100+ Internal Auditor Interview Questions and Answers

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

An internal auditor needs to check various aspects in branches to ensure compliance and efficiency.

• Financial records and transactions

• Compliance with company policies and procedures

• Inventory management and control

• Security measures in place

• Employee training and adherence to regulations

Risk is the potential for loss or harm resulting from uncertainties in business operations. Financial controls are procedures put in place to mitigate risks and ensure accuracy in financial reporting.

• Risk is the possibility of an event occurring that will have an impact on the achievement of objectives.

• Financial controls are policies, procedures, and practices implemented by an organization to manage and mitigate financial risks.

• Examples of financial controls include segregat...read more

The major risk associated with banks is credit risk.

• Credit risk is the risk of borrowers defaulting on their loans or not making payments on time.

• Banks face credit risk when lending money to individuals, businesses, or other financial institutions.

• Credit risk can lead to financial losses for banks if borrowers fail to repay their loans.

• Banks use credit analysis and risk management techniques to assess and mitigate credit risk.

• Examples of credit risk include loan defaults, ban...read more

There are several types of wages act depending on the country and region.

• Wages act varies from country to country

• In India, there are several wages act such as Minimum Wages Act, Payment of Wages Act, etc.

• In the United States, the Fair Labor Standards Act (FLSA) is the primary federal law governing wages and hours of work.

• Other countries may have their own specific wages act.

Internal Audit involves evaluating and improving the effectiveness of risk management, control, and governance processes within an organization.

• Evaluating the adequacy and effectiveness of internal controls

• Identifying areas of potential risk and recommending improvements

• Ensuring compliance with laws, regulations, and company policies

• Providing assurance to management and stakeholders

• Helping to improve operational efficiency and effectiveness

Fixed assets audit involves verifying existence, valuation, and ownership of assets.

• Reviewing fixed assets register to ensure all assets are accounted for

• Physically inspecting assets to verify existence and condition

• Checking depreciation calculations to ensure accuracy

• Confirming ownership of assets through documentation

• Testing controls related to fixed assets management

• Reconciling fixed assets register with general ledger accounts

Some major audit observations include inadequate documentation, lack of segregation of duties, and ineffective internal controls.

• Inadequate documentation of transactions and processes

• Lack of segregation of duties leading to potential fraud or errors

• Ineffective internal controls resulting in increased risk of misstatements

• Examples: missing invoices, one person handling both cash receipts and disbursements, lack of approval processes

The 4 financial statements are Income Statement, Balance Sheet, Cash Flow Statement, and Statement of Stockholders' Equity.

• Income Statement: Shows a company's revenues and expenses over a specific period of time.

• Balance Sheet: Provides a snapshot of a company's financial position at a specific point in time.

• Cash Flow Statement: Reports a company's cash inflows and outflows during a specific period.

• Statement of Stockholders' Equity: Details changes in a company's equity over a...read more

Fraud checking involves various types of techniques and methods to detect and prevent fraudulent activities within an organization.

• Conducting regular audits to identify discrepancies or irregularities in financial records

• Implementing internal controls such as segregation of duties to prevent fraud

• Utilizing data analytics tools to detect patterns of fraudulent behavior

• Performing background checks on employees and vendors to mitigate risks

• Training employees on fraud awareness a...read more

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

• Internal audit provides an independent and objective evaluation of an organization's operations, including its internal control systems.

• It helps organizations identify areas of risk and opportunities for improvement.

• Internal audit can also provide consulting services to help organizations improve their operations and achieve their object...read more

End-to-end process review involves analyzing a process from start to finish to identify key risks and areas for improvement.

• Identify the starting point of the process and follow it through each step until completion

• Document each step in the process and identify potential risks or weaknesses

• Evaluate the effectiveness of controls in place to mitigate risks

• Recommend improvements to strengthen the process and reduce risks

• Examples: Procure-to-pay process, order-to-cash process, hi...read more

Target costing is a cost management technique used to determine the maximum cost of a product based on customer demand and profit margins.

• It involves setting a target cost for a product before it is developed.

• The target cost is determined by subtracting the desired profit margin from the expected selling price.

• The cost of production is then managed to ensure that it does not exceed the target cost.

• This technique helps companies to design products that are profitable and meet ...read more

A profit and loss account is a financial statement that summarizes the revenues, costs, and expenses incurred during a specific period.

• It shows the company's financial performance by detailing the total revenue generated and the expenses incurred to generate that revenue.

• The difference between the total revenue and total expenses is the net profit or loss for the period.

• It helps stakeholders assess the profitability and financial health of the company.

• Common components includ...read more

One of my previous audit non-conformities was related to inadequate documentation of financial transactions.

• The non-conformity was identified during a routine financial audit.

• The issue was that the supporting documentation for certain financial transactions was incomplete or missing.

• This posed a risk of inaccurate financial reporting and potential fraud.

• I worked with the finance team to develop and implement a standardized documentation process to address the non-conformity.

• R...read more

Reviewing scrap process involves analyzing the steps taken and the final outcomes to identify areas for improvement.

• Review the documentation and procedures related to the scrap process

• Analyze the root causes of scrap, such as production errors or quality issues

• Evaluate the effectiveness of current scrap prevention measures

• Assess the financial impact of scrap on the organization

• Implement corrective actions based on findings to improve the scrap process

• Monitor and track the res...read more

The golden rule of accounting states that debit what comes in and credit what goes out.

• Debit what comes in and credit what goes out

• Assets = Liabilities + Equity

• Helps maintain the balance in financial statements

Target costing derives the cost at which a product must be manufactured to generate a desired profit margin.

• Target costing is a cost management tool used in product development.

• It involves determining the maximum cost that can be incurred for a product to be profitable.

• The target cost is then derived by subtracting the desired profit margin from the expected selling price.

• The target cost is used as a benchmark for the product development team to design and manufacture the pro...read more

Yes

• Yes, I am ready to marketing.

• To grow gold loans, we can implement various strategies such as targeted advertising campaigns, partnerships with jewelry stores, and offering competitive interest rates.

• We can also explore digital marketing channels like social media and search engine optimization to reach a wider audience.

• Conducting market research to identify potential customers and their needs can help tailor our loan offerings and marketing efforts.

• Regularly reviewing and ...read more

Quality of paint work can be checked by examining the finish, color consistency, adhesion, and durability.

• Inspect the finish for smoothness and uniformity

• Check for color consistency by comparing different areas of the painted surface

• Test adhesion by applying tape to the painted surface and checking for peeling

• Assess durability by subjecting the painted surface to various conditions such as sunlight, moisture, and abrasion

Controls in internal audit refer to measures put in place to ensure compliance, accuracy, and reliability of financial reporting.

• Preventive controls

• Detective controls

• Corrective controls

• IT controls

• Physical controls

• Segregation of duties

• Authorization and approval

• Reconciliation and review

• Documentation and record-keeping

Revenue leakages can be found by analyzing financial data, identifying discrepancies, and implementing controls.

• Analyze financial data to identify discrepancies

• Review sales and purchase records for inconsistencies

• Implement controls to prevent future leakages

• Conduct regular audits to ensure compliance

• Train employees on proper financial procedures

• Utilize technology to monitor transactions

• Compare actual revenue to projected revenue

• Investigate customer complaints or unusual activ...read more

Revenue recognition in hospitals and restaurants differs due to nature of services provided.

• Hospitals recognize revenue based on services provided to patients and insurance reimbursements.

• Restaurants recognize revenue at the point of sale for food and beverages.

• Hospitals may also recognize revenue from research grants and donations.

• Restaurants may offer gift cards and recognize revenue when redeemed.

• Both industries must adhere to accounting standards such as ASC 606.

Yes, I have knowledge about SAP.

• I have experience using SAP for financial reporting and analysis.

• I have completed training courses on SAP modules such as FI/CO and MM.

• I have successfully implemented SAP systems in previous roles.

• I am familiar with SAP's interface and functionalities.

Major audit observations include inadequate documentation, lack of segregation of duties, and insufficient controls.

• Inadequate documentation of transactions and processes

• Lack of segregation of duties leading to potential fraud risks

• Insufficient controls over financial reporting

• Non-compliance with regulatory requirements

• Weaknesses in IT security measures

Checks in P2P Audit include vendor verification, invoice accuracy, approval process review, duplicate payments detection, and compliance with policies.

• Verify vendor information for accuracy and legitimacy

• Ensure invoices match purchase orders and goods received

• Review approval process to confirm proper authorization

• Detect and prevent duplicate payments

• Check for compliance with company policies and regulations

I chose the audit domain due to my strong analytical skills and attention to detail.

• Enjoy analyzing data and identifying patterns

• Have a keen eye for detail and accuracy

• Interested in ensuring compliance and improving processes

• Value the importance of risk management and internal controls

SAP T codes are transaction codes used in SAP systems to execute specific functions or tasks.

• Some major SAP T codes include: SE11 (Data Dictionary), SE38 (ABAP Editor), SE16 (Data Browser), VA01 (Create Sales Order), ME21N (Create Purchase Order)

• T codes are used to access different modules and functionalities within SAP systems

• Users can also create custom T codes for specific tasks or reports

Gold is a chemical element with the symbol Au and atomic number 79.

• Gold is a highly sought-after precious metal.

• It is known for its bright yellow color and luster.

• Gold is a good conductor of electricity and is used in electronics.

• It is also used in jewelry, coins, and as a store of value.

• Gold is often mined from the earth and can be found in various forms such as nuggets, flakes, and dust.

The role of internal audit is to provide independent assurance that an organization's risk management, governance, and internal control processes are operating effectively.

• Evaluating the effectiveness of risk management processes

• Assessing the adequacy of internal controls

• Ensuring compliance with laws and regulations

• Providing recommendations for improvement

• Reporting findings to management and the board of directors

The Gstr-3b due date is the deadline for filing the monthly summary return for GST.

• The Gstr-3b due date is usually the 20th of the following month.

• For example, if you are filing for the month of January, the due date would be February 20th.

• Failure to file Gstr-3b by the due date may result in penalties.

P2P flow involves procurement and payment processes. RCM is a method to identify risks and controls in a process.

• Understand the procurement process from requisition to payment

• Identify key control points and risks in the process

• Map out the flow of P2P process and construct a risk control matrix (RCM)

• Ensure segregation of duties to prevent fraud

• Implement controls such as approval workflows and vendor verification

Audits in different industries vary based on regulations, risks, and specific industry practices.

• Regulations: Each industry has its own set of regulations that auditors must adhere to.

• Risks: The risks faced by companies in different industries vary, impacting the focus of audits.

• Industry practices: Auditors need to understand the specific practices and processes of each industry to effectively conduct audits.

• Examples: Financial audits in the banking industry focus on complian...read more

I have over 5 years of experience in internal audit, conducting risk assessments, testing controls, and providing recommendations for improvement.

• Conducted risk assessments to identify potential areas of concern

• Tested controls to ensure compliance with policies and procedures

• Provided recommendations for improvement to enhance operational efficiency

• Collaborated with various departments to address audit findings

• Utilized audit software to streamline processes and improve accurac...read more

Changing government policy requires a thorough understanding of the current policy, identifying the need for change, and building a strong case for change.

• Research the current policy and identify its strengths and weaknesses

• Identify the need for change and gather data to support the change

• Build a strong case for change by engaging stakeholders and presenting a clear and compelling argument

• Collaborate with policymakers and other stakeholders to develop a new policy that addres...read more

Control unemployment by implementing policies that promote job creation and economic growth.

• Encourage entrepreneurship and small business development

• Invest in education and training programs to develop a skilled workforce

• Provide incentives for companies to hire and retain employees

• Implement policies that promote economic growth and job creation

• Partner with local businesses and organizations to identify job opportunities

• Offer unemployment benefits and job placement services to...read more

I support privatisation as it can lead to increased efficiency and competition.

• Privatisation can lead to increased efficiency and competition

• Private companies may have more incentive to innovate and improve services

• Examples of successful privatisation include British Telecom and British Airways

• Opposing privatisation may limit options for consumers and lead to less efficient services

Advance Authorisation Scheme allows import of inputs without payment of duty for export production.

• Allows import of inputs without payment of duty for export production

• Helps in promoting exports by reducing production costs

• Requires fulfillment of export obligation within a specified time frame

• Commonly used in industries like textiles, pharmaceuticals, and electronics

Cross contamination refers to the transfer of harmful substances or microorganisms from one object or surface to another.

• Cross contamination can occur in various settings, such as in food preparation, healthcare facilities, or laboratories.

• Examples of cross contamination include using the same cutting board for raw meat and vegetables without proper cleaning, leading to the spread of bacteria.

• In healthcare, cross contamination can happen when healthcare professionals fail to ...read more

ICFR/SOX testing refers to the evaluation of internal controls over financial reporting to ensure compliance with the Sarbanes-Oxley Act.

• ICFR stands for Internal Control over Financial Reporting

• SOX refers to the Sarbanes-Oxley Act

• ICFR/SOX testing involves assessing the effectiveness of internal controls to prevent financial misstatements

• Testing may include walkthroughs, inquiries, and testing of controls

• Results of testing are used to provide assurance on the reliability of fi...read more

Implementing automated data analytics tools, enhancing risk assessment processes, and strengthening internal controls.

• Implement automated data analytics tools to improve efficiency and accuracy in auditing processes

• Enhance risk assessment processes to identify and prioritize key risks facing the organization

• Strengthen internal controls to prevent and detect fraud, errors, and inefficiencies

I see auditing as a way to ensure compliance, identify risks, and improve processes.

• Ensuring compliance with regulations and policies

• Identifying potential risks and vulnerabilities

• Improving efficiency and effectiveness of processes

• Providing recommendations for improvement based on findings

Quality of tiles can be checked by examining the surface, edges, thickness, color consistency, and water absorption.

• Examine the surface for any cracks, scratches, or unevenness.

• Check the edges for smoothness and uniformity.

• Measure the thickness of the tiles to ensure consistency.

• Compare the color of multiple tiles to check for consistency.

• Perform a water absorption test by placing a few drops of water on the tile and observing how quickly it is absorbed.

Negative list of GST includes goods and services that are exempted from GST.

• Goods and services that are not subject to GST

• Examples include alcohol for human consumption, petroleum products, and electricity

• These items are not eligible for input tax credit

Internal Audit team is crucial for ensuring compliance, risk management, and improving organizational efficiency.

• Internal Audit team provides independent and objective assurance to the organization's management and stakeholders.

• They help in identifying and mitigating risks, ensuring compliance with laws and regulations, and improving operational efficiency.

• Internal Audit team also helps in enhancing the effectiveness of internal controls and governance processes.

• For example, ...read more

EBITA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. Goodwill is an intangible asset that represents the excess of the purchase price over the fair market value of a company's net assets.

• EBITA is a measure of a company's operating performance without factoring in interest, taxes, depreciation, and amortization expenses.

• Goodwill is an intangible asset that represents the premium paid for a company in an acquisition.

• EBITA is used to assess a company...read more