Chapter 13 · 7 hours
Internal Control and Auditing
SEE past exam questions
Past questions and answers
7 questions set from this chapter, 2 of them more than once. Most repeated first.
- Asked 2 times
- 2082 Chaitra · Set A · 5 marks
- 2082 Grade Increment · 5 marks
Write any five differences between internal audit and external audit.
Answer
Differences between Internal Audit and External Audit
| S.N. | Basis | Internal Audit | External Audit |
|---|---|---|---|
| 1. | Appointment | Appointed by the management of the organisation. | Appointed by the owners/shareholders or as required by law. |
| 2. | Objective | To check and improve the internal control system and detect errors and frauds early. | To verify the true and fair view of the financial statements. |
| 3. | Scope | Scope is decided by the management; it covers the whole organisation as per need. | Scope is fixed by law or statute; it mainly covers financial statements. |
| 4. | Conducted by | Conducted by employees of the organisation (internal audit staff). | Conducted by independent auditors outside the organisation. |
| 5. | Reporting | Reports to the management (board or top-level management). | Reports to the shareholders or the appointing authority. |
| 6. | Independence | Not fully independent, as auditors are employees of the organisation. | Fully independent of the organisation. |
| 7. | Frequency | Conducted continuously throughout the year. | Conducted periodically, usually once a year. |
(Any five of the above may be written.)
Answer checked by Claude Sonnet · Oct 21, 2026
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- Asked 2 times
- 2081 Chaitra · Set B · 5 marks
- 2082 Pre-board · PABSON Set B · 1 mark
What is internal control? Write any four objectives of it. (1+4)
Answer
Internal control is the whole system of checks, controls, rules and procedures adopted by a business to safeguard its assets, ensure accuracy and reliability of accounting records, prevent and detect errors and frauds, and promote operational efficiency. It covers both accounting controls (such as vouchers, journals, ledgers, trial balance) and administrative controls (such as rotation of duties, supervision, physical protection of assets).
Four objectives of internal control:
- Safeguarding assets — to protect cash, stock, furniture, machinery and other assets from theft, misuse, damage or misappropriation.
- Ensuring accurate and reliable accounting records — to make sure that all transactions are recorded correctly, completely and in time, so that the books show the true position of the business.
- Preventing and detecting errors and frauds — to stop mistakes and dishonest acts from occurring, and to trace them early if they do occur, through checks like division of work and periodic verification.
- Promoting operational efficiency and adherence to policy — to ensure that work is done systematically, economically and according to the rules and plans laid down by the management.
Answer checked by Claude Sonnet · Oct 21, 2026
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- 2082 Chaitra · Set B · 1 mark
Who does the internal audit of government office?
Answer
Financial Comptroller General Office
The internal audit of government offices in Nepal is carried out by the Financial Comptroller General Office (FCGO), while the Auditor General performs the external audit of government revenues and expenditures.
Answer checked by Claude Sonnet · Oct 21, 2026
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- 2082 Chaitra · Set B · 1 mark
Write any two importance of auditing.
Answer
(1) It helps to detect and prevent errors and frauds in the books of accounts.
(2) It increases the reliability of financial statements, as they are certified by an independent auditor and thus trusted by owners, investors, and lenders.
Answer checked by Claude Sonnet · Oct 21, 2026
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- 2081 Chaitra · Set A · 5 marks
Write any five differences between internal and final audit.
Answer
Differences between Internal Audit and Final Audit
| S.N. | Basis | Internal Audit | Final Audit |
|---|---|---|---|
| 1 | Meaning | An audit conducted continuously throughout the year by the internal staff of the organisation to check the internal control system. | An audit conducted at the end of the accounting year by an independent external auditor to verify the final accounts. |
| 2 | Appointment | Appointed by the management of the organisation. | Appointed by the shareholders (or as per law) and conducted by a qualified external auditor. |
| 3 | Objective | To detect errors and frauds early and to ensure that the internal control system works properly. | To verify the true and fair view of the financial position and profit/loss shown in the final accounts. |
| 4 | Scope | Limited to the internal matters of the organisation as directed by the management. | Wide in scope; covers the whole financial year and all books of accounts as required by law. |
| 5 | Time of Audit | Conducted continuously or periodically during the whole accounting year. | Conducted once a year, after the preparation of the final accounts. |
| 6 | Report | Report is submitted to the management for internal use. | Report is submitted to the shareholders and is generally made public. |
| 7 | Auditor's Independence | The auditor is an employee of the organisation, so independence is limited. | The auditor is an independent outsider, so independence is maintained. |
(Any five of the above differences may be written.)
Answer checked by Claude Sonnet · Oct 21, 2026
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- CDC Model Question, Office Operation and Accountancy · 1 mark
Which is the apex auditing body in Nepal?
Answer
The Office of the Auditor General is the apex auditing body of Nepal. It is a constitutional body that audits the accounts of all government offices and other public bodies and submits its report to the President.
Answer checked by Claude Sonnet · Oct 21, 2026
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- CDC model question
What is government audit? Write any three importance of government audit.
Answer
Government audit is the examination of the accounts, records, transactions and financial statements of government offices by an authorised auditor, to find whether public money was collected and spent legally, honestly and economically.
Three importance of government audit:
- Controls misuse of public funds: It checks that money is spent according to law and budget, which reduces fraud, waste and irregularities.
- Ensures accountability: Offices and officials become answerable for their financial actions, and this builds public trust.
- Supports reform and decision-making: Audit reports point out weaknesses in financial management and give suggestions to improve the system.
Answer checked by Claude Sonnet · Oct 21, 2026
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Questions from SEE 2082 Office Operation and Accountancy, RE-3011'A' (Board exam, Chaitra 2082 (scan); Set A is pages 1-6 of the combined PDF), SEE 2082 Office Operation and Accountancy, RE-3011'B' (Board exam, Chaitra 2082 (scan); Set B is pages 7-12 of the combined PDF), SEE 2081 Office Operation and Accountancy, RE-3011'A' (Board exam, 2081 (scan)), SEE 2081 Office Operation and Accountancy, RE-3011'B' (Board exam, 2081 (scan)), CDC Model Question, Office Operation and Accountancy (CDC model paper, 5 images (_-_1 to _-_5)), SEE Grade Increment 2082 (2026) Office Operation and Accountancy, GI-3011 (Board exam (Grade Increment), 2082; six page scans, bilingual, 75 marks), SEE 2078 (2022) Optional II Office Operation and Accountancy (Board exam, 2078, old course (2 h 15 m, 5x1 + 8x5 + 3x10); four page scans. The page calls it a model; edusanjal lists the same paper as the SEE 2078 past paper. Only questions that fit the current outline are taken), SEE 2075 (2019) Optional II Office Management and Account, RE-301 (Board exam, 2075, old course (2 h 15 m); typed text plus table image. Only questions that fit the current outline are taken), SEE 2074 (2018) Optional II Office Management and Account, RE-301 (Board exam, 2074, old course (2 h 15 m); typed text plus table image. Only questions that fit the current outline are taken), CDC model question (Auditing, 75 marks, 2 h 15 m) (CDC model paper for the Auditing subject (earlier course), posted as an 'Account 2080' model; only the questions that fit the current Accountancy outline are taken), PABSAN SEE Pre-Board 2082 Office Practice and Accountancy (Pre-board exam of the National Private and Boarding Schools' Association Nepal (PABSAN), 2082; six page scans), PABSON SEE Pre-Board 2082 Office Practice and Accounting, Set B (3011'B') (Pre-board exam of PABSON, 2082-10-29; six page scans), PABSON SEE Pre-Board 2082 Office Management and Account, Set E (3011'E') (Pre-board exam of PABSON, 2082-10-22; seven page scans) and PABSON SEE Preparatory Examination 2082 Office Practice and Accountancy (3011) (Preparatory (pre-board) exam of PABSON, 2082-10-22; six page scans). Answers are written for this site; check them against your class notes.
Chapter titles and hours from the official syllabus ↗