ABSTRACT
This set of questions for the MKAGUZI
DARAJA LA II (Accounting and Auditing) aptitude test focuses on practical,
job-related problem-solving situations that auditors are likely to encounter in
real work settings. The questions assess analytical thinking, ethical judgment,
and professional decision-making in auditing, accounting, public finance
management, and internal control environments. Each scenario is designed to
test the candidate’s ability to apply auditing standards, detect
irregularities, ensure compliance, and maintain professional integrity under
realistic and sometimes conflicting conditions.
Prepared by: Accountants and Auditors
Compiled by Johnson Yesaya Mgelwa.
A lawyer stationed in Dar-es-salaam.
0628729934.
Date: June 1, 2025
Dear applicants,
This collection of questions and answers
has been prepared to help all of you to understand the key areas tested during
the interview. The goal is to provide a useful, and practical study guide so you
can all perform confidently and fairly in the selection process. I wish you the
best of luck, and may this resource support you in achieving success!
Warm regards,
Johnson Yesaya Mgelwa
For Personal Use by Applicants Preparing
for Mkaguzi Daraja la II (Ukaguzi wa Hesabu) at – the National Audit Office
(NAOT).
ALL
QUESTIONS ARE COMPILED TOGETHER.
1.
Which
of the following best describes the primary objective of a performance
(value-for-money) audit in the public sector?
A.
Verify amounts recorded in financial statements against source documents
B. Assess whether resources have been used economically, efficiently, and
effectively
C. Ensure compliance with tax laws and calculation of tax liabilities
D. Test internal controls over financial reporting for material misstatements
Answer – B. Assess whether resources have
been used economically, efficiently, and effectively
Rationale: A performance (value-for-money) audit in
the public sector focuses on assessing economy (minimizing cost), efficiency
(maximizing output from inputs), and effectiveness (achieving intended
objectives), rather than purely checking financial statement amounts, tax
computation, or only controls for reporting — therefore option B best captures
the primary objective.
2.
Under
Tanzanian public procurement regulations, which document typically establishes
the technical and financial evaluation criteria before tender opening?
A.
Contract performance bond
B. Invitation to bid (ITB)
C. Evaluation plan or evaluation criteria matrix
D. Notification of award
Answer – C. Evaluation plan or evaluation
criteria matrix
Rationale: Procurement best practice and Tanzanian
procurement regulations require that evaluation criteria and methodology be set
out in an evaluation plan or matrix prior to bid opening so bids are evaluated
consistently and transparently; the ITB informs bidders, but the detailed
evaluation plan is the formal internal document—thus C is correct.
3.
Which
accounting standard concept requires matching expenses with the revenues they
help generate in the same period?
A.
Prudence concept
B. Accrual concept
C. Matching concept
D. Consistency concept
Answer – C. Matching concept
Rationale: The matching concept explicitly requires
that expenses be recognized in the same accounting period as the related
revenues so profit measurement is accurate; while accrual accounting supports
this, the specific concept named for matching expenses to revenues is the
matching concept, so C is correct.
4.
When
auditing a government grant to a local authority, which audit evidence is least
persuasive on its own for verifying the grant was used for the intended
purpose?
A.
Bank statements showing transfer of funds to local authority account
B. Signed copies of contracts for projects funded by the grant
C. Management’s written representation stating funds were used correctly
D. Project inspection reports showing physical progress of activities
Answer – C. Management’s written
representation stating funds were used correctly
Rationale: While management representations are a
form of audit evidence, they are less persuasive on their own because they are
subjective and may be biased; objective documents such as bank statements,
contracts, and inspection reports provide stronger corroboration, hence C is
least persuasive alone.
5.
Which
of the following is a key duty of the Controller and Auditor General under the
Tanzanian Constitution concerning public accounts?
A.
Approve government budgets submitted by ministries
B. Audit and report on public accounts and the use of public funds
C. Set tax rates for government revenue collection
D. Authorize public procurement awards above statutory thresholds
Answer – B. Audit and report on public
accounts and the use of public funds
Rationale: The Controller and Auditor General’s
constitutional role is to audit public accounts and report on government
expenditures and use of public funds to promote accountability; approving
budgets, setting tax rates, or authorizing procurement awards are executive or
legislative functions, not the CAG’s audit role, so B is correct.
6.
In
internal control terms, segregation of duties primarily reduces the risk of:
A.
Inefficient procurement processes
B. Unauthorized changes to IT code
C. Errors and fraud due to concentration of
incompatible tasks
D. Delays in financial reporting
Answer – C. Errors and fraud due to
concentration of incompatible tasks
Rationale: Segregation of duties separates
authorization, custody, recording, and reconciliation functions so no single
individual has conflicting responsibilities that could enable errors or conceal
fraud; while it may indirectly affect other things, its primary risk reduction
is against errors and fraud from concentrated tasks—so C is correct.
7.
Which
statement about IPSAS (International Public Sector Accounting Standards) is
correct for government financial reporting?
A.
IPSAS are legally binding worldwide and replace national law automatically
B. IPSAS focus mainly on corporate profit measurement methods
C. IPSAS provide guidance to improve public sector financial reporting
transparency
D. IPSAS require consolidated private sector financial statements
Answer – C. IPSAS provide guidance to
improve public sector financial reporting transparency
Rationale: IPSAS are standards developed to improve
transparency and comparability of public sector financial reporting and assist
governments in presenting reliable financial information; they are not
automatically legally binding everywhere, do not focus on corporate profit per
se, and do not mandate private sector consolidation—thus C is correct.
8.
During
an audit, which analytical procedure would be most appropriate to identify
unusual payroll activity?
A.
Reviewing payroll bank reconciliations for arithmetic accuracy
B. Comparing current month payroll expense to budget and prior months for
significant variances
C. Verifying individual timecards against employment contracts only
D. Observing the payroll department’s office layout
Answer
– B. Comparing current
month payroll expense to budget and prior months for significant variances
Rationale: Analytical procedures compare expected
relationships (e.g., payroll trends vs budget and prior periods) to detect
unusual or unexpected variances that warrant further investigation; reconciling
or verifying timecards are substantive tests but trend comparison is most
efficient for identifying anomalies—hence B is correct.
9.
Which
of this best reflects the principle of “materiality” in audit planning?
A.
Auditors must test all transactions regardless of size
B. Only transactions above the statutory tax threshold are relevant
C. Auditors focus on matters that could influence users’ decisions due to their
significance
D. Materiality requires disclosure of every related-party transaction
Answer – C. Auditors focus on matters
that could influence users’ decisions due to their significance
Rationale: Materiality is about significance:
auditors concentrate on information or misstatements that could reasonably
influence the economic decisions of users; it does not demand testing every
transaction nor only those above tax thresholds, and it does not automatically
require disclosure of every related-party transaction irrespective of
significance—so C is correct.
10.
Under
National Audit Office procedures, which document would an auditor most likely
prepare to record audit findings and recommended corrective actions?
A.
Audit engagement letter B. Management
representation letter C. Bank deposit slip D.
Audit query or audit memo (audit report point)
Answer – D. Audit query or audit memo
(audit report point)
Rationale: Audit queries, memos, or report points
document specific findings, support, and recommended corrective actions
communicated to management; engagement letters set the terms before work,
representation letters record management statements, and deposit slips are
transactional—therefore D is the correct document type.
11.
Which
of the following is the most appropriate auditor response when evidence
indicates potential fraud affecting public funds?
A.
Assess the implications, gather more evidence, inform appropriate levels of
management, and report as required by law and audit standards
B. Immediately resign from the assignment without reporting C.
Ignore and continue the audit as planned to avoid disruption
D. Return funds to management and close the audit file
Answer – A. Assess the implications,
gather more evidence, inform appropriate levels of management, and report as
required by law and audit standards
Rationale: On detecting potential fraud, auditors
must investigate further to obtain sufficient appropriate evidence, communicate
with appropriate management and those charged with governance as required, and
report to relevant authorities per legal and professional obligations;
ignoring, resigning without reporting, or returning funds are inappropriate—so A
is correct.
12.
For
public-sector audits, which ratio would be most indicative of a local
government’s liquidity position?
A.
Debt-to-equity ratio
B. Current ratio (current assets / current liabilities)
C. Gross profit margin
D. Return on assets
Answer – B. Current ratio (current assets
/ current liabilities)
Rationale: The current ratio, calculated as current
assets divided by current liabilities, measures short-term liquidity and the
ability to meet imminent obligations, which is relevant for local governments;
debt-to-equity, profit margin, and return on assets are less directly useful
for immediate liquidity assessment—hence B is correct.
13.
Which
tax concept is primarily concerned with the legal incidence of tax and who is
statutorily obliged to pay it to the authority?
A.
Economic incidence
B. Legal incidence
C. Tax neutrality
D. Tax base erosion
Answer – B. Legal incidence
Rationale: Legal incidence refers to who is legally
obligated to remit the tax to the tax authority (statutory payer), whereas
economic incidence concerns who ultimately bears the economic burden; tax
neutrality and base erosion relate to different tax policy issues—so B is
correct.
14.
When
testing procurement compliance, which of the following is the best single
control to verify that goods received were authorized?
A.
Presence of goods in storage during a site visit
C. Reviewing the supplier’s catalog prices only
B. Confirming supplier’s bank details D.
Matching purchase order, receiving report, and supplier
invoice before payment
Answer – D. Matching purchase order,
receiving report, and supplier invoice before payment
Rationale: The three-way match between purchase
order (authorization), receiving report (evidence of receipt), and supplier
invoice (payment claim) ensures that payments are made only for authorized and
received goods; single site presence, price checks, or bank detail
confirmations are insufficient alone—so D is correct.
15.
In
auditing computerized accounting systems, which control helps prevent
unauthorized changes to the accounting application?
A.
Segregation of duties in physical storekeeping
B. Application change management with restricted developer access and formal
approvals
C. Daily manual backups kept on an employee’s desk
D. Use of paper journals in parallel with the system
Answer – B. Application change management
with restricted developer access and formal approvals
Rationale: Application change management
controls (formal change requests, restricted developer access, testing, and
approvals) prevent unauthorized or incorrect modifications to the accounting
application; while backups and segregation help elsewhere, they do not by
themselves prevent unauthorized application changes—hence B is correct.
16.
Which
of the following is true regarding the auditor’s use of sampling in substantive
testing?
A.
Sampling always eliminates the need for professional judgment B. Sampling is
not permitted under international audit standards
C. Sampling can provide reasonable assurance but cannot provide absolute
assurance
D. Sampling guarantees detection of all fraud
Answer – C. Sampling can provide
reasonable assurance but cannot provide absolute assurance
Rationale: Audit sampling is a tool to obtain
sufficient appropriate evidence and provides reasonable (not absolute)
assurance because it examines a subset of items; it does not replace
professional judgment, is permitted, and cannot guarantee detection of all fraud—thus
C is correct.
17.
Under
public financial management, what is the main purpose of an Appropriation Act?
A.
To authorize the legal incurrence of government expenditure for a fiscal year B. To audit expenditure by the
Controller and Auditor General
C. To set interest rates for public debt instruments
D. To define audit procedures for local authorities
Answer – A. To authorize the legal
incurrence of government expenditure for a fiscal year
Rationale: An Appropriation Act is legislation
usually passed by parliament to legally authorize government spending
(allocations) for a particular fiscal year; it does not itself audit
expenditures, set interest rates, or define audit procedures—so A is correct.
18.
Which
ethical principle requires an auditor to avoid relationships or situations that
might impair objectivity or create a conflict of interest?
A.
Confidentiality
B. Professional competence
C. Independence and objectivity
D. Due care
Answer – C. Independence and objectivity
Rationale: Independence and objectivity
require auditors to be unbiased and free from conflicts that could affect
professional judgment; confidentiality, competence, and due care are important
but do not specifically address avoiding impairing relationships—so C is
correct.
19.
An
auditor discovers that a grant recipient recorded an expenditure twice in the
same period. Which assertion is primarily affected?
A. Existence
B. Valuation
C. Occurrence (or occurrence/accuracy)
D. Completeness
Answer – C. Occurrence (or
occurrence/accuracy)
Rationale: Duplicate recording is an
accuracy/occurrence issue — transactions are recorded but recorded incorrectly
or more than once, thereby affecting the occurrence/accuracy assertion;
completeness concerns missing items, existence is about whether assets exist,
and valuation is about amounts—so C is correct.
20.
Which
of the following best explains why auditors perform walkthroughs of a process?
A.
To prepare final audit opinion wording only
B. To gain an understanding of internal controls and confirm how transactions
are processed end-to-end
C. To replace detailed substantive testing entirely
D. To prepare tax returns for the auditee
Answer – B. To gain an understanding of
internal controls and confirm how transactions are processed end-to-end
Rationale: Walkthroughs are executed to understand
the flow of transactions and controls from initiation to recording, confirming
that the auditor’s knowledge of processes is accurate; they are not solely for
drafting opinions, do not replace all substantive testing, and are unrelated to
preparing tax returns—so B is correct.
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