- A
Use an Azure Policy assignment with the Audit effect.
Audit records noncompliance without blocking activity. That makes it ideal for compliance reporting when the organization wants visibility first and enforcement later.
- B
Assign the policy at the management group scope that contains the department subscriptions.
A management group assignment covers all subscriptions in the department with one configuration. That gives the compliance team broad reporting reach while avoiding repeated per-subscription setup.
- C
Use the Deny effect.
Why wrong: Deny would block the deployment or update if the tag is missing. That conflicts with the requirement to let users continue creating and changing resources.
- D
Grant Reader on the subscription to the compliance team.
Why wrong: Reader helps people view resources, but it does not evaluate compliance or generate policy results. Policy is the control that identifies missing tags, not RBAC.
- E
Apply a ReadOnly lock to all resource groups.
Why wrong: ReadOnly locks interfere with normal management operations and still do not provide compliance reporting for missing tags. This is the wrong tool for the task.
Quick Answer
The answer is to use the Audit effect and assign the policy at the management group scope. The Audit effect is the correct choice because it allows Azure Policy to evaluate and log non-compliant resources—such as those missing an Environment tag—directly to the activity log without blocking creation or modification, satisfying the compliance team’s need for visibility without enforcement. Assigning at the management group scope ensures the policy cascades to all subscriptions under that department, creating a single governance boundary that catches every resource in scope. On the AZ-104 exam, this scenario tests your understanding of the difference between Audit, Deny, and Modify effects, with a common trap being to select Deny because it also enforces tags, but the question explicitly requires no blocking. Remember the memory tip: “Audit alerts, Deny defends”—if the goal is to find missing tags without stopping users, always choose Audit.
AZ-104 Manage Azure Identities and Governance Practice Question
This AZ-104 practice question tests your understanding of manage azure identities and governance. Match the stated requirement to the specific cloud service, access model, or configuration option — many options are valid in isolation but not for this scenario. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A compliance team wants to identify all resources in a department that are missing an Environment tag, but they do not want to stop users from creating or changing resources. Which two choices should the administrator make? Select two.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Use an Azure Policy assignment with the Audit effect.
Option A is correct because the Audit effect in Azure Policy allows the compliance team to identify resources missing an Environment tag without blocking resource creation or modification. This effect logs non-compliant resources to the activity log, enabling visibility without enforcement. Option B is correct because assigning the policy at the management group scope ensures it applies to all subscriptions within that department, covering all resources under a single governance boundary.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Use an Azure Policy assignment with the Audit effect.
Why this is correct
Audit records noncompliance without blocking activity. That makes it ideal for compliance reporting when the organization wants visibility first and enforcement later.
Related concept
Read the scenario before looking for a memorised answer.
- ✓
Assign the policy at the management group scope that contains the department subscriptions.
Why this is correct
A management group assignment covers all subscriptions in the department with one configuration. That gives the compliance team broad reporting reach while avoiding repeated per-subscription setup.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Use the Deny effect.
Why it's wrong here
Deny would block the deployment or update if the tag is missing. That conflicts with the requirement to let users continue creating and changing resources.
- ✗
Grant Reader on the subscription to the compliance team.
Why it's wrong here
Reader helps people view resources, but it does not evaluate compliance or generate policy results. Policy is the control that identifies missing tags, not RBAC.
- ✗
Apply a ReadOnly lock to all resource groups.
Why it's wrong here
ReadOnly locks interfere with normal management operations and still do not provide compliance reporting for missing tags. This is the wrong tool for the task.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse the Audit effect with the Deny effect, thinking they need to block non-compliant resources to identify them, or they mistakenly believe granting Reader access is sufficient for automated tag discovery, when in fact Azure Policy is the correct tool for compliance evaluation without enforcement.
Detailed technical explanation
How to think about this question
Azure Policy uses a policy engine that evaluates resources against defined rules during resource creation, update, and existing resource compliance scans. The Audit effect writes a compliance event to the activity log but does not block the request, making it ideal for discovery without disruption. Assigning at the management group scope leverages the hierarchical inheritance model, where policies propagate to all child subscriptions and resource groups, ensuring consistent coverage across the department.
KKey Concepts to Remember
- Read the scenario before looking for a memorised answer.
- Find the constraint that changes the correct option.
- Eliminate answers that are true in general but not in this case.
TExam Day Tips
- Watch for words such as best, first, most likely and least administrative effort.
- Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A cloud solutions architect for a retail company is evaluating services for a new workload. The correct answer here reflects best practice for the specific scenario described — not a general cloud recommendation. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Cloud exam questions reward reading the constraint carefully: the same technology can be right or wrong depending on the use case.
What to study next
Got this wrong? Here's your next step.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
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FAQ
Questions learners often ask
What does this AZ-104 question test?
Manage Azure Identities and Governance — This question tests Manage Azure Identities and Governance — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Use an Azure Policy assignment with the Audit effect. — Option A is correct because the Audit effect in Azure Policy allows the compliance team to identify resources missing an Environment tag without blocking resource creation or modification. This effect logs non-compliant resources to the activity log, enabling visibility without enforcement. Option B is correct because assigning the policy at the management group scope ensures it applies to all subscriptions within that department, covering all resources under a single governance boundary.
What should I do if I get this AZ-104 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
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Last reviewed: Jun 11, 2026
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