Internal audit interview questions and answers

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Audit interviews are somehow tough as compared that to Senior accountant interview and other accounting interviews. Therefore, The internal audit interview questions are somehow technical as well. So you have to prepare for your written and oral test in order to get through your internal audit or other positions related to the audit. Senior accountant interview questions

Moreover, These questions below are ready to help you and give an amazing interview.

Audit interview questions

What do you understand by the term audit?

Answer: Auditing is a regular and systematic examination of the books of accounts and the related operation in order to check if it complies with the proper records and complies with the GAAP, accounting standards, and the other accounting policies and laws.

In other words, Auditing is an examination of accounting records undertaken with a view to establishing whether they correctly and completely reflect the transaction. Marketing interview questions

Moreover, Auditing can be defined as inspecting, Analyzing, comparison between the data, reviewing, vouching and verification, along with the ascertainment and examining the books of accounts of a business concerned. With a view to having a correct, true, and fair idea of its financial statements containing balance sheet, income statement and cash flows of the company.

Internal Audit Interview Questions

How will you detect and prevent frauds?

Answer: Frauds are always committed deliberately and intentionally to defraud the proprietors of the organization. It is, therefore, necessary that the auditor should exercise the utmost care to detect such frauds. In auditing the frauds are of following types; Cost Accountant interview questions

  1. Misappropriation or embezzlement of cash.
  2. Misappropriation of goods.
  3. Manipulation of accounts.
audit interview questions

What are the duties of an auditor in respect of frauds?

Answer:

  1. Vouch for all the receipts from the counterfoils or carbon copies or cash memos, sales reports, etc.
  2. Verify the methods of valuation of stocks.
  3. Check the stock register. good inward notes, good outwards books, and delivery challans.
  4. Check thoroughly the salary and wages register.
  5. Calculate different types of financial ratios in regard to find out the frauds and any kind of manipulations that exist in the books of accounts.
  6. Go through the details of the problems when there is suspicion.
  7. One should take care and use the skills and experience while discharging his.her duties in regard.
  8. Make a surprise visit to check the accounts.
  9. Check the details of unusual items.

Accounting interview questions and answers

audit interview questions

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How will you detect and prevent errors?

Answer: Errors are non-intentional mistakes that influence financial statements such as missing out a transaction or not declaring information in financial statements. Errors can be very serious such as a violation of regulations about finance and accounting. The different kinds of error that the auditor may find out in the course of the audit are as follows;

Clerical Errors:

Answer: Clerical Errors are the errors that take place when the accounts are posted in the wrong way. For instance, In case the payment received from one person gets credited to the amount that is received from another person. As this the matter of the posting mistake the trial balance will still be equal. Clerical errors can further be classified into three different categories;

  1. The error of commission: The error of commission will take place due to the incorrect posting in the books of accounts. These may take place either in the full amount or in the part amount. Furthermore, Error of commission takes place in the situation where amounts are incorrectly calculated, there is a mistake in totaling the amount and another balancing of the ledger’s mistakes. For example, while purchasing the furniture and furniture-related items costing $.5000 from John is paid to john and ultimately the entry is made in the cash books as well. But there comes a situation where the furniture account is debited or entered as $50 by mistake. Then this is an error of commission. Further, This error of commission which is available in the books of accounts is reflected in the trial balance. and this can be verified and found out at the time of checking and verification of the books of accounts.
  2. The error of Omission: These kinds of error occurs when a transaction is completely or partially omitted from books of accounts. Furthermore, the purchase of machinery items from John in $5,000 but not entered in the books or The sales of machinery to Ms. Mary for $500 not entered in purchase book and sales book respectively is the instance for the error of omission. Further explaining this error, If the entry for the payment of advertisement expenses of $500 is reflected in the books of accounts but the advertisement expenses are not booked. These are the error or omission. In this case, this will not affect the trial balance but the income statement will show excess profit of $500. Further, this error will be detected by the auditor while checking the books of accounts.
  3. Compensating Errors: When one error compensated another error then this type of error is called as the compensating error. Further, One entry compensates for the mistake of another entry. If one mistake entry is made in the books of accounts then another entry will be passed to offset the next entry. So these errors are known to be as compensating errors. Explaining this error with an example If John’s accounts are debited by $5,000 instead of $500. Then in order to compensate for this error. Mary’s account is Debited by $500 instead of $5000. This will offset the outstanding balances present in their accounts. Furthermore, this type of error is very difficult to trace because these will not be detected unless the full-fledged audit action or investigation is taken under.
  4. Errors of Principle: These types of error takes place when the accountant has no proper or in-depth knowledge about the accounting principles such as GAAP and accounting standards. Further, the accountant makes the entry without having the concept which leads to the error of principle. Furthermore, the Error of principle will result in inappropriate entries in the allocation of income and the expes=nditure and differentiate between the capital and revenue expenditures. Moreover, It may lead to the incorrect valuation of the stock and the inventories. Similarly, the depreciation charged may also vary as well. For example, The cost included in to install the machinery and equipment is charged in the income statement or profit and loss account instead of machinery and equipment accounts.
audit questions for interview

Entry Level Accounting Interview Questions

What measures will auditors adopt to detect errors?

  1. Verify and check the closing balances of the previous year with the opening balances of the current year. All the balance sheet items.
  2. Check the posting into respective ledger accounts.
  3. Checking the total of the subsidiary books.
  4. Verify the total of trial balance.
  5. Verify all the castings and the carryforwards.
  6. Make sure that all the accounts from the ledger are taken into accounts.
  7. Check and verify the accounts heads and items under those accounts heads and compare them with the data of the previous year.
  8. See that no entry of the original book remains unposted.
  9. Ultimately careful scrutiny is the only remedy for the detection of errors.

How accountancy differs from auditing

  1. Accountancy refers to the preparation of final accounts and its interpretation whereas auditing refers to examination and checking of these accounting records.
  2. The nature of accountancy is primarily constructive. Moreover, it is mainly concerned with the current recording of business facts whereas auditing is analytical in nature and essentially retrospective.
  3. The main objectives of accountancy are to ascertain the trading results of business concerns during a financial year whereas the objective of auditing is to certify the correctness and justifications of the financial statement prepared by the accountant.
  4. When bookkeeping records are completed they become available for the beginning of work accountancy. In other words, accountancy starts where bookkeeping ends whereas The work of auditing starts only when the work of accountancy completes. In other words, where accountancy ends, auditing starts.
  5. An accountant is not required to submit a report to the proprietor of the concern when the accounting work is over whereas The auditor must submit the report after the completion of the audit work.
audit questions for interview

Interview questions on audit

What is teeming and lading?

Answer: Teeming and the lading is a fraud in the bookkeeping that occurs due to not depositing cash in the bank accounts, delay in entering the amounts received in accounts, etc. Similarly, It is a type of fraud that involves the crediting of one account through the abstraction of money from another account.

It can happen when one customer’s payment is stolen and another customer payment is posted to hide the theft. It involves the process of debiting the payment received from one person and allocating to another person’s accounts. Therefore, It is the misappropriation of cash which is activated by making a false entry relating to a transaction, which in turn is canceled by a further entry and so on until such frauds are discovered.

Interview questions on audit

What really happens in teeming and lading?

Answer: In teeming and lading, the person who handles cash uses the money for some days and show transaction after some time. The accountant or the bookkeeper gets payment or receives the amount but does not deposit in the bank account but keeps with himself and use it for personal use. When another payment comes to him he will deposit that money against the first one used and does not show the new amount received and this process will be followed regularly.

As the amount received from the subsequent debtors credited to the earlier debtors account, one debtor account dos not show an outstanding balance for a long time. Such a process is continued until the time the original amount is misappropriated is finally replaced or until the cashier is caught.

internal audit interview questions

Explain Teeming and lading with example?

Answer: It is usually done by way of dividing say, the amounts which have been paid by the debtors for example if debtors A pays 20,000 in account the accountants may use this money and not record it at all. If debtor B pays Rs. 30,000 this may now be divided among the two debtors as if A paid Rs. 20,000 and B paid Rs. 10,000 which case B is still a debtor to the extent of Rs. 20,000. This may be carried for a long period of time.

audit interview questions and answers

Vouching of Cash Payments

Answer: The objects of vouching for the payment side of the cash book are to ensure that the payments were properly authorized, ascertain that they were entered under their appropriate head of account in the cash book, see that payments relate to business and are a proper business charge, determine that the payments are supported by the required documentary evidence and determine the closing cash and bank balances correctly. The auditor should vouch in the following lines:

  1. Checking of the internal control and internal check system: While checking the cash payments and verifying it the auditor should properly examine the proper in with reference to cash payments auditor should examine the proper internal control and internal check system. Most of the frauds or misappropriations of cash will originate from the loopholes on lapses in the internal control system.
  2. Inspecting and verification of wages: Payment of wages involves a large amount. Chances of occurring frauds are high in wage payments. Hence, the auditor should make an inspection of the certified and the corrected wages and salary sheets and similarly the testing of similar items that would satisfy the auditor. He/She should check and verify the salaries as well. There must be a detailed verification of the employees with their copy of appointment letter and check how the salaries are disbursed.
  3. Checking and verifying the petty: There should be the proper verification of the total petty cash that is available in hand along with the balances of the cash that is shown in the cash ledger.
  4. Checking of the bills payable: While in the course of audit, there should be a proper examination of bills. If there is the case that the bills are paid via bank then it should ve verified with the bank statements as well.
  5. Verification of the income and expenses: While coordinating audit the auditor will have to verify the proper income and expenses with the different revenues and expenditures.
  6. Proper verification of the creditor’s payments: There should be the proper verification and the examination The auditor should also examine the record and documentary evidence about the payments made to the creditors.
  7. Verification and Detection of missing vouchers: There must be the proper detection and the checking of the missing vouchers. Since the missing vouchers can have some inappropriateness and irregularities to some extent.
  8. Verifying the different payments made: There can be other payments other than creditors and salary such as director’s loan, commission expenses, and the allowances related to the traveling. The auditor must recognize it properly.
Internal audit interview questions and answers

Cash Discount Allowed in Sales

Answer: If a customer pays the amount at the time of purchasing goods or within the stipulated time, the vendor may allow a cash discount to the customer. There is a chance of fraud inflating the rate of discount or showing discounts allowed without providing such a discount to the customer.

So the auditor should check thoroughly according to the discount policy. The auditor should check the records on the basis of cash receipts issued while receiving cash.

Internal audit interview questions

Vouching of Purchase Returns

Answer: If a part or whole of a consignment of goods is found to be defective or of inferior quality, such goods will be returned to the supplier. When the goods are returned, the supplier’s account should be debited. The debit is made through the purchase returns book on the basis of debit notes. The supplier on receipt of the debit note issues a credit note indicating the acceptance of the debt. Internal audit interview questions

The auditor, before he starts vouching for purchase returns, should ascertain that a proper system. of internal check is in force with regard to purchasing returns in order to ensure that full credit is obtained for all goods returned.

Internal audit interview questions and answers

KPMG internal audit interview questions

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Internal audit interview questions and answers

Difference between the obsolescence and depreciation

Answer: Obsolescence is defined as the decrease in the use and the market value of the assets as compared to the previous market price. Above all, It is a very distinct situation as compared to depreciation and the wear and tear in the assets. This ultimately leads to decrease in the price of assets.

While determining the risk to be more specific while determining the operating risk obsolescence plays a major role. There can be the chances where the value of the assets or the obsolete items are required to write off with the income or the earnings. Further, These are done to maintain accounting integrity as well.

The main example, we can look at different machines or technical equipment especially in the medical field. Internal audit interview questions. Because it is not related to the nature and use of fixed assets, so it is also not depreciation. Obsolescence is not important in the field of accounting but it is important in technology research and marketing of the product.

KPMG internal audit interview questions

In conclusion these we some of the internal audit interview questions. Go through these questions and answers several times before you go for the interview. These will surely help you.

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