Audit Interview Questions And Answers

Audit or Auditing is an important term used in accounting that describes the examination or inspection of something to check if it is accurate, valid, and compliant with the rules or regulations. It is usually performed by an independent party to assess the performance, processes, or financial statements of an organization, business, or individual. The purpose of an audit is to identify any discrepancies, errors, or fraud and to provide assurance that the information being examined is reliable and trustworthy.

There are many different types of audits that can be conducted, some of as noted below.

Financial Audit: This type of audit is focused on examining an organization’s financial statements to ensure they are accurate, complete, and comply with accounting standards.

Internal Audit: Internal audit is conducted by an organization’s internal audit function and is focused on evaluating the effectiveness of an organization’s internal controls, risk management processes, and governance practices.

Operational Audit: An operational audit is focused on evaluating an organization’s operations, processes, and systems to identify opportunities for improvement and enhance efficiency and effectiveness.

Compliance Audit: Compliance audit is focused on ensuring that an organization is complying with applicable laws, regulations, and policies.

Information Technology (IT) Audit: IT audit is focused on evaluating an organization’s IT systems, infrastructure, and processes to identify security risks, ensure data privacy and compliance with industry standards.

Forensic Audit: Forensic audit is conducted to investigate financial fraud, embezzlement, or other illegal activities that may have occurred within an organization.

Environmental Audit: An environmental audit is focused on evaluating an organization’s impact on the environment, including its compliance with environmental laws and regulations.

Social Audit: Social audit is focused on evaluating an organization’s impact on society and social issues such as labour practices, community involvement, and human rights.

Other audits also include External audit, IRS tax audit, payroll audit, Pay audit, Value for money audit, Special audit etc. The specific type of audit conducted will depend on the organization’s needs, objectives, and the scope of the audit.

Auditing in depth is a comprehensive and detailed approach to auditing that involves an in-depth examination of an organization’s financial and operational systems and processes. It goes beyond a traditional audit that may focus primarily on financial statements and accounting records.

An audit is an independent examination of an organization’s financial statements, records, and operations to assess whether they are accurate and comply with relevant laws and regulations. Audits are typically conducted by external or internal auditors, and the main reasons for conducting an audit include:

• Compliance
• Financial reporting
• Risk management
• Actions that result in an audit being conducted:
• Regulatory requirements
• Suspicion of fraud or irregularities
• Changes in ownership or management
• Random selection for monitoring compliance and identifying potential risks.

Vouching is a process used by auditors to test the validity of transactions and balances in an organization’s financial statements. It involves selecting individual transactions or balances and examining the underlying source documents to ensure that they are valid and properly recorded.

The purpose of vouching is to ensure that transactions and balances are properly supported by valid source documents, and to identify any discrepancies or errors in the financial records. This helps auditors to assess the accuracy and reliability of an organization’s financial statements, and to identify any potential risks or fraud.

ACA stands for Associate Chartered Accountant. It is a professional qualification awarded by the Institute of Chartered Accountants in England and Wales (ICAEW). It is a widely recognized and respected qualification in the accounting and finance industry, and it is often a requirement for those seeking a career in audit.

The main difference between internal and external audit is the focus and purpose of the audit team. Internal audit is focused on improving an organization’s operations and is conducted by employees of the organization, while external audit is focused on providing assurance to stakeholders on the accuracy and reliability of an organization’s financial statements and is conducted by third-party auditors.

Examples of Internal Audit:

• Compliance Audit
• Internal Financial Audit
• Performance Audit
• Technology Audit
• Construction Audit
• Special investigation
• Informational systems Audit
• Environmental Audit etc.

Accounting involves the recording, classification, and summarization of financial transactions for the purpose of producing financial statements. Auditing, on the other hand, involves the independent examination of those financial statements to assess their reliability and accuracy.

In this regard, George A. Terry states:

“The planning, organising, actuating and controlling compared to what might be called the norm of successful operation are the essential meaning of management audit. It reviews the company’s past, present and future. The areas the company covers are ex-amined with a view to determine whether the company is achieving maximum results out of its endeavours”.

Before an audit process can begin, the following steps are typically taken to prepare for the audit:

Planning: Determine the scope and objectives of the audit and develop an audit plan.

Preparing documentation: Gather relevant documentation, such as financial statements and internal policies. Determine the purpose of the audit whether it complies with government regulations, quality standards, internal procedures and systems

Communication: Notify the relevant parties about the audit and establish communication channels.

Conducting a risk assessment: Assess the risks involved and determine the appropriate audit procedures.

Preparing the audit team: Assemble the audit team and provide them with the necessary training and resources.

These steps are important to ensure that the audit is properly scoped, that the auditor has access to necessary information, and that the audit process is conducted efficiently and effectively.

The 5 Cs of internal audit are:

 Compliance, Control, Confidentiality, Communication, and Competence.

Decommission liability refers to the financial obligation or liability that an organization may have to incur in order to retire or remove an asset or facility from service at the end of its useful life. This may include costs related to dismantling, decontaminating, and disposing of equipment, as well as restoring the site to its original condition. Decommission liability is an important consideration for organizations that operate assets or facilities that have a limited useful life, such as power plants, oil rigs, or mines, as it can have significant financial implications.

An internal audit checklist is a tool used by internal auditors to ensure that they cover all the essential areas during an audit. Here are some elements that you may consider including in your internal audit checklist:

• Financial Statements
• Warrants / Vouchers
• Bills / Receipts
• Disbursements / checks
• Bank Reconciliation
• Income
• Risk Management
• Treasurer’s Reports
• Taxes

ISO 9001:2000 is a previous version of the ISO 9001 quality management system (QMS) standard. It was first published in the year 2000 and was replaced by ISO 9001:2008 and then by ISO 9001:2015 (Current). ISO 9001:2000 provided a framework for organizations to establish and maintain a quality management system that meets the needs of their customers and other stakeholders. It emphasized the importance of customer satisfaction, continuous improvement, and a process-based approach to managing quality.

ISA 610 is an international auditing standard developed by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC). It provides guidance to external auditors on how to use the work of internal auditors in the audit of financial statements.

INTOSAI stands for International Standards of Supreme Audit Institutions. These standards provide guidance to auditors in the public sector on how to conduct audits of government organizations and programs. The INTOSAI standards cover a broad range of audit areas, including financial audits, performance audits, and compliance audits.

key difference between the two types of audits is that regulatory or statutory audits focus on compliance, while performance audits focus on performance improvement (daily Performances.

IRS stands for Internal Revenue Service. It is the tax collection agency of the United States (US) federal government. The IRS is responsible for administering and enforcing the federal tax laws, including the collection of income taxes, employment taxes, excise taxes, estate and gift taxes, and other federal taxes. The taxes collected by the IRS are used to fund government programs and services, including national defence, infrastructure, social security, healthcare, and education. The IRS plays a crucial role in supporting the functioning of the federal government and maintaining the stability of the economy. 

Here are some common audit findings that may arise during an audit:

• Inaccurate or incomplete financial statements
• Lack of adherence to generally accepted accounting principles
• Non-compliance with laws and regulations
• Lack of Documentation
• Inefficiencies
• Inadequate risk management
• Improper classification of transactions