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

Financial statements provide a snapshot of a company's financial health, including assets, liabilities, and equity. Trial balances ensure accuracy of financial records.

• Financial statements serve to provide stakeholders with an overview of a company's financial performance and position.

• Components of financial statements include balance sheet, income statement, cash flow statement, and statement of changes in equity.

• Balance sheet shows assets, liabilities, and equity at a speci...read more

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

Internal audit is conducted by employees of the organization, while external audit is conducted by independent professionals.

• Internal audit is performed by employees of the organization, while external audit is performed by independent professionals.

• Internal audit focuses on evaluating and improving internal controls, risk management, and operational efficiency within the organization.

• External audit focuses on providing an independent opinion on the accuracy and fairness of t...read more

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

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

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

Depreciation is the allocation of the cost of a tangible asset over its useful life. Land does not depreciate.

• Depreciation is a non-cash expense that reflects the decrease in value of an asset over time.

• It is calculated using methods such as straight-line, double declining balance, or units of production.

• Land is not depreciated because it is considered to have an indefinite useful life.

• Journal entries for depreciation involve debiting Depreciation Expense and crediting Accumu...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

Yes, I have handled market complaints regarding count variations in bottle lines, ensuring quality control and customer satisfaction.

• Received a complaint about a batch of bottles containing fewer units than labeled.

• Conducted an investigation by reviewing production logs and quality checks.

• Identified a malfunction in the counting machine that led to discrepancies.

• Implemented corrective actions, including recalibrating the machine and retraining staff.

• Communicated with the cust...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

Implemented a streamlined invoice processing system that reduced approval time by 30%.

• Identified bottlenecks in the existing invoice approval process.

• Collaborated with the finance team to map out the workflow.

• Introduced an automated system for invoice submissions and approvals.

• Trained staff on the new system, ensuring smooth transition.

• Monitored the process post-implementation, achieving a 30% reduction in approval time.

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

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

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

I have conducted stock audits and am fully prepared to perform audits in cold storage environments.

• Experience with Stock Audits: I have previously conducted stock audits in various settings, ensuring accurate inventory records.

• Cold Storage Protocols: I am familiar with the specific protocols required for auditing stock in cold storage, such as temperature monitoring.

• Inventory Management Systems: I have used inventory management systems that track stock levels in real-time, wh...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

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

Sample quality is determined by guidelines like ISO 9001, focusing on statistical methods and risk assessment for effective sampling.

• ISO 9001: This standard provides a framework for quality management systems, emphasizing the importance of quality in sampling processes.

• Statistical Sampling: Techniques such as random sampling or stratified sampling are used to ensure that the sample accurately represents the population.

• Risk Assessment: Identifying potential risks in the sampli...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