CA Inter Group 2 Subjects (2026): Costing, Auditing & FM-SM

CA Inter Group 2 subjects at a glance

• Total: 3 papers, 300 marks, 3 hours per paper.
• Every paper is 70 marks descriptive and 30 marks objective.
• Note the name: it is Auditing and Ethics under the New Scheme, not the old 'Auditing and Assurance'.

Paper 4 — Cost and Management Accounting (100 marks)

A fully practical paper, and the most improvable one in the group: the question types repeat across attempts, so drilling genuinely converts into marks.

The syllabus runs from cost concepts and the elements of cost — material, labour and overheads — through costing methods including job, batch, contract, process and joint products, service costing, and standard costing, into marginal costing and budgets. Reconciliation of cost and financial accounts and activity-based costing round it out.

• Process costing, standard costing variances and marginal costing are the dependable high-mark areas.
• Speed and layout decide outcomes here. A correct answer with a disorganised working loses marks a clean format would have kept.
• Because the patterns repeat, past-paper practice has a higher return in this paper than anywhere else in Group 2.

Paper 5 — Auditing and Ethics (100 marks)

The most theory-dense paper in Group 2, and the one students most often underestimate. Under the New Scheme the ethics component is explicit in the paper's name and in the syllabus, not an afterthought.

It covers the nature, objective and scope of audit, audit strategy and planning, risk assessment and internal control, audit evidence and documentation, audit of items in financial statements, completion and the audit report, along with the audit of different types of entities and professional ethics.

• Standards on Auditing (SAs) are the backbone. Knowing which SA governs a situation is worth more than reproducing its text.
• The 30-mark MCQ portion is scenario-driven: you are given an audit situation and must choose the correct treatment or reporting outcome.
• Write in the language of the standards. Answers phrased in everyday terms score noticeably below answers using the correct terminology.

Paper 6 — Financial Management and Strategic Management (100 marks)

Effectively two papers in one. Section 6A is Financial Management for 50 marks, Section 6B is Strategic Management for 50 marks, and they share nothing beyond an answer book. Each half is commonly split around 35 marks descriptive and 15 marks objective.

Financial Management is numerical: cost of capital, capital structure and leverage, capital budgeting, working capital management, and financing decisions including dividend policy. Strategic Management is entirely theoretical: strategic analysis, the external and internal environment, strategy formulation and implementation, and organisational structure and control.

• FM 50 marks, SM 50 marks — and the 40% minimum applies to the combined paper, so a strong FM cannot rescue an unread SM if the total falls short.
• SM is the most efficient scoring opportunity in Group 2. It is short, purely theoretical, and many students leave it until the final week and lose easy marks.
• Treat them as two separate preparations with two separate revision cycles. Studying them as one subject is why this paper surprises people.

Group 2 exam pattern and passing marks

• No negative marking, so answer every MCQ. A blank is a guaranteed zero; a reasoned guess costs nothing.
• 40% in each paper AND 50% in aggregate. Scores of 70, 55 and 38 fail the group even though the average is above 50%.

Which Group 2 paper to study first

Group 2 has a natural sequence, because two of the three papers reward drilling and one rewards repetition.

Begin with Cost and Management Accounting — it is the largest practical load and improves most predictably with practice. Take Financial Management next, since it shares numerical habits with costing and benefits from that momentum. Auditing and Ethics needs the longest run-in for retention, so start it early but revise it late and often. Strategic Management is deliberately last: it is short enough to build in the final stretch, and it stays fresh.

• Cost and Management Accounting — start first, drill past questions relentlessly.
• Financial Management — second, riding the numerical momentum from costing.
• Auditing and Ethics — start early, revise late and repeatedly.
• Strategic Management — last, but never skipped. It is 50 marks of pure theory.

Is Group 2 easier than Group 1?

Group 2 is often called the lighter group, and by volume that is fair — it has no equivalent of Advanced Accounting. But 'lighter' misleads students into starting late.

Group 2's failures usually come from two specific places: Auditing treated as reading rather than study, and Strategic Management left to the last week. Both are avoidable. Pass percentages move between attempts, so use this as workload guidance, not a prediction.

Preparing for Group 2 without re-reading everything

Group 2 spans costing computations, audit standards, financial numeracy and strategy theory — four different kinds of thinking across 300 marks. No single revision pass covers it, so the students who clear it are the ones who know precisely which concepts are weak and fix those first.

A chapter is not one thing. Scoring 12/20 on a costing chapter tells you nothing about which of its concepts broke. Concept-level practice does, and that is what makes limited revision time convert into marks.

Frequently asked questions