10+ Senior Audit Associate Interview Questions and Answers

Types of sampling include random, systematic, stratified, and cluster. Test of details involves examining individual transactions while substantive analytical procedures involve analyzing trends and ratios.

• Random sampling involves selecting items randomly from the population.

• Systematic sampling involves selecting items at regular intervals.

• Stratified sampling involves dividing the population into subgroups and selecting items from each subgroup.

• Cluster sampling involves selec...read more

Debt issuance cost/loan processing fees/transaction cost are capitalized and amortized over the life of the loan.

• Debt issuance cost/loan processing fees/transaction cost are costs incurred in obtaining a loan.

• These costs are capitalized and amortized over the life of the loan.

• The amortization of these costs reduces the effective interest rate of the loan.

• The accounting treatment for these costs is in accordance with the guidance in ASC 835-30.

• Examples of these costs include l...read more

Assertions for Accounts Payable and testing unrecorded liabilities.

• Assertions for Accounts Payable include completeness, accuracy, existence, valuation, and rights and obligations.

• To test for unrecorded liabilities, perform a search for unrecorded liabilities by reviewing vendor invoices, purchase orders, and receiving reports.

• Another way to test for unrecorded liabilities is to review subsequent cash disbursements after the balance sheet date.

• Confirmations with vendors can a...read more

Deferred revenue and unearned revenue are the same thing. They refer to revenue received in advance of being earned.

• Deferred revenue and unearned revenue are both liabilities on a company's balance sheet.

• They represent revenue that has been received but not yet earned.

• An example of deferred revenue is a subscription service that is paid for in advance.

• An example of unearned revenue is a deposit received for a future service or product.

• Deferred revenue is recognized as revenue...read more

Property, plant and equipment can be tested through physical inspection, documentation review and analytical procedures.

• Perform a physical inspection of the assets to ensure they exist and are in good condition

• Review documentation such as purchase invoices, maintenance records and depreciation schedules

• Perform analytical procedures such as comparing the current year's depreciation expense to prior years

• Consider testing for impairment if there are indicators of potential impai...read more

Ind AS 570 outlines three types of sampling reports: Type 1, Type 2, and Type 3.

• Type 1 report is issued when the auditor identifies no material misstatements in the sample.

• Type 2 report is issued when the auditor identifies material misstatements in the sample and concludes that the population may contain material misstatements.

• Type 3 report is issued when the auditor identifies material misstatements in the sample and concludes that the population contains material misstatem...read more

Prudence concept is an accounting principle that requires caution and carefulness in financial reporting.

• Prudence concept suggests that a company should not overstate its assets or income, and should not understate its liabilities or expenses.

• It is also known as conservatism principle.

• This principle helps in avoiding over-optimism and overconfidence in financial reporting.

• For example, if a company is uncertain about the collectability of its accounts receivable, it should rec...read more

Amortization is for intangible assets, while depreciation is for tangible assets.

• Amortization is the process of spreading the cost of an intangible asset over its useful life.

• Depreciation is the process of allocating the cost of a tangible asset over its useful life.

• Examples of intangible assets that are amortized include patents, copyrights, and trademarks.

• Examples of tangible assets that are depreciated include buildings, machinery, and vehicles.

Recent amendments in SAS focus on enhancing audit quality and transparency.

• Amendments include changes to auditor reporting requirements to provide more relevant information to stakeholders.

• Enhancements to audit procedures to improve detection of fraud and errors.

• Updates to standards for auditing accounting estimates and related disclosures.

• Increased focus on risk assessment and response in audits.

• Changes to requirements for communication between auditors and audit committees.