Common Audit Interview Questions You Must Prepare Before the interview

If you are a commerce student aspiring to kick-start your career in the field of Auditing this article is going to help you prepare for your upcoming Audit Interview and know the audit interview questions from our experts.

Before jumping on the most likely questions asked in Audit Interviews let us first crystallize on some basic concepts.

What is an Audit?

The typical textbook definition of Audit is – “An audit is an independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion thereon”

In simple terms,
The audit is Independent examination of the financial statements of an entity.
A major hint lies in this definition which is a direct requirement for hiring in the field of Auditing i.e the Independence of the Auditor.

Types of Audit

There are various types of Audits conducted in an organization.
A simple way to classify them is based on the basis of Independence involved in an audit or interference of the client.

The basic classification is as follows:

1) Statutory Audit:

Statutory Audits are conducted by Independent auditors who are appointed by the company or board of directors.
This audit has a high level of Independence. The manner, content and time lines for conducting the audit and submission of audit report is governed by the respective Statutory Acts applicable.

2) Internal audit:

Internal audit is done by an auditor who may or may not be an independent auditor, the auditor is appointed by the management and depending on the needs the scope is mutually decided in the terms of engagement.

What is Internal Audit?

“Internal audit is an independent management function, which involves a continuous and critical appraisal of the functioning of an entity with a view to suggest improvements thereto and add value to and strengthen the overall governance mechanism of the entity, including the entity’s strategic risk management and internal control system.”

In simple terms:

• An internal Audit is an Independent appraisal activity within an organization.
• The internal auditor reviews the activities and processes of the organization and provides suggestions for improvements.
• The scope of internal audit is not restricted to financial transactions but also extends to the review of all operations of the enterprise and it evaluates the effectiveness of management.

Going through the above basic requirements for an Audit role it can be concluded that the Employer will be desirous of hiring an Individual with the following personal qualities / characteristics.

1. Honesty and Integrity
2. Straight Forwardness.
3. Unbiased in making decisions and reaching conclusions i.e has the ability to think independently and does not get influenced by others.
4. Maintains Confidentiality.
5. Has the ability to communicate confidently.

 

What do you mean by the Independence of the Auditor?

• The auditor should be independent of the entity subject to the audit.
• The auditor’s independence safeguards the auditor’s ability to form an audit opinion without being affected by any influences.
• Independence enhances the auditor’s ability to act with integrity, to be objective and to maintain an attitude of professional skepticism.
• The objective of the audit is to express an opinion on the financial statements.
• The person conducting this task should take care to ensure that financial statements would not mislead anybody.

This can be done by him by satisfying himself:

• The accounts have been drawn up with reference to entries in the books of account
• The entries in the books of account are adequately supported by sufficient and appropriate evidence
• None of the entries in the books of account has been omitted in the process of compilation and nothing which is not in the books of account has found a place in the financial statements.
• The information conveyed by the financial statements is clear and unambiguous.
• The financial statement amounts are properly classified, described and disclosed in conformity with accounting standards.
• The statement of accounts presents a true and fair picture of the operational results and the assets and liabilities.

After revisiting the basics and understanding the ideal requirement from the point of view of the recruiting organization let’s now move to a few of the common Interview questions asked in Audit Interviews

Common Interview Questions for Statutory Audit Interviews:

1. Tell me something about yourself or walk me through your resume covering yourself and the family background?
2. Can you describe the process followed for conducting a statutory audit?
3. What do you mean by the term “Material misstatements”?
4. What are the types of Audit Opinions?
5. Questions on IAS/IFRS/IND-AS:

Qualified CA / ACCA fresher’s can be expected to summarize any of the IAS / IND AS in a short span of 10 minutes the most frequently asked IAS / IND AS are as follows:

• IFRS 115 / IND AS 115 – REVENUE FROM CONTRACTS WITH CUSTOMERS
• IAS 16 / IND AS 16 – PROPERTY, PLANT AND EQUIPMENT
• IAS 8 / IND AS 8 – ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS
• IAS 10 / IND AS 10 – EVENTS AFTER THE REPORTING PERIOD
• IAS 2 / IND AS 2 – INVENTORIES
• IAS 12 / IND AS 12 – INCOME TAXES

1. Questions on AUDITING STANDARDS:

Qualified CA fresher’s can be expected to summarize any of the Auditing Standards in a short span of 10 minutes the most frequently asked Auditing Standards are as follows:
1. 1. • SA 300 – Planning an Audit of Financial Statements
      • SA 315 – Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment
      • SA 230 – Audit Documentation
      • SA 320 – Materiality in Planning and Performing an Audit
      • SA 570 – Going Concern
      • SA 550 – Related Parties
      • SA 700 – Forming an Opinion and Reporting on Financial Statements
      • SA 705 – Modifications to the Opinion in the Independent Auditor’s Report
   2. Questions on Work Exposures in accordance with the resume:
      1. Give us a brief about the roles and responsibilities handled by you?
      2. Tell us about few of your key audit findings?
   3. General Questions:
      1. In a scale of 1 to 5 how would you rate yourself in MS Excel / MS Word / MS Powerpoint or (any related IT software part of the JD) and why?
      2. Why do you desire to work in the Statutory Auditing domain?
      3. Why do you desire to work with our organization?
      4. What are your hobbies/interests?

Common Interview Questions for Internal Audit Interviews:

1. 1. Tell me something about yourself or walk me through your resume covering about yourself and the family background?
   2. Give us a brief about the roles and responsibilities handled by you in your journey in the field of Audit so far?
   3. What are all areas you have covered as a part of the Internal Audit?
   4. Can you elaborate us the entire P2P process and the key controls within the same?

[The interviewer might ask any one of the processes in detail out of the processes/areas which you have covered and stated on the resume or have just answered to the interviewer in any of his previous questions, common processes being the P2P (Procure to pay) and O2C (Order to Cash)]

1. What do you mean by Audit of Internal controls? And also throw some light on what do you mean by RCM.

(RCM stands for Risk control matrix)

1. 1. Can you recall and tell us about any one of the design and control gaps that you might have identified in your Internal Audit experience so far and how was the same addressed?
   2. Hypothetical Case question:

Example: Assume that you are on an Audit assignment leading a team of 5 out of which 2 members went on unplanned leave due to some emergency or any XYZ reason and they will not be able to join you for supposed 7 to 8 days, but the timelines of deliverables promised to the client cannot be delayed what would be your plan of action in such a scenario to ensure that the work is completed within the timelines without compromising on the quality?

1. General Questions:
   1. On a scale of 1 to 5 how would you rate yourself in MS Excel / MS Word / MS PowerPoint or (any related IT software part of the JD) and why?
   2. Why do you desire to work in the Internal Auditing domain?
   3. Why do you desire to work with our organization?
   4. What are your hobbies/interests?

We would love to answer your question related to the Audit. Wish you the best luck for your Audit Interview.

Also Read: 5 Productivity tips for commerce students to prepare for ACCA exam