100+ Internal Auditor Interview Questions and Answers

Purchase to pay process is the cycle of activities from procurement to payment of goods or services.

• Procurement of goods or services

• Receiving and verifying the goods or services

• Matching the invoice with the purchase order and goods receipt

• Approval of the invoice

• Payment to the supplier

• Recording the transaction in the accounting system

• Periodic review of the process for improvement

• Example: A company orders office supplies, receives them, matches the invoice with the purchase ord...read more

Clients expect consultancy firms to provide expertise, objectivity, efficiency, and value in internal audit services.

• Expertise in industry best practices and regulations

• Objectivity in assessing risks and controls

• Efficiency in conducting audits and delivering timely reports

• Value in providing actionable recommendations for improvement

• Examples: detailed audit plans, thorough risk assessments, clear communication of findings

DOA stands for Delegation of Authority. It is a document that outlines the level of authority and responsibility of an individual within an organization.

• DOA is prepared by identifying the roles and responsibilities of individuals within an organization

• It should clearly define the limits of authority for each individual

• DOA should be reviewed and updated regularly to ensure it remains relevant

• SOP stands for Standard Operating Procedure and is a document that outlines the steps ...read more

Key risk areas for an internal auditor include fraud, compliance, operational, financial, and cybersecurity risks.

• Fraud risk: Misappropriation of assets, financial statement fraud, corruption.

• Compliance risk: Failure to comply with laws and regulations, industry standards.

• Operational risk: Inefficiencies, errors, lack of internal controls.

• Financial risk: Mismanagement of funds, inaccurate financial reporting.

• Cybersecurity risk: Data breaches, hacking, ransomware attacks.

Test of effectiveness and design is a process used to evaluate the efficiency and adequacy of controls in place.

• Test of effectiveness assesses whether controls are operating as intended.

• Test of design evaluates the adequacy of controls to address risks.

• Examples include testing the effectiveness of access controls by attempting unauthorized access, and testing the design of segregation of duties controls by reviewing job responsibilities.

• Results of these tests help identify we...read more

The Wages Bill Amendment Act is a law that regulates the payment of wages to workers in India.

• The act was first introduced in 1948 and has been amended several times since then.

• The latest amendment was made in 2017 and introduced the concept of a 'universal minimum wage'.

• The amendment also made it mandatory for employers to pay wages electronically, unless the employee requests otherwise.

• The act covers all workers in India, including those in the organized and unorganized sec...read more

The question is asking for the difference between P&L and Balance Sheet and the concept of golden ratio GST.

• P&L shows the company's revenue and expenses over a period of time, while the balance sheet shows the company's assets, liabilities, and equity at a specific point in time.

• Golden ratio GST is a mathematical concept used to determine the optimal tax rate for maximum revenue.

• P&L is used to determine the company's profitability, while the balance sheet is used to determine...read more

Improving E-commerce through personalized experiences, streamlined checkout process, and enhanced security measures.

• Implement personalized product recommendations based on user browsing and purchase history

• Simplify checkout process with one-click payment options and guest checkout

• Enhance security measures with two-factor authentication and fraud detection technology

• Offer flexible delivery options such as same-day or next-day delivery

• Provide excellent customer service through ...read more

To determine the purity of gold, one can use methods such as checking for the presence of black stone residue after nitric acid testing and examining the crystal salt formation.

• Check for black stone residue after nitric acid testing

• Examine crystal salt formation

• Look for purity marks on the gold, such as numbers and symbols

Various factors such as changes in regulations, technology, business processes, and personnel can affect the design and operating effectiveness of controls.

• Changes in regulations can impact the design and operating effectiveness of controls by requiring updates to comply with new laws or standards.

• Advancements in technology may render existing controls obsolete or ineffective, necessitating enhancements or replacements.

• Changes in business processes can affect the relevance an...read more

BRS is bank reconciliation statement, accounting entry is a record of financial transaction, audit is an independent examination of financial records, internal control is a process to ensure efficient and effective operations.

• BRS is prepared to reconcile the bank balance as per the bank statement with the balance as per the company's books

• Accounting entry is a record of financial transaction that shows the debit and credit aspects of the transaction

• Audit is an independent exa...read more

3 critical areas to cover in internal audit of home loans

• Compliance with regulations and policies

• Accuracy of loan documentation and data

• Effectiveness of risk management practices

As an internal auditor, I would address the staff's perception by emphasizing the positive aspects of auditing and promoting a collaborative approach.

• Explain the purpose of auditing as a means to identify areas of improvement and ensure compliance with regulations.

• Highlight the benefits of auditing, such as risk mitigation, process optimization, and enhancing organizational performance.

• Encourage open communication and collaboration with staff to foster a positive audit cultur...read more

Fixed, regular, permanent, and contractual types of employment defined.

• Fixed type employment refers to a job with a predetermined end date.

• Regular type employment is a job with no predetermined end date and is ongoing.

• Permanent type employment is a job that is expected to last indefinitely.

• Contractual type employment is a job that is based on a specific contract or agreement.

• Examples of fixed type employment include seasonal work or project-based work.

• Examples of regular type...read more

Assertions are the representations by management in financial statements regarding the accuracy and completeness of information.

• Assertions include existence, completeness, rights and obligations, valuation or allocation, and presentation and disclosure.

• Existence - assets and liabilities exist at a given date

• Completeness - all transactions and accounts that should be included are included

• Rights and obligations - entity has legal rights to assets and liabilities

• Valuation or all...read more

Audit is a systematic examination of financial records, statements, or operations to ensure accuracy and compliance with laws and regulations.

• Audit involves reviewing financial records, statements, or operations

• It aims to ensure accuracy, compliance with laws and regulations, and identify any discrepancies or fraud

• Auditors gather evidence, analyze data, and report findings to stakeholders

• Types of audits include financial audit, operational audit, compliance audit, and forensi...read more

Yes

• Implementing a management information system in Tally

• Creating customized reports and dashboards

• Setting up automated alerts and notifications

• Integrating Tally with other systems for seamless data flow

• Regularly analyzing and presenting information to management

VLOOKUP is used to search for a value in a table and return a corresponding value. Filter is used to display only specific data based on criteria.

• VLOOKUP searches for a value in the first column of a table and returns a value in the same row from a specified column.

• Filter allows you to display only the rows that meet certain criteria, hiding the rest of the data.

• Example: VLOOKUP formula =VLOOKUP(A2, Sheet2!A:B, 2, FALSE) - searches for the value in cell A2 in Sheet2 and retur...read more

Internal audits are conducted by internal staff to evaluate and improve the effectiveness of risk management, control, and governance processes within an organization, while statutory audits are required by law and are conducted by external auditors to ensure compliance with financial reporting standards.

• Internal audits are conducted by internal staff, while statutory audits are conducted by external auditors.

• Internal audits focus on evaluating and improving risk management, ...read more

The process of conducting an internal audit involves planning, executing, reporting, and follow-up.

• Plan the audit by defining objectives, scope, and methodology.

• Gather relevant data and evidence through interviews, document reviews, and observations.

• Analyze the data to identify risks, control weaknesses, and areas for improvement.

• Report findings to management and recommend corrective actions.

• Follow up on implementation of recommendations to ensure effectiveness.

• Examples: Cond...read more

Learned about financial statement preparation, audit procedures, and client communication.

• Assisted in the preparation of financial statements for clients

• Conducted audit procedures such as testing internal controls and verifying account balances

• Communicated with clients to gather necessary information and provide updates on audit progress

• Learned about the importance of professional skepticism and attention to detail in auditing

Ratios are used to analyze financial performance and efficiency of a company.

• Profit Margin: Net income divided by total revenue, shows how much profit a company makes for every dollar of sales.

• Current Ratio: Current assets divided by current liabilities, measures a company's ability to pay its short-term obligations.

• Debt-to-Equity Ratio: Total debt divided by total equity, indicates the proportion of debt used to finance a company's assets.

• Return on Investment (ROI): Net prof...read more

The type of auditing being done is likely internal auditing, focusing on evaluating and improving the effectiveness of risk management, control, and governance processes within the organization.

• Internal auditing involves assessing and improving the effectiveness of risk management, control, and governance processes within an organization.

• It helps in identifying areas of improvement and ensuring compliance with policies and regulations.

• Examples of internal auditing activities ...read more

Frauds during customer visits can be identified through thorough documentation review, observation of inconsistencies, and analysis of financial data.

• Reviewing documentation provided by customers for inconsistencies or inaccuracies

• Observing customer behavior and interactions for any suspicious activity

• Analyzing financial data for any irregularities or discrepancies

• Conducting surprise audits to catch any fraudulent activities

• Interviewing employees and customers to gather more ...read more

Implement a system to register daily work from each employee.

• Create a standardized form for employees to fill out daily

• Ensure the form includes relevant information such as tasks completed and time spent

• Designate a specific person or team to collect and review the forms

• Use the information gathered to track employee productivity and identify areas for improvement

Find the second largest element in an array

• Sort the array in descending order

• Return the element at index 1

SEBI circulars are regulatory guidelines issued by the Securities and Exchange Board of India.

• SEBI circulars are regulatory guidelines issued by the Securities and Exchange Board of India to ensure compliance and transparency in the securities market.

• These circulars cover a wide range of topics including disclosure requirements, investor protection, market conduct, and regulatory compliance.

• SEBI circulars are important for market participants such as listed companies, interme...read more

Yes, GST is applicable on electricity.

• GST is applicable on the supply of goods and services, including electricity.

• Electricity is classified as a 'goods' under GST.

• GST rates on electricity vary depending on the type of consumer and the state.

• For example, residential consumers may have a lower GST rate compared to commercial consumers.

Internal audit is a systematic evaluation of an organization's operations to ensure effectiveness, efficiency, compliance, and risk management.

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

• It helps organizations accomplish their objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

• In...read more

Knowledge of financial systems, risk management, and Toyota's business operations is important for an internal auditor at Toyota Financial Services.

• Understanding of financial systems and processes

• Knowledge of risk management principles and practices

• Familiarity with Toyota's business operations and industry

• Ability to analyze and interpret financial data

• Strong communication and interpersonal skills

• Attention to detail and ability to identify potential risks or fraud

• Understanding...read more

GST is not applicable on certain products.

• Basic groceries such as fruits, vegetables, milk, and bread

• Education services

• Healthcare services

• Public transportation

• Postal services

• Exported goods and services

The purpose of audit is to provide an independent assessment of an organization's financial statements or processes to ensure accuracy, compliance, and efficiency.

• Ensuring accuracy of financial statements

• Evaluating compliance with laws and regulations

• Identifying areas for improvement in processes and controls

• Providing assurance to stakeholders

• Detecting and preventing fraud or errors

• Enhancing transparency and accountability

• Examples: financial audit, operational audit, complian...read more

Yes, I have 5 years of experience in internal auditing in the banking industry.

• I have 5 years of experience in internal auditing in the banking industry

• Conducted regular audits to ensure compliance with regulations

• Identified and addressed financial risks within the organization

• Prepared detailed audit reports for management review

The process of audit involves planning, fieldwork, reporting, and follow-up.

• Plan the audit by understanding the organization's objectives and risks

• Conduct fieldwork by gathering and analyzing data, testing controls, and identifying issues

• Report findings and recommendations to management and stakeholders

• Follow up on recommendations to ensure they have been implemented

• Use audit software and tools to streamline the process and increase efficiency

Yes, I am willing to travel as required for the job.

• I am comfortable with travel and have done it before for work.

• I understand that travel is a necessary part of the job and am willing to make the necessary arrangements.

• I am adaptable and can work effectively in different environments and cultures.

Risks are potential events that could negatively impact an organization, while controls are measures put in place to mitigate those risks.

• Risks are uncertainties that could lead to financial loss, operational disruption, or reputational damage.

• Controls are policies, procedures, and practices implemented to reduce the likelihood or impact of identified risks.

• Examples of risks include fraud, cybersecurity threats, regulatory non-compliance, and natural disasters.

• Examples of con...read more

As an Internal Auditor, my work involves conducting audits to assess the effectiveness of internal controls and compliance with regulations.

• Performing risk assessments to identify areas of potential risk

• Developing audit plans and procedures

• Conducting interviews and reviewing documents to gather information

• Testing internal controls and processes

• Identifying deficiencies and recommending improvements

• Preparing audit reports and presenting findings to management

• Monitoring the impl...read more

Internal audit process of a manufacturing company involves evaluating the effectiveness of internal controls, risk management, and compliance.

• Assessing the adequacy of inventory controls

• Reviewing production processes for efficiency and effectiveness

• Evaluating compliance with environmental regulations

• Assessing the effectiveness of quality control measures

• Reviewing financial controls and transactions

• Evaluating the effectiveness of health and safety policies

• Assessing the adequac...read more

Changing site management periodically can bring fresh perspectives and ideas to the organization.

• Periodic changes in site management can help in identifying and addressing issues that may have been overlooked by the previous management.

• New management can bring in fresh ideas and perspectives that can help in improving the overall performance of the organization.

• Changing site management can also help in developing the skills and capabilities of the existing employees by exposi...read more

I have experience in auditing financial statements and internal controls.

• Auditing financial statements to ensure accuracy and compliance with accounting standards

• Evaluating internal controls to identify weaknesses and recommend improvements

• Testing transactions to verify their validity and completeness

• Preparing audit reports to communicate findings and recommendations

• Working with clients to address any issues or concerns

• Staying up-to-date with changes in accounting and auditin...read more

I maintain open communication, try to understand their perspective, and find common ground.

• Maintain open communication and express concerns calmly

• Try to understand their perspective and empathize with their concerns

• Find common ground and work towards a mutually beneficial solution

• Seek assistance from a supervisor or mediator if necessary

ISOs are international standards that provide guidelines and requirements for various industries.

• ISO 9001: Quality Management System

• ISO 14001: Environmental Management System

• ISO 27001: Information Security Management System

• ISO 45001: Occupational Health and Safety Management System

• ISO 50001: Energy Management System

The main role of an internal auditor is to assess and evaluate an organization's internal controls, processes, and procedures to ensure compliance and identify areas for improvement.

• Assessing and evaluating internal controls, processes, and procedures

• Ensuring compliance with laws, regulations, and company policies

• Identifying areas for improvement and making recommendations

• Conducting risk assessments and audits

• Providing assurance to management and stakeholders

• Detecting and pre...read more

Reverse a linked list

• Iteratively swap the next and previous pointers of each node

• Use three pointers to keep track of the current, previous, and next nodes

• Update the head pointer to the last node after reversing

Internal audit practice involves evaluating and improving the effectiveness of an organization's risk management, control, and governance processes.

• Internal audit is an independent and objective assurance activity

• It helps organizations achieve their objectives by bringing a systematic and disciplined approach to evaluate and improve processes

• Internal auditors assess risks, test controls, and provide recommendations for improvement

• They ensure compliance with laws, regulations,...read more

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

• Internal Audit evaluates the effectiveness of risk management, control, and governance processes within an organization.

• It helps identify areas of improvement and provides recommendations for enhancing internal controls.

• Internal Audit helps ensure compliance with laws, regulations, and internal policies.

• It plays a crucial role in detecti...read more

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

• Internal audit evaluates the effectiveness of an organization's risk management, control, and governance processes.

• It provides recommendations for improvement and helps organizations achieve their objectives.

• Internal auditors are responsible for assessing the accuracy of financial statements and ensuring compliance with laws and regulati...read more