1. The main objective of financial control in Panchayat Raj Institutions (PRIs) is —
A) To increase taxes
B) To ensure proper utilization of public funds
C) To reduce development works
D) To maintain political control
Answer: B
Explanation: Financial control ensures that funds are used economically, efficiently, and only for authorized purposes.
2. Financial control in Panchayats is exercised under which Act in Karnataka?
A) Karnataka Local Bodies Act, 1989
B) Karnataka Panchayat Raj Act, 1993
C) Karnataka Finance Act, 2000
D) RDPR Act, 2015
Answer: B
Explanation: The Karnataka Panchayat Raj Act, 1993 lays down procedures for budgeting, accounting, and auditing at all Panchayat levels.
3. The financial year for Panchayats runs from —
A) January to December
B) April to March
C) March to February
D) July to June
Answer: B
Explanation: All PRIs follow the Indian Government’s financial year – April 1 to March 31.
4. The authority responsible for maintaining Panchayat accounts is —
A) Panchayat Development Officer (PDO)
B) MLA
C) Gram Sabha
D) CEO, Zilla Panchayat
Answer: A
Explanation: The PDO keeps the cashbook, ledgers, and prepares financial statements for audits.
5. Financial control is mainly achieved through —
A) Budgeting, accounting, and auditing
B) Political debates
C) Public rallies
D) Election campaigns
Answer: A
Explanation: These three pillars ensure financial discipline and transparency.
6. The budget of a Gram Panchayat is prepared by —
A) Panchayat Development Officer
B) President of Panchayat
C) Gram Sabha
D) Secretary of Zilla Panchayat
Answer: A
Explanation: The PDO prepares the draft budget which is approved by the Gram Panchayat and later presented before the Gram Sabha.
7. The Panchayat budget must be approved by —
A) State Government
B) Gram Sabha
C) Zilla Panchayat
D) Deputy Commissioner
Answer: B
Explanation: The Gram Sabha approves the Panchayat’s annual budget ensuring people’s participation in financial planning.
8. Financial control prevents —
A) Misuse and misappropriation of funds
B) Development of rural areas
C) Local employment
D) Scheme implementation
Answer: A
Explanation: Proper financial control ensures funds are used for genuine and legal purposes.
9. Which department supervises the financial control system of Panchayats?
A) RDPR Department
B) Revenue Department
C) Urban Development Department
D) Election Commission
Answer: A
Explanation: The Rural Development and Panchayat Raj (RDPR) Department ensures strict financial control and accountability.
10. What is the primary source of income for Gram Panchayats?
A) Property tax, grants, and fees
B) Sale of land
C) Fines from courts
D) Political funds
Answer: A
Explanation: Panchayats raise funds from local taxes, government grants, and service fees.
11. Which of the following is a major grant-in-aid to Panchayats?
A) Central Finance Commission grant
B) Local MLA fund
C) Industrial development fund
D) Education fund
Answer: A
Explanation: Central Finance Commission provides devolution of funds directly to Panchayats for local governance.
12. The financial control system in Panchayat Raj aims for —
A) Fiscal discipline and accountability
B) Political autonomy
C) Central interference
D) Privatization
Answer: A
Explanation: It enforces rule-based spending and transparent management of public money.
13. The financial audit of Panchayats ensures —
A) Prevention of financial irregularities
B) Political stability
C) Legal reforms
D) Industrial promotion
Answer: A
Explanation: Audit detects misuse, errors, and ensures corrective action.
14. The cashbook in Panchayats records —
A) Daily receipts and payments
B) Land ownership
C) Population data
D) Meeting resolutions
Answer: A
Explanation: The cashbook maintains day-to-day transactions for transparency.
15. Which of the following statements is true about Panchayat financial control?
A) It is a continuous process
B) It is done only once a year
C) It is voluntary
D) It is optional
Answer: A
Explanation: Financial control is a continuous process through budgeting, accounting, and periodic audit.
16. Who verifies the Panchayat’s expenditure at the district level?
A) CEO, Zilla Panchayat
B) Deputy Commissioner
C) RDPR Minister
D) Panchayat President
Answer: A
Explanation: The CEO oversees all financial transactions under their jurisdiction.
17. Which of the following is not an expenditure of Panchayats?
A) Salaries of staff
B) Public health and sanitation
C) Agricultural programs
D) Private industry promotion
Answer: D
Explanation: Panchayats are not responsible for private business promotion.
18. Financial statements are prepared —
A) Monthly and annually
B) Once in five years
C) Before every election
D) Randomly
Answer: A
Explanation: Monthly and annual financial reports are prepared for transparency and audit purposes.
19. The Appropriation Register in Panchayats is used for —
A) Monitoring budgeted expenditure
B) Recording land transactions
C) Political discussions
D) Voter lists
Answer: A
Explanation: It helps to ensure that spending remains within sanctioned limits.
20. Which body has the ultimate power to control Panchayat finances?
A) State Government
B) Gram Sabha
C) Zilla Panchayat
D) CEO
Answer: A
Explanation: The State Government issues rules and guidelines governing local body finances.
21. Who conducts the internal audit of Gram Panchayats?
A) Taluk-level audit officer
B) Private auditor
C) MLA office
D) Panchayat president
Answer: A
Explanation: Internal audits are conducted by government-appointed auditors at the Taluk or district level.
22. The External Audit of Panchayat finances is carried out by —
A) State Audit and Accounts Department
B) Panchayat staff
C) NGOs
D) Local MLA
Answer: A
Explanation: The State Audit and Accounts Department conducts external audits to verify financial integrity.
23. The Annual Financial Statement includes —
A) Receipts and payments summary
B) Weather data
C) Election reports
D) Political resolutions
Answer: A
Explanation: It shows a summary of all receipts and payments of the financial year.
24. In financial control, the term “Vouching” means —
A) Verification of transactions with supporting documents
B) Issuing orders
C) Collecting taxes
D) Calling meetings
Answer: A
Explanation: Vouching ensures that every entry in accounts has valid documentary proof.
25. The Panchayat’s accounts are written in which prescribed form?
A) Panchayat Accounting Manual
B) Rural Development Manual
C) Treasury Rules
D) Central Finance Code
Answer: A
Explanation: Accounts follow the Karnataka Panchayat Accounting Manual issued by RDPR.
26. The word “Audit” originates from —
A) Latin
B) Greek
C) Sanskrit
D) French
Answer: A
Explanation: Derived from the Latin word “Audire”, meaning “to hear,” reflecting the practice of hearing financial statements.
27. The main objective of audit is —
A) Detection and prevention of frauds and errors
B) Political monitoring
C) Data entry
D) Public awareness
Answer: A
Explanation: Audit ensures correctness, legality, and accuracy of financial records.
28. Who appoints auditors for Panchayat Raj Institutions in Karnataka?
A) State Government
B) Zilla Panchayat
C) Gram Sabha
D) CEO
Answer: A
Explanation: The State Government appoints auditors under the Karnataka Panchayat Raj Act.
29. The financial audit of PRIs is done —
A) Annually
B) Quarterly
C) Once in five years
D) Randomly
Answer: A
Explanation: Audits are conducted annually to assess yearly financial performance.
30. An audit objection arises when —
A) Rules or procedures are violated
B) Accounts are perfect
C) Expenditure is sanctioned
D) Funds are unutilized
Answer: A
Explanation: It means a financial irregularity or non-compliance identified by the auditor.
31. Who prepares the “Audit Report” of Panchayat accounts?
A) Appointed Government Auditor
B) Gram Sabha
C) MLA
D) Panchayat President
Answer: A
Explanation: The Audit Report is prepared by a Government auditor appointed by the State Government, highlighting financial irregularities and suggesting corrections.
32. The audit report of a Gram Panchayat is submitted to —
A) CEO, Zilla Panchayat
B) Taluk Panchayat
C) State Audit Department
D) All of the above
Answer: D
Explanation: Audit reports move through all administrative levels — from Gram Panchayat to Taluk and Zilla Panchayat, then to the State Audit Department for record and follow-up.
33. If financial irregularities are found, who can take disciplinary action?
A) CEO, Zilla Panchayat
B) Deputy Commissioner
C) Commissioner, RDPR
D) All of the above
Answer: D
Explanation: Depending on the level of irregularity, disciplinary action can be taken by CEO, Deputy Commissioner, or Commissioner, RDPR.
34. Which document records day-to-day financial transactions of a Panchayat?
A) Cash Book
B) Audit Register
C) Budget File
D) Voucher File
Answer: A
Explanation: The Cash Book records all receipts and payments on a daily basis to maintain financial transparency.
35. Who verifies whether expenditure is as per budgeted provision?
A) Auditor
B) Executive Officer
C) CEO
D) PDO
Answer: A
Explanation: The auditor checks whether expenditures have been incurred only for approved items within the budget limit.
36. Financial control ensures —
A) Economy, efficiency, and effectiveness
B) Political control
C) Delay in works
D) Reduction in funds
Answer: A
Explanation:
Known as the “3Es,” these are the goals of financial management — economy, efficiency, effectiveness.
37. What is an “Audit Trail”?
A) A record of all financial transactions
B) A road map of rural works
C) List of pending projects
D) Election schedule
Answer: A
Explanation: An audit trail is a chronological record showing the source, flow, and authorization of financial transactions.
38. What is the main purpose of internal control?
A) To prevent and detect errors or fraud
B) To delay projects
C) To increase paperwork
D) To change policies
Answer: A
Explanation: Internal control is a preventive system ensuring accuracy and integrity in financial operations.
39. Which of the following is part of financial control?
A) Pre-audit and post-audit
B) Inspection of roads
C) Recruitment of staff
D) Conduct of meetings
Answer: A
Explanation: Pre-audit checks expenditure before payment, post-audit reviews expenditure after it occurs.
40. Who maintains the “Audit Objection Register”?
A) Panchayat Development Officer
B) Executive Officer
C) Zilla Panchayat Accountant
D) Auditor
Answer: A
Explanation: The PDO records all audit objections and the status of their compliance in this register.
41. The Panchayat Raj audit ensures compliance with —
A) Financial rules and Panchayat Raj Act
B) Political policies
C) Industrial standards
D) Tax laws only
Answer: A
Explanation: Audits ensure all financial operations adhere to the Panchayat Raj Act, 1993 and related rules.
42. When is an audit considered complete?
A) After all audit objections are resolved
B) When funds are exhausted
C) When new elections are held
D) When accounts are closed
Answer: A
Explanation: Audit completion occurs when all objections are clarified and compliance reports submitted.
43. Who certifies that Panchayat accounts are true and fair?
A) Auditor
B) Gram Sabha
C) Taluk Panchayat
D) Zilla Panchayat
Answer: A
Explanation: Only a qualified auditor can certify accounts as true and fair after thorough verification.
44. What does “Financial Misappropriation” mean?
A) Illegal use of public funds
B) Proper use of grants
C) Budget savings
D) Timely project completion
Answer: A
Explanation: It means diverting or using funds for unauthorized purposes — a serious financial irregularity.
45. Audit remarks requiring immediate correction are called —
A) Serious irregularities
B) Minor notes
C) Supplementary notes
D) Statistical data
Answer: A
Explanation: Serious audit remarks highlight violations of financial discipline needing urgent correction.
46. Financial audit in Panchayat Raj Institutions is mandatory under —
A) Article 243 of the Constitution
B) Article 21A
C) Article 32
D) Article 356
Answer: A
Explanation: Article 243 mandates accountability and audit of Panchayat finances by the State Legislature.
47. The 73rd Constitutional Amendment emphasizes —
A) Devolution of funds, functions, and functionaries
B) Central control
C) Political reservation only
D) Judicial reforms
Answer: A
Explanation: It ensures decentralization through transfer of funds and financial authority to Panchayats.
48. Financial rules for Panchayats are issued by —
A) State Government (RDPR)
B) Central Government
C) Election Commission
D) Zilla Panchayat
Answer: A
Explanation: The State RDPR Department prescribes accounting and audit rules.
49. The term “Post-Audit” refers to —
A) Audit after expenditure is incurred
B) Prepayment check
C) Audit before budget approval
D) Routine inspection
Answer: A
Explanation: It examines the legality and propriety of expenditure after it has been made.
50. The “Objection Statement” is —
A) A list of audit findings sent to Panchayat
B) Citizen complaint list
C) Record of development works
D) Budget proposal
Answer: A
Explanation: It details audit objections and is sent to the Panchayat for corrective action.
51. Audit findings are reviewed by which authority?
A) CEO, Zilla Panchayat
B) Gram Sabha
C) Auditor General
D) RDPR Commissioner
Answer: A
Explanation: The CEO examines audit findings and instructs Panchayats to correct irregularities.
52. The process of responding to audit objections is called —
A) Compliance
B) Explanation
C) Budget correction
D) Re-audit
Answer: A
Explanation: Compliance means providing explanation or proof to settle audit objections.
53. Who monitors compliance with audit reports?
A) CEO, Zilla Panchayat
B) State Audit Department
C) RDPR Commissioner
D) All of the above
Answer: D
Explanation: Monitoring is multi-level — local, district, and state authorities all track compliance.
54. What is the purpose of re-audit?
A) To verify whether earlier audit objections have been resolved
B) To delay projects
C) To create new objections
D) To audit only elections
Answer: A
Explanation: Re-audit confirms that corrective actions were taken on previous audit remarks.
55. Who maintains the “Stock Register” in a Panchayat?
A) PDO
B) Auditor
C) President
D) Accountant
Answer: A
Explanation:
The PDO records all items purchased and used, preventing loss or misuse.
56. Financial discipline in Panchayat Raj means —
A) Spending money according to rules and budget
B) Avoiding development
C) Political favoritism
D) Central control
Answer: A
Explanation: It ensures rule-based expenditure and avoidance of wastage.
57. The audit of Panchayat accounts ensures —
A) Legality, accuracy, and fairness
B) Political success
C) Publicity
D) Tax evasion
Answer: A
Explanation: Audit validates that financial statements are true and follow statutory requirements.
58. The final authority for financial audit in Karnataka is —
A) State Audit and Accounts Department
B) CAG of India
C) Lokayukta
D) RDPR Minister
Answer: A
Explanation: All Panchayat audits are under the State Audit and Accounts Department.
59. If a Panchayat fails to respond to audit reports, action is taken by —
A) CEO, Zilla Panchayat
B) Deputy Commissioner
C) RDPR Department
D) All of the above
Answer: D
Explanation: Non-compliance is handled at multiple administrative levels for accountability.
60. Audit objections pending over 3 years are called —
A) Long-pending audit paras
B) Closed files
C) Completed reports
D) Settled cases
Answer: A
Explanation: They indicate delayed action or unresolved financial irregularities.
61. “Social Audit” in Panchayat context means —
A) Public verification of projects and expenditures
B) Government secret audit
C) Private review
D) Political debate
Answer: A
Explanation: Citizens themselves examine development works to ensure transparency and participation.
62. Social audit of MGNREGA is done —
A) Twice a year
B) Once a year
C) Every five years
D) Never
Answer: A
Explanation: Social audit under MGNREGA is conducted twice annually by the Gram Sabha.
63. Who presides over social audit meetings?
A) Gram Sabha President
B) Local villagers’ committee
C) District Collector
D) CEO
Answer: B
Explanation: A Social Audit Committee formed by villagers conducts and presides over such meetings.
64. The aim of social audit is —
A) Transparency and accountability
B) Political mobilization
C) Financial savings
D) Tax increment
Answer: A
Explanation: It ensures transparency by involving people directly in the audit process.
65. An “Audit Para” refers to —
A) Each observation in an audit report
B) Tax collection figure
C) Budget proposal
D) Expenditure sanction
Answer: A
Explanation: Each observation or remark in an audit report is called an audit para.
66. The reply to audit objections must be sent within —
A) 30 days
B) 60 days
C) 90 days
D) 6 months
Answer: C
Explanation: Audit replies are generally to be sent within 90 days of receiving the report.
67. Panchayat accounts are maintained under which system?
A) Double-entry system
B) Single-entry system
C) Accrual system
D) Cashless system
Answer: B
Explanation:
Most Panchayats maintain single-entry cash-based accounting for simplicity.
68. Revenue receipts of a Gram Panchayat include —
A) House tax, water tax, and government grants
B) Salaries
C) Loans
D) Donations only
Answer: A
Explanation: Regular income includes taxes, fees, and grants received from State and Central Governments.
69. Expenditure control is done through —
A) Budget and appropriation register
B) Gram Sabha meetings only
C) Political meetings
D) Media reports
Answer: A
Explanation: The budget and appropriation register monitor expenditure within approved limits.
70. The financial irregularity involving false vouchers is called —
A) Fraud
B) Technical error
C) Omission
D) Routine mistake
Answer: A
Explanation: Producing fake or inflated vouchers constitutes fraud under audit rules.
71. A “Reconciliation Statement” is prepared to —
A) Match cashbook balances with bank accounts
B) Prepare annual budgets
C) Compare staff attendance
D) Issue cheques
Answer: A
Explanation: It ensures all deposits and withdrawals are correctly recorded in Panchayat accounts.
72. Financial statements of Panchayats are consolidated by —
A) Zilla Panchayat
B) State Audit Office
C) Finance Commission
D) Deputy Commissioner
Answer: A
Explanation: All Gram and Taluk Panchayat statements are consolidated at the district level.
73. Which document records government grants received by Panchayats?
A) Grant Register
B) Cash Book
C) Audit Register
D) Treasury Receipt
Answer: A
Explanation: The Grant Register tracks allocation, release, and utilization of all grants.
74. Who authenticates Panchayat’s annual accounts before audit?
A) President and PDO
B) MLA
C) Deputy Commissioner
D) CEO
Answer: A
Explanation: The President (head) and PDO jointly certify accounts for submission to auditors.
75. The final audit report of PRIs is forwarded to —
A) State Government / RDPR Department
B) Panchayat President only
C) Gram Sabha only
D) Finance Minister
Answer: A
Explanation: The RDPR Department receives final audit reports for legislative review.
76. The State Finance Commission reviews —
A) Financial position of Panchayats
B) Urban planning
C) Central schemes only
D) Land reforms
Answer: A
Explanation: It recommends measures to improve Panchayat finances and fund distribution.
77. Audit reports help ensure —
A) Accountability in rural governance
B) Political party strength
C) Bureaucratic secrecy
D) Increased expenditure
Answer: A
Explanation: They ensure responsibility and integrity in handling public funds.
78. The Panchayat Raj Act requires accounts to be kept in —
A) Prescribed formats approved by the State
B) Any personal format
C) Private company format
D) NGO manuals
Answer: A
Explanation: The Act mandates uniform formats for transparency and audit efficiency.
79. Penalty for misappropriation of Panchayat funds includes —
A) Recovery and legal action
B) Promotion
C) Incentive
D) Transfer
Answer: A
Explanation: Such violations result in recovery, suspension, or even criminal prosecution.
80. The Gram Sabha ensures financial accountability through —
A) Public questioning and approval of budget
B) Secret audits
C) Central verification
D) Political campaigns
Answer: A
Explanation: Citizens have the right to question expenditure during Gram Sabha meetings.
81. Funds received for specific schemes must be used —
A) Only for that purpose
B) For general administration
C) For any project
D) For publicity
Answer: A
Explanation: Scheme funds like PMAY or MGNREGA must be spent strictly for the intended purpose.
82. A “Grant-in-Aid” is —
A) Non-repayable financial assistance from Government
B) Bank loan
C) Donation
D) Private funding
Answer: A
Explanation: It’s a non-repayable financial transfer to Panchayats for development programs.
83. The “Performance Audit” examines —
A) Efficiency and effectiveness of works
B) Only receipts
C) Staff attendance
D) Budget drafting
Answer: A
Explanation: It focuses on value for money and program results, not just financial accuracy.
84. Audit reports of Panchayats are reviewed annually by —
A) Legislative Committee on Local Bodies
B) Election Commission
C) Finance Minister
D) Zilla Panchayat
Answer: A
Explanation: This Legislative Committee ensures follow-up and accountability of PRIs.
85. If an auditor finds excess expenditure, it is termed as —
A) Over-expenditure
B) Proper use
C) Budget saving
D) Grant lapse
Answer: A
Explanation: It indicates spending beyond the approved budget limit — a violation of rules.
86. An auditor’s role is primarily —
A) Advisory and reporting
B) Executive and political
C) Judicial
D) Legislative
Answer: A
Explanation: Auditors advise and report irregularities but don’t directly punish offenders.
87. Audit reports strengthen —
A) Transparency in rural governance
B) Secrecy
C) Bureaucratic power
D) Tax control
Answer: A
Explanation: Publicly available audit reports promote openness and accountability.
88. The Panchayat’s “Financial Autonomy” means —
A) Power to raise and utilize funds independently
B) Power to borrow without permission
C) No accountability
D) Political freedom
Answer: A
Explanation: It allows Panchayats to manage local revenue sources within legal boundaries.
89. The term “Financial Control” implies —
A) Regulating receipts, expenditure, and assets
B) Centralized governance
C) Urban development
D) Judicial reforms
Answer: A
Explanation: It covers the entire financial cycle from budgeting to auditing.
90. The Panchayat fund is operated jointly by —
A) Panchayat President and PDO
B) CEO and MLA
C) Gram Sabha
D) Auditor and Secretary
Answer: A
Explanation: Joint operation ensures check and balance in disbursal of funds.
91. What does “Utilization Certificate (UC)” indicate?
A) That funds granted have been used for intended purpose
B) Pending grant release
C) Audit remark
D) Budget proposal
Answer: A
Explanation: UC certifies completion and proper usage of government funds.
92. Who verifies Utilization Certificates?
A) Zilla Panchayat CEO
B) Auditor
C) RDPR Department
D) All of the above
Answer: D
Explanation: Verification is multi-level — from auditor to CEO and state.
93. Failure to submit Utilization Certificates can lead to —
A) Stoppage of future grants
B) Promotion of officials
C) Additional funding
D) Political appreciation
Answer: A
Explanation: Future financial assistance is withheld until pending UCs are cleared.
94. Audit enhances —
A) Efficiency, economy, and effectiveness
B) Secrecy
C) Bureaucracy
D) Political monopoly
Answer: A
Explanation: It ensures that public money achieves maximum results efficiently.
95. Financial control helps detect —
A) Fraud, waste, and inefficiency
B) Political rivals
C) Tax evaders
D) Industrial policies
Answer: A
Explanation: Audit and control prevent misuse and ensure accountability in spending.
96. The 15th Finance Commission provides grants to —
A) Rural and Urban Local Bodies
B) Only Urban Corporations
C) NGOs
D) District Courts
Answer: A
Explanation: It devolves funds directly to rural and urban local bodies for development.
97. Audit ensures financial propriety, meaning —
A) Spending only for legitimate purposes
B) Freedom from control
C) Delay in works
D) Increasing taxes
Answer: A
Explanation: Propriety ensures legality and morality in financial decisions.
98. A Panchayat must respond to audit paras —
A) Within 90 days
B) Within 180 days
C) Anytime
D) Only before elections
Answer: A
Explanation: Rule requires timely reply within three months from audit receipt.
99. The ultimate aim of Financial Control and Audit is —
A) Transparency, accountability, and good governance
B) Political stability
C) Bureaucratic secrecy
D) Tax hikes
Answer: A
Explanation: It ensures honest administration and people’s trust in local institutions.
100. Which principle governs Panchayat Finance and Audit?
A) “Public money must be spent for public purpose”
B) “Revenue first, service later”
C) “Political control over finance”
D) “Delay and discretion”
Answer: A
Explanation: All Panchayat financial systems are based on this core principle of public accountability.