PwC Statutory Audit Associate Interview Questions and Answers

CARO 2020 is an updated version of the Companies Auditor's Report Order with new reporting requirements.

• CARO 2020 has expanded the scope of reporting requirements for auditors

• It includes new reporting requirements related to fraud, internal financial controls, and loans and investments

• CARO 2020 also requires auditors to report on the impact of COVID-19 on the company's financial statements

• The threshold for reporting on...read more

Ind AS 115 is a new revenue recognition standard applicable to all industries.

• Ind AS 115 replaces the existing revenue recognition standards and provides a single, comprehensive framework for revenue recognition.

• It outlines a five-step model for recognizing revenue from contracts with customers.

• The five steps are: identify the contract, identify the performance obligations, determine the transaction price, allocate the...read more

A common control business combination occurs when two or more businesses are under the control of the same parent company.

• In a common control business combination, the parent company has the ability to direct the operating and financial policies of the businesses.

• This type of combination typically involves businesses that are owned by the same group of shareholders or have the same management team.

• Common control busine...read more

Effective Interest Rate (EIR) for a loan can be calculated using a formula that considers the loan amount, interest rate, and repayment schedule.

• Calculate the present value of all cash flows associated with the loan, including both principal and interest payments

• Determine the interest rate that equates the present value of cash flows to the loan amount

• The formula for EIR calculation is complex and typically requires th...read more

An audit trail is a chronological record of all activities related to a specific operation or event.

• It provides a detailed history of changes made to data, including who made the changes and when.

• Audit trails are commonly used in financial audits to track transactions and ensure accuracy.

• They help in detecting errors, fraud, or unauthorized activities by providing a trail of evidence.

• Audit trails are essential for main...read more

Internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations.

• Internal audit is conducted by employees of the organization to evaluate and improve the effectiveness of risk management, control, and governance processes.

• Statutory audit is a mandatory audit of the financial statements of an organization conducted by external auditors to ensure...read more

CARO 2020 is an updated version of the Companies Auditor's Report Order with new reporting requirements.

• CARO 2020 has expanded the scope of reporting requirements for auditors

• It includes new reporting requirements related to fraud, internal financial controls, and loans and investments

• CARO 2020 also requires auditors to report on the impact of COVID-19 on the company's financial statements

• The threshold for reporting on...read more

Ind AS 115 is a new revenue recognition standard applicable to all industries.

• Ind AS 115 replaces the existing revenue recognition standards and provides a single, comprehensive framework for revenue recognition.

• It outlines a five-step model for recognizing revenue from contracts with customers.

• The five steps are: identify the contract, identify the performance obligations, determine the transaction price, allocate the...read more

I have completed a 3-year articleship experience in a reputed audit firm.

• During my articleship, I gained practical knowledge and hands-on experience in auditing financial statements.

• I assisted in conducting audits for various clients across different industries.

• I learned how to analyze financial data, identify risks, and ensure compliance with statutory regulations.

• I also developed strong communication and interpersona...read more

CARO 2016 and CARO 2020 are two different sets of rules and regulations for statutory audits in India.

• CARO 2016 had 16 clauses while CARO 2020 has 21 clauses.

• CARO 2020 introduced new reporting requirements related to fraud, internal financial controls, and corporate social responsibility.

• CARO 2020 expanded the scope of reporting on related party transactions.

• CARO 2020 requires reporting on defaults in repayment of loan...read more

Schedule 3 refers to the section of a statutory audit report that outlines the auditors' responsibilities and findings.

• Schedule 3 provides details about the scope of the audit and the auditors' opinion on the financial statements.

• It includes information on the auditors' assessment of internal controls and any significant audit findings.

• Changes in Schedule 3 may occur due to updates in auditing standards or changes in t...read more

IndAS 115 is a new revenue recognition standard that replaces the existing IndAS 18 and IndAS 11.

• IndAS 115 is applicable to all entities that recognize revenue from contracts with customers.

• It provides a single, comprehensive framework for revenue recognition across all industries.

• The standard introduces a five-step model for recognizing revenue from contracts:

• 1. Identify the contract with the customer

• 2. Identify the p...read more

Audit trail is a chronological record that provides evidence of the sequence of activities and changes made to a set of data or transactions.

• Audit trail is a log or record of all activities and changes made during an audit process.

• It helps in ensuring the integrity and reliability of financial statements and other audit evidence.

• Audit trail provides a clear and transparent trail of actions taken, allowing for traceabil...read more

Auditing accounts receivable involves verifying the accuracy and completeness of recorded receivables.

• Reviewing the accounts receivable ledger and comparing it to supporting documentation

• Confirming the balances with customers through direct communication or third-party confirmations

• Testing the valuation of receivables by assessing the adequacy of allowances for doubtful accounts

• Examining the aging of receivables to ide...read more

Materiality in audit refers to the threshold at which misstatements or omissions in financial statements could influence the decisions of users.

• Materiality is a concept used by auditors to determine the significance of errors or omissions in financial statements.

• It helps auditors decide where to focus their attention and resources during an audit.

• Materiality is influenced by factors such as the size of the company, ind...read more

Auditor's opinion is a formal statement issued by an auditor based on their assessment of a company's financial statements.

• Auditor's opinion is a key component of the audit report

• It provides an overall assessment of the financial statements' accuracy and compliance with accounting standards

• The opinion can be unqualified (clean), qualified, adverse, or disclaimer

• An unqualified opinion means the auditor believes the fina...read more