) Cyber Fraud Prevention
C) Customer Awareness & Legal Aspects
D) Physical Cash Management

Q.12 Which of the following is a primary benefit of using Computer-Assisted Audit Techniques (CAATs) in IS Audit?
A) Reducing the need for internal audits by externalizing all IT-related functions.
B) Enhancing audit efficiency and effectiveness, particularly in critical financial and regulatory areas.
C) Replacing human auditors entirely with automated audit software.
D) Limiting audit procedures to manual verification of financial statements

Q.13 Which of the following is a primary focus of Statutory Audit in banks?
A) Conducting a detailed review of every banking transaction.
B) Verifying compliance with statutory norms like CRR, SLR, and Priority Sector Lending (PSL).
C) Replacing concurrent and internal audits by independently reviewing all daily transactions.
D) Auditing only the IT systems and cybersecurity framework of the bank

Q.14 Which statement is NOT true about Statutory Audit in banks?
A) It is mandated by the Banking Regulation Act, 1949.
B) It is conducted by a Statutory Auditor to independently verify financial statements.
C) It examines all intricate banking transactions in detail.
D) It relies on reports from concurrent and internal audits for test checking

Q.15 Which of the following statements is correct regarding the appointment of Statutory Auditors in banks?
A) The Reserve Bank of India (RBI) directly appoints statutory auditors for all banks in India.
B) Statutory auditors for Private Sector Banks are appointed by the Board of Directors.
C) Statutory auditors for Public Sector Banks are appointed by their Board of Directors as per RBI guidelines.
D) The Institute of Chartered Accountants of India (ICAI) alone prepares the panel of auditors for banks

Q.16 What is the primary objective of Revenue Audit in banks?
A) To review the bank’s compliance with statutory liquidity and capital adequacy norms.
B) To identify cases of income leakages, including leakage of interest and other charges.
C) To examine all financial transactions in detail for fraud detection.
D) To replace internal and concurrent audits by conducting a full financial review

Q.17 Which of the following statements best describes the purpose of Stock and Receivables Audit in banks?
A) To ensure that the stock and book debt statements submitted by borrowers accurately reflect their financial position.
B) To conduct an overall financial audit of all borrower accounts, regardless of size.
C) To replace statutory and concurrent audits by focusing solely on loan disbursement verification.
D) To evaluate the bank’s internal stock management and inventory control processes

Q.18 What is the primary objective of a Forensic Audit in banking?
A) To ensure compliance with statutory financial reporting standards.
B) To verify the accuracy of stock and book debt statements of borrowers.
C) To detect fraud, misrepresentation, and financial irregularities for legal proceedings.
D) To evaluate the effectiveness of a bank’s internal control systems

Q.19 What is the main objective of a Management Audit in banks?
A) To detect financial fraud and irregularities for legal proceedings.
B) To assess compliance with statutory banking regulations and guidelines.
C) To evaluate the efficiency of management in resource utilization, strategic planning, and operations.
D) To verify the accuracy of financial statements and accounting records

Q.20 What is the primary purpose of a Tax Audit, including GST Audit, in banks?
A) To verify the accuracy of tax returns and ensure compliance with tax laws.
B) To assess the efficiency of the bank’s management and resource utilization.
C) To detect fraud and financial misrepresentation for legal proceedings.
D) To evaluate the effectiveness of internal controls and risk management policies