Internal Audit Interview Preparation: Essential Questions for CA Articleship Seeker
Introduction:
Preparing for an internal audit interview as a CA Articleship seeker can be a challenging yet rewarding experience. Internal audit interviews often test your knowledge of auditing concepts, practical scenarios, and your ability to apply technical skills in real-world situations. This blog offers essential internal audit interview tips to help you understand the crucial topics, such as IFC applicability, key auditing standards, and control mechanisms. With these insights, you’ll be well-equipped to impress your interviewer and secure that coveted articleship role in internal audit.
Features Of Internal Audit
| Feature | Description |
|---|---|
| Objective | To improve an organization’s operations and add value. |
| Governance | Conducted by internal staff or outsourced providers. |
| Scope | Can be wide-ranging, including operational efficiency, risk management, and compliance with policies and procedures. |
| Frequency | Can be continuous or at regular intervals throughout the year. |
| Appointment | Internal auditors are appointed by management. |
| Reporting | Reports are presented to management and/or the audit committee. |
| Regulation | Governed by the standards set by the Institute of Internal Auditors or similar bodies. |
| Focus Area | Broader focus on business practices, processes, and risk management. |
| Legal Requirement | Not legally required but may be mandated by corporate governance codes. |
| Nature of Work | More advisory and consultative. |
Essential Questions for CA Articleship Seeker
| Question | Answer |
|---|---|
| IFC Applicability | IFC is applicable to private companies with turnover > 50 crore or outstanding loans & borrowings > 25 crores, as per the latest audited financial statement. |
| Section 138 of Companies Act | Section 138 mandates certain companies to appoint an internal auditor who can be a CA, cost accountant, or other professionals as decided by the Board. |
| SA 315 related questions | SA 315 deals with identifying risks of material misstatement through understanding the entity and its environment. |
| What is risk? | Risk refers to events that could adversely affect an organization’s objectives or impact the reliability of financial reporting. |
| What is segregation of duties? | Segregation of duties is an internal control principle ensuring that no single individual controls all aspects of any significant transaction. |
| Maker-checker principle | This principle ensures one person creates transactions (maker), and another verifies and approves them (checker). |
| What do you mean by Internal Controls? | Internal controls are processes ensuring financial integrity, accountability, and fraud prevention within an organization. |
| Meaning of Control Owner | The control owner is responsible for implementing and maintaining a specific internal control, ensuring it operates as intended. |
| Meaning of control environment | The control environment is the set of standards, processes, and structures forming the basis for carrying out internal control in an organization. |
| How will you determine the operating effectiveness of internal control? | By testing controls through observation, inspection, and re-performance to ensure they work as intended. |
| Practical situations based questions on internal audit. | These involve case studies or scenarios where internal audit principles are applied to specific situations or problems. |
| SA 610 related questions | SA 610 focuses on how external auditors can use the work of internal auditors and the considerations for assessing the internal audit function. |
| What is the risk control matrix? | A risk control matrix identifies and assesses the risks in different areas of an organization and the controls in place to mitigate them. |
| What are the reporting requirements under ICFR? | Reporting involves management’s assessment of the organization’s internal control over financial reporting. |
| What is your view on automation software replacing internal audit? | Automation software can improve efficiency but cannot fully replace the judgment and expertise of human auditors. |
| What is the P2P process? What will you verify in Internal Audit? | P2P (Procure-to-Pay) involves steps taken to procure goods or services. Internal Audit verifies effectiveness, adherence to policies, and risks of fraud/non-compliance. |
| What is the Order to Sales process? What will you verify in Internal Audit? | The Order to Sales process includes all steps from receiving orders to delivering products/services. Internal Audit checks accuracy, efficiency, and compliance. |
| What is the approval mechanism? | An approval mechanism involves a formal process for reviewing and approving transactions at various levels of authority. |
| What is supply chain management? | Supply chain management involves overseeing the flow of goods/services, including movement/storage of raw materials, inventory, and finished goods. |
| GST compliance related, e-way bill related questions will also be asked | These questions cover compliance requirements under GST, such as filings, tax calculations, input tax credits, and e-way bills. |
| Income tax – TDS, TCS, Advance tax related questions will also be asked | Questions focus on compliance with income tax laws, including TDS, TCS, and advance tax payments. |
| Accounting standards and accounting basic questions will also be asked | These questions cover fundamental accounting principles and the application of accounting standards in financial statements. |
| Can you explain the concept of ‘control risk’ in internal auditing? | Control risk is the risk that a misstatement could occur in transactions, not being prevented or corrected by the entity’s controls in a timely manner. |
| How does an internal auditor assess ‘fraud risk’ within an organization? | Assessing fraud risk involves identifying potential fraud schemes, evaluating controls to prevent/detect fraud, and continuously monitoring these controls. |
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