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 related party transactions has been increased from Rs. 10...read more

To check cash and bank balances, I would perform bank reconciliations, verify deposits and withdrawals, and review bank statements.

• Perform bank reconciliations to ensure the balance in the company's books matches the bank statement

• Verify deposits and withdrawals by comparing them to supporting documentation such as deposit slips and checks

• Review bank statements for any discrepancies or unauthorized transactions

• Investigate any differences between the company's records and the ...read more

I have been engaged in auditing various industries including manufacturing, retail, technology, and financial services.

• Manufacturing industry audits involved reviewing inventory management and cost control processes.

• Retail industry audits focused on sales and revenue recognition practices.

• Technology industry audits included assessing internal controls over software development and intellectual property.

• Financial services audits involved evaluating compliance with regulatory r...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, industry norms, and regulatory requirements.

• For example, a $1...read more

Assertions are claims or statements made by management regarding the financial statements.

• Assertions are made by management about the accuracy, completeness, and validity of the financial statements.

• There are different types of assertions such as existence, completeness, valuation, rights and obligations, etc.

• Auditors use these assertions to assess the risk of material misstatement in the financial statements.

• For example, the existence assertion states that assets and liabili...read more

Revenue recognition is the process of recording revenue in the financial statements when it is earned, regardless of when the cash is received.

• Revenue is recognized when it is realized or realizable and earned.

• The amount of revenue to be recognized is based on the consideration received or expected to be received in exchange for goods or services.

• Revenue recognition principles may vary based on the industry and specific circumstances.

• Examples include recognizing revenue from ...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 transaction price to the performance obligations, and rec...read more