Identity Management with Microsoft Entra
AB-650 Exam Alignment
AB-650
Domain 2 — Manage identities and access in Microsoft Entra: create and manage users and guest users; manage M365 Groups; manage admin roles and role assignments; configure Privileged Identity Management (PIM); manage administrative units; manage contacts and bulk operations using Microsoft Graph PowerShell.
- Know the difference between M365 Groups, Security Groups, Distribution Groups, and Mail-enabled Security Groups
- Understand Privileged Identity Management (PIM) — eligible vs active role assignments and the approval/justification workflow
- Know what Administrative Units are and how they enable scoped delegation without administrative unit-level role limits
- Know that bulk user operations (create, update, delete) can be done via CSV import in the M365 Admin Center or Microsoft Graph PowerShell
👤 User and Guest Account Management
User accounts in Microsoft 365 are stored in Microsoft Entra ID and accessed through the M365 Admin Center or the Entra Admin Center. AB-650 tests both internal user management and B2B guest user access.
| User Type | Account Format | Authentication | Managed In |
|---|---|---|---|
| Internal Member | user@contoso.com (in tenant) | Entra ID — password, MFA, SSPR | M365 Admin Center or Entra Admin Center |
| B2B Guest | user_domain.com#EXT#@contoso.onmicrosoft.com | Their home organisation (federated) or one-time passcode (OTP) if no home IdP | Entra Admin Center → External Identities or M365 Admin Center → Guest users |
| Entra B2B Direct Connect | External user accesses resources directly without being added to the directory | Home organisation authentication only | Entra Admin Center → External Identities → Cross-tenant access |
| Display name | UPN | User type | Licence |
|---|---|---|---|
| Alice Johnson | alice@contoso.com | Member | M365 E5 + Copilot |
| Bob Partner | bob_partner.com#EXT#@... | Guest | — |
| Carol Smith | carol@contoso.com | Member | M365 E3 |
👥 Microsoft 365 Groups & Group Types
| Group Type | Use Case | Supports Email | Can Be Used for Licences |
|---|---|---|---|
| Microsoft 365 Group | Team collaboration — shared mailbox, calendar, SharePoint site, Teams, Planner automatically created | Yes — shared group mailbox | Yes (group-based licensing) |
| Security Group | Manage access to apps, resources, and M365 services. Used for RBAC and conditional access. | No (unless mail-enabled) | Yes (group-based licensing) |
| Distribution Group | Email distribution only — send email to all members | Yes — delivery only | No |
| Mail-enabled Security Group | Combines security group (resource access) with email distribution capability | Yes | No |
| Dynamic Group | Membership managed automatically by Entra ID rules based on user attributes (e.g. department, jobTitle, location) | Either (based on type) | Yes (if security type) |
🔐 Privileged Identity Management (PIM)
PIM provides just-in-time (JIT) privileged access for Entra ID roles and Azure resource roles. Instead of having permanent Global Admin rights, admins are eligible for the role and must activate it — reducing the attack surface from compromised admin accounts.
| Assignment Type | How It Works | Best For |
|---|---|---|
| Eligible | User is eligible for the role but must explicitly activate it. Activation can require MFA, justification, and manager approval. Active for a configurable duration (1–8 hours). | All privileged roles — Global Admin, Privileged Role Admin, Security Admin |
| Active | Role is permanently assigned — no activation required. Same as traditional role assignment. | Break-glass emergency accounts only; service accounts that require constant role access |
| Time-bound | Either eligible or active assignment with a defined start and end date/time | Contractor access, project-based admin roles |
🔥 PIM is New in AB-650 (Was Advanced/Optional in MS-102)
Privileged Identity Management is now explicitly tested in AB-650 Domain 2. Key facts: (1) PIM requires Microsoft Entra ID P2 licence (included in M365 E5 and EMS E5); (2) PIM generates audit logs for every role activation — who activated which role, when, and for how long; (3) PIM access reviews can be scheduled to periodically verify that eligible and active assignments are still needed; (4) The first Global Admin assigned eligible PIM must be done by a current permanent Global Admin before PIM can self-govern.
📇 Administrative Units
Administrative Units (AUs) enable scoped administration — restricting an admin’s scope to a subset of users, groups, or devices rather than the entire tenant. Essential for large organisations where regional IT teams manage their own users.
💡 Administrative Units — Key Facts for AB-650
- An AU is a container that can hold users, groups, and/or devices
- Assign roles to admins scoped to an AU — e.g. User Administrator for the “UK Staff” AU only
- The scoped admin cannot manage objects outside their AU
- AUs do NOT appear as containers in Microsoft 365 Groups or Teams — they are purely an administrative delegation boundary
- Requires Microsoft Entra ID P1 or P2 licence
- Objects can belong to multiple AUs simultaneously
Connect-MgGraph -Scopes 'User.ReadWrite.All','Group.ReadWrite.All','RoleManagement.ReadWrite.Directory' # Create a new internal user $PasswordProfile = @{Password = 'TempP@ssw0rd!'; ForceChangePasswordNextSignIn = $true} New-MgUser -DisplayName 'Carol Smith' -UserPrincipalName 'carol@contoso.com' -PasswordProfile $PasswordProfile -AccountEnabled $true # Invite a B2B guest user New-MgInvitation -InvitedUserEmailAddress 'bob@partner.com' -InviteRedirectUrl 'https://myapps.microsoft.com' -SendInvitationMessage $true # Create a dynamic security group (auto-membership by department) New-MgGroup -DisplayName 'IT-Department' -GroupTypes @('DynamicMembership') -SecurityEnabled $true -MailEnabled $false -MembershipRule "(user.department -eq 'IT')" -MembershipRuleProcessingState 'On' # View PIM eligible role assignments for the directory Get-MgRoleManagementDirectoryRoleEligibilitySchedule -All | Select-Object PrincipalId,RoleDefinitionId,Status | Format-Table -AutoSize # Create an Administrative Unit $AU = New-MgDirectoryAdministrativeUnit -DisplayName 'UK Staff' -Description 'All UK-based users' # Bulk create users from CSV Import-Csv 'C:\users.csv' | ForEach-Object { $PP = @{Password = $_.TempPassword; ForceChangePasswordNextSignIn = $true} New-MgUser -DisplayName $_.DisplayName -UserPrincipalName $_.UPN -PasswordProfile $PP -AccountEnabled $true -UsageLocation 'GB' }
💡 Best Practices
- Enable PIM for all Global Administrator assignments immediately — permanently active Global Admin accounts are the highest-value target for attackers
- Use dynamic group membership rules for licence assignment where possible — users automatically receive the correct licences when attributes like department or jobTitle are set
- Require justification AND MFA for all PIM role activations — this provides an audit trail and prevents silent privilege escalation
- Use Administrative Units for multi-region or multi-department organisations to delegate helpdesk teams to manage only their own users without tenant-wide admin rights
- Set guest user access restrictions via Entra External Identities — by default, guests can enumerate all users and groups in the directory, which is a security risk
- Schedule quarterly PIM access reviews for all privileged roles — automated reviews in Entra Identity Governance can email role holders to confirm whether they still need the access
🎓 Interview Q&A
(user.department -eq "Sales") automatically adds or removes users when their department attribute changes in Entra ID — no manual group management needed. Static groups are appropriate when membership doesn’t follow a consistent attribute pattern, or when you need precise control over who gets a licence (e.g. a Copilot pilot with specific approved users). Note: dynamic group membership can take up to 24 hours to reflect attribute changes for large tenants.An administrator wants Global Administrators to only have elevated access when actively needed, with all activations requiring MFA and a business justification. Which feature should be configured?
An organisation has 500 contractors who should automatically receive Microsoft 365 F3 licences when their EmployeeType attribute is set to “Contractor” in Entra ID, and lose them when it changes. What is the most efficient approach?
(user.employeeType -eq "Contractor") automatically adds users when their EmployeeType becomes “Contractor” and removes them when it changes. Assigning the F3 licence to this group via group-based licensing automates the entire process. Options A and B require manual management. Conditional Access (C) manages authentication, not licence assignment.A regional IT team in Germany needs to reset passwords and manage user accounts for German employees only, without being able to modify any other users in the tenant. What is the correct configuration?
A B2B guest user (bob@partner.com) reports they cannot access shared resources. Investigating, the admin finds the guest user’s account in Entra ID but their invitation status shows “PendingAcceptance.” What does this mean?
Which Microsoft 365 group type automatically creates a shared mailbox, SharePoint site, Teams workspace, and Planner board when the group is created?