Hello Everyone!! Welcome back to the TAX DESTINATION Blog. In this blog, we will discuss all of Internal Audit & how you can crack the interviews of Audit Profile.
Internal Audit & Statutory Audit Roles are the most choosy & Interesting roles for all CA Freshers. But many will get rejected due to lack of experience during Aritcleship.
Still, you can crack Interviews if you know about the overall aspects of how an Internal Audit will be conducted. To help you here we are giving a list of Areas where an Interviewer will check on the same.
Common questions for Internal Audit Interviews:
Here are some example questions and answers to help you prepare for an
internal audit interview:
- Why did you apply for this position?
- Why
are internal audits necessary? - Explain the steps to prepare
for and perform an internal
audit. - Can you describe substantive tests?
- What should you do after an internal
audit? - What is ISO 9001:2000?
- What
are the differences
between regulatory or statutory audits
and performance audits? - What are the purposes of ISA 610 and INTOSAI
standards?
Employers ask this question because they want to discover how much you
know about their company and the
position you applied for. Before your interview, do some research and learn about the most important areas
of the company and what departments need an
internal audit most. That way, you can give detailed, enthusiastic reasons why you are interested in the job.
Tell your interviewer about your passion
for optimizing business
processes and discuss any relevant experiences. If you have worked as an internal auditor
before, mention your previous
successes. For instance, you could talk about how you saved your past employer
money and made the business
more efficient.
Example:
“Your business is growing, and
using my internal auditing skills to help you
become even more successful sounds very exciting. Your company also
offers excellent benefits, and I have spoken to current employees who love the friendly atmosphere.”
Interviewers ask this question because they want to make sure you
understand the benefits of internal
audits and exactly how they can help businesses. An internal audit helps management plan, organize, direct
and control their operations. By doing so, companies
can make the changes needed to comply with laws and regulations, increase
their profits and achieve their goals faster.
Example: “An internal
audit lets you know which parts of your company
are successful & which ones need some improvements.
It can help you to reduce costs, increase profits
and make your business more appealing to investors. It also makes creating monitoring procedures, streamlining business
processes and following
laws easier.”
Interviewers will often ask this question to make sure you understand
all aspects of the internal auditing
process. A skilled internal auditor should also make sure the authority of the audit team is well-established to
improve cooperation from those being audited.
Auditors should decide which departments will need internal audits and
how often. They should prepare and
distribute a yearly audit schedule and make sure the audit complies with government regulations, quality standards and internal procedures and systems.
Before starting an internal audit, the treasurer of the business must
give all financial records to the
auditor. These include check registers, bank statements, deposit slips, cancelled checks, bills, receipts, expense
vouchers, tax returns and the treasurer’s reports.
Auditors should also organize a meeting to identify risks and discuss the plan, scope and purpose
of the audit. Finally, they should review all documents
and develop a report that will drive
action.
Example:
“I always get to know my team
members and department leaders well so we can
work together smoothly during the audit. I also prepare a yearly audit schedule
to give management plenty of time to
get ready for each audit. Then, I discuss the purpose and scope of each audit with the relevant departments. After I
receive the financial records I need
from the treasurer, I work with my team to identify the areas that need improvement. Finally, I compose a concise
report with recommendations for improvements.”
04.
Can you describe
substantive tests?
Your interviewer could ask this question to make sure you
know why reviewing documents thoroughly is important. Substantive testing examines financial statements and
supporting documentation to look for errors or discrepancies. It helps
companies support assertions that
financial records are complete, valid and accurate. It also reassures
inventors and prevents
fraud.
Example: “During substantive testing, auditors examine all the
documents they receive very
thoroughly. Catching and correcting a small error that seems insignificant to
others could save your company
thousands of dollars and help people learn to prevent future mistakes. Meticulous substantive testing
also assures the accuracy of all financial records. During
my first audit,
I will check everything in detail. In future auditing
cycles, I will focus on areas that seem
questionable based on data from the financial
statements.”
05. What should you do after an internal
audit?
Like the previous question, employers ask this to give you a chance to
show your knowledge. Auditors should
meet with the people involved to discuss nonconformances. A non-conformance is an issue, a problem
or a violation of company regulations that could cause
a business to lose money.
Reports, data, test results, intellectual property and more could be non-conforming. Internal auditors should also set
reasonable deadlines for corrective actions,
get feedback from their team members and keep thorough
records of completed
corrective actions.
Example:
“I would discuss nonconformances
with the departments audited and make sure
that managers understand which corrective actions they should take. I would
also get feedback about my
performance and my team’s performance. I would make sure the deadlines for corrective actions are reasonable and keep
detailed records of the changes that managers make.”
This question tests your knowledge of international management
standards. The International
Organization for Standardization (ISO) gives specifications for products & services to ensure excellent quality,
safety and efficiency. They are essential for international trade, and their headquarters are in Geneva,
Switzerland.
ISO 9001:2000 specifies quality management requirements, helping companies provide consistent products and services to meet customer and regulatory
requirements. It helps keep people
satisfied and defines the processes needed to improve businesses. Employees should understand product
requirements from customers, legal regulations, and any additional needs. ISO 9001:2000 also requires
well-documented, up-to-date, readily available information about each product.
Example:
“ISO 9001:2000 is a list of
specifications for products and services from the International Organization for Standardization or ISO.
Following it can keep customers satisfied
and increase quality, safety and efficiency. ISO 9001:2000 also requires companies to keep plenty of up-to-date
information about each product or service, making internal
auditors’ jobs much easier.”
Employers will likely ask this question to make sure you
have a wide range of skills and can
complete different types of internal audits based on the company’s needs. A regulatory or statutory audit looks at the
financial reporting or budget reporting of the
audited business, and it contains
the auditor’s opinion
about what changes
the company should
make.
A performance audit examines programs
or projects along with their functions and their daily operations. It can also look at
the management systems and procedures of government
or non-profit entities to make sure the organization is using resources efficiently and effectively. It contains a
statement of assurance about the items tested
for compliance instead
of the auditor’s opinion.
Example:
“A regulatory or statutory audit
should focus on financial reporting. My regulatory or statutory audit
would include my thoroughly researched opinions about the changes
your company should make to increase its efficiency and profitability. In contrast, a performance audit is more
about daily operations and individual programs or projects. Instead of an expert opinion, it should contain a
detailed statement of assurance with
all the facts that managers need. That way, they can form their own opinions
about which improvements are best.”
- What are
the purposes of ISA 610 and
INTOSAI standards?
Employers ask this question to make sure you are familiar with
auditing organizations, regulations
and working with other auditors. ISA stands for the International Standards for Auditing, and ISA 610 gives
guidelines about how internal and external auditors should work together. The International Organization of Supreme
Audit Institutions (INTOSAI) is a
group of government entities. Its members include the Chief Financial Controller, the Comptroller General
and the Auditor
General Offices of many countries.
The INTOSAI started in Havana, Cuba in 1953, and its headquarters are
in Vienna, Austria. It produces standards
and guidelines about regulatory or statutory audits
and performance audits.
Example:
“ISA 610 is part of the
International Standards for Auditing. It gives useful guidelines about how internal and external auditors can work
with each other efficiently and
smoothly. The International Organization of Supreme Audit Institutions or
INTOSAI is a group of government
offices and organizations that produces standards and guidelines about regulatory or statutory audits
and performance audits.”
Let’s go into a few more important Questions relating to Internal Audit
1) Explain what is internal audit?
An independent and objective evaluations or examination of the company’s financial and operational business activities is referred to as internal audit.
- Mention
what is the difference between internal and external audits?
- Ensure the authority of the audit team is established- it will enhance the co-operation from the auditees
- Decide which areas of the company
will be audited and the frequency of the audits.
Prepare yearly audit schedule and distribute - Determine the purpose of the audit and whether it complies with government regulations, quality standards, internal procedures and systems
- Organize a meeting with the auditors
to discuss plan, scope and purpose of the audit - Read the documents you are auditing
against.
4) Mention what is meant by decommissioning liability?
De-commission liability
is costs that a company expects to levy in future when the plant is shut-down.
5) Explain what is required
to perform an internal audit?
To perform an internal audit all of the financial
records shall be given by the
treasurer for the audit, including
the cheque-book register, bank statement,
deposit slip, cancelled cheques, treasurer’s reports, expense
vouchers or
warrants with bill receipts, the annual treasurer’s report etc.
6) List out the check-list for the internal audit?
The check-list for the internal audit includes
- Warrants / Vouchers
- Bills / Receipts
- Disbursements/checks
- Bank Reconciliation
- Income
- Treasurer’s Reports
- Taxes
7) Mention what
all things have to be taken care of cheques and vouchers in internal audit?
Cheques:
- Make sure that there are no
missing cheques - Voided cheques are saved
- All cheques recorded in the cheque
register
Vouchers:
- Written for all cheques,
including voided cheques - Amount on cheque matches the amount
on voucher/warrant - Adequate explanation for all
expenditures
8)
Explain how you should conduct an internal audit?
To
conduct an internal
audit, you should
- Decide what you want to achieve
- Identify risks and review objectives
- Plan and audit activities
- Validate the facts and complete the work
- Develop a deliverable or report that will drive action
- Follow up
9) Explain what is the meaning of
plan drawn up in internal
audit?
Plan drawn up is the assessment of the risk that is mutually
agreed between
internal audit,
senior management and audit committee determines the
frequency with which particular audits take
place.
10) Why internal audit
is necessary?
An internal Audit is necessary
to
- Enhance the size and complexity of businesses
- Increase the compliance requirements
- Focus on risk management and internal controls
to manage them - Unconventional business models
- Stringent norms implemented by regulators to protect investors
- Intensive use of information technology
- Increasingly competitive environment
11)
Explain what you should do after the internal
audit?
After the internal
audit,
- Hold auditors meeting with auditees
involved with the audit, discuss the non-conformances and what part is missed
- Issue the audit report in a timely manner
- Encourage auditees
to take corrective actions again flaws
- Help and guide those responsible for completing the corrective actions by setting reasonable deadlines
- Take the feedback of the
auditees and how your audit team were perceived.
