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First of all a heartiest Congratulation to all of you for clearing your CA intermediate examination and you're welcome to our website where you can check all your queries regarding your Articleship,Career etc.In this Blog post we are providing some important for technical round question for CA Articleship in Internal Audit domain here in this post you got to know about all the question that will be asked in technical round of all the big 4s and big 20 firm for your CA articleship
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CA Articleship internal audit question
CA Articleship technical round questions of internal audit with answer for big 4s,big 20
Que 1. For Whom Internal Audit is Applicable
(a) Every Listed Companies
(b) Every unlisted public company if satisfy any of the criteria given as under-
- paid-up share capital of fifty crore rupees or more during the preceding financial year
- turnover of two hundred crore rupees or more during the preceding financial year
- outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year
- outstanding deposits of twenty five crore rupees or more at any point of time during the preceding financial year; and
(c) Every private company if satisfy any of the criteria given as under-
- turnover of two hundred crore rupees or more during the preceding financial year; or
- outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year:
Que 2. Steps to perform Internal Audit.
Answer:
• Determine the areas that need to be audited.
• Ascertain the frequency such area needs to be audited
• Prepare a schedule and maintain consistency
• Brief the people involved beforehand so they're prepared
• Formulate the audit checklist and execute the audit
• Document and analyze the findings
• Define remediation controls to improve the shortcomings
• Monitoring & following up in the future.
Que 3. What are the important aspects to be considered by an external auditor in the evaluation of the internal audit function?
Answer: He shall determine the adequacy of the Internal audit work for his own purposes through:
• Objectivity of internal auditor
• Competency of the internal auditor
• Application of systematic & disciplined approach
Que 4. Explain what is required to perform an internal audit?
Answer: In order to perform an internal audit, a complete process walkthrough should be conducted of relevant business processes as per scope of audit. The roles and responsibilities of people involved and documents / workflow maintained should be noted along with the relevant financial information basis discussions with the relevant stakeholders and employees of the company to understand the as is process knowledge. Further, company management should commit to provide any assistance that may be required to perform the audit.
Que 5. Can you describe substantive tests and when we use them in the process of auditing the business process?
Answer: Substantive tests are tests conducted by the auditor to obtain evidence w.r.t.
Completeness, validity and accuracy of account balances and related transactions. During substantive tests, all the documents are thoroughly checked to catch and correct even the small
errors.
Que 6: What are the qualities that an internal auditor should possess to be effective?
Answer:
• The Internal auditor should possess the expertise for evaluating management control systems, especially financial and accounting controls.
• Knowledge of technology and commercial practices to evaluate the operational performance and non-monetary controls.
• Basic knowledge of commerce, laws, taxation, cost accounting, economics, quantitative methods and EDP systems.
• Understanding of management principles and techniques.
• Questioning & an analytical mindset
• Solution driven approach
• Ability to deal with people.
Que 7. Why is Internal Audit necessary?
Answer: Internal Audit is increasingly becoming necessary because of the following reasons:
• Increased compliance requirements. Monk
• Unconventional Business models
• Extensive use of IT in businesses rive To Win
• Cut throat competition
• Increased size and complexity of businesses
Que 8. Difference between process and controls?
Answer: Processes are actions done to accomplish a task, for example, sending a material requisition note to the stores department. Controls are put in place to ensure the accuracy of such processes, for example, ensuring that such material requisition was authorized, documented and reconciled at various stages.
Que 9. What is IFC?
Answer: Internal Financial Controls are the policies and procedures adopted by the company to ensure:
• Orderly and efficient conduct of business, including adherence to company's policies
• Safeguarding of assets,
• Prevention and detection of fraud and errors,
• Accuracy and completeness of the accounting records and
• Timely preparation of reliable financial information.
Que 10. Why is an internal audit necessary?
Answer: Internal audits are an excellent way to study and assess a specific process or area. It is the best strategy to identify areas for development and address possible problems before they arise.
Corrective action must be taken when necessary without undue delay. The role of an internal audit is to provide assurance that a company's risk management, governance, and internal control processes are operating effectively. Moreover, internal audits also prove to be a defense mechanism in detecting violations of laws, regulations, and provisions of contracts and agreements.
Que 11. What is assertion?
An assertion refers to a claim or statement made by the management of an audited entity regarding the accuracy, completeness, and validity of the financial information presented in the company's financial statements. During the audit process, the external auditor evaluates these assertions to provide an opinion on the reliability of the financial statements.
There are typically five main types of assertions in audit: (mention any two)
Existence or Occurrence: This assertion pertains to whether the assets, liabilities, and transactions reported in the financial statements actually exist and have occurred during the audit period.
Completeness: This assertion ensures that all relevant and material financial information and transactions have been included in the financial statements, and nothing important has been omitted.
Rights and Obligations: This assertion deals with whether the company has the legal right to claim ownership of its reported assets and whether the liabilities disclosed are the company's obligations.
Valuation or Allocation: This assertion involves whether the financial statement items are correctly valued, including recognition of revenues and expenses in accordance with the applicable accounting principles.
Presentation and Disclosure: This assertion deals with the proper presentation and disclosure of financial information in the financial statements, ensuring that the information is understandable, relevant, and in compliance with accounting standards and regulations.What is assertion?
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