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JAIIB AFM Unit 11 — Bank Audit and Inspection: Free MCQs with Explanations

By Swarnakshi Jha (ex-banker) · Updated 20 September 2026 · Paper 3 of the November 2026 cycle (28 November 2026)

This page is a free slice of our JAIIB AFM question bank for Unit 11 — Bank Audit and Inspection (Module A — Basic Accounting and Finance). The Mock Centre holds 54 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.

AFM · Module A54 MCQs in the Mock Centre5 free belowPaper on 28 November 2026

Key facts examiners test from this unit

  1. Audit = "an instrument of financial control" (CAG); objective shifted from 'true and correct' to 'true and FAIR'; auditor only expresses an OPINION (inherent limitations).
  2. Chapter X, Companies Act 2013 = auditors; CAATs moved audit from 'ticks' to 'clicks'.
  3. RBIA: introduced 27 Dec 2002, supplemented 7 Jan 2021; audit of the MANAGEMENT of risk; branch + corporate levels; BCBS & IIA standards.

5 free practice questions — tap an option

Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.

Question 1 of 5
According to the Comptroller & Auditor General (CAG) of India, audit is:
Why (b): CAG: audit is 'an INSTRUMENT OF FINANCIAL CONTROL' — a safeguard against extravagance, carelessness or fraud in realising and using money/assets.
Question 2 of 5
The incidental objectives of auditing are:
Why (b): Incidental objectives: the DETECTION and PREVENTION of errors AND frauds.
Question 3 of 5
Internal Audit is generally undertaken by:
Why (b): Internal audit is generally by the BANK'S OWN STAFF (with some CA firms) — books' accuracy plus, in banks, fraud detection invariably included.
Question 4 of 5
The statutory audit mainly focuses on:
Why (b): Statutory audit focuses on LOANS & ADVANCES, PSL compliance, CRR, SLR, CRAR and statutory norms — relying on concurrent/internal audits and test checks for transaction detail.
Question 5 of 5
RBI encourages banks to adopt the international standards on internal audit issued by:
Why (a): RBI encourages banks to adopt the internal-audit standards of the BCBS AND THE IIA — the Basel Committee and the Institute of Internal Auditors.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
True and correctTrue and fairOld arithmetical standard vs modern fair-representation standard
Concurrent auditInternal auditExternal CAs, monthly, with the transaction vs bank's own staff, periodic
Practise all 54 questions on Unit 11. The free demo opens a slice of every subject with the same explanations; the AFM Online-only pass unlocks all 1,681 AFM questions, the full and module mocks, Smart Revision and the Readiness Score for one year (₹1,299). Not sure where you stand? Take the free 10-question test first.
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← Unit 10: Back Office Functions and Handling Unreconciled Entries in Banks · Unit 12: Balance Sheet Equation → · All AFM units · JAIIB 2026 guide

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Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. Regulatory figures verified as of September 2026; verify from official sources before relying on them in practice.