Internal Audit

What are the audit procedures for Account Receivables testing?

Leave a Comment / Technical, All, Statutory Audit, Internal Audit, Question Bank / By

● Ledgers, Agreements and other related supporting documents are obtained from the client to ensure the completeness & accuracy transaction ● Perform ageing analysis and check whether there is any need for making provision for doubtful debts for long outstanding balances. ● Independent external Confirmations are sent to the customers and their response are noted …

What are the audit procedures for Account Receivables testing? Read More »

How to manage a team and client

Leave a Comment / HR, Technical, All, Statutory Audit, Internal Audit, Question Bank / By

Managing a team and client effectively requires a combination of strong leadership skills, effective communication, and a customer-centric approach. Here are some key strategies for managing both aspects: 1. Clear Communication: Maintain open and transparent communication channels with both your team members and clients. Clearly articulate expectations, project goals, and deadlines to ensure everyone is …

How to manage a team and client Read More »

Tell us about your Article ship challenges.

Leave a Comment / All, Statutory Audit, Internal Audit, Question Bank, HR, Technical / By

During my articleship, I encountered various challenges that allowed me to grow both personally and professionally. One of the key challenges I faced was managing tight deadlines and multiple client engagements simultaneously. As an article trainee, I had to balance my time effectively to ensure timely completion of audit assignments and other responsibilities. Another challenge …

Tell us about your Article ship challenges. Read More »

Tell us about your articleship focus.

Leave a Comment / Technical, All, Statutory Audit, Internal Audit, Question Bank, HR / By

During my articleship, my focus was primarily on gaining practical experience and exposure in the field of auditing and financial accounting. I worked under the guidance of experienced professionals in a reputed firm, which provided me with valuable opportunities to enhance my skills and knowledge. One of my main areas of focus during my articleship …

Tell us about your articleship focus. Read More »

Common Observations or audit points in Procure to Pay Process

Leave a Comment / Statutory Audit, Internal Audit, Question Bank, HR, Technical, All / By

During the audit of the Procurement-to-Pay (P2P) process, there are several common issues or observations that auditors often encounter. These issues can lead to inaccuracies, inefficiencies, compliance breaches, and financial losses. Here are some common audit issues or observations in the Procurement-to-Pay process: 1. Lack of Segregation of Duties (SoD): One of the primary concerns …

Common Observations or audit points in Procure to Pay Process Read More »

Tell us about your observations in audit.

Leave a Comment / Technical, All, Statutory Audit, Internal Audit, Question Bank, HR / By

Here are some examples you can use 1. Misclassification of Air Conditioners/other appliances as Office Equipment ACs, whether installed in Factory or in Office should be treated as Plant and Machinery with 15 Years useful life. But they are often misclassified as Office Equipment with 5 years useful life under Schedule II of Companies Act. …

Tell us about your observations in audit. Read More »

What do you mean by walkthroughs and control testings?

Leave a Comment / Statutory Audit, Internal Audit, Question Bank, Technical, All / By

In the context of auditing, walkthroughs and control testing are two important procedures used to assess the effectiveness of a company’s internal controls. Walkthroughs: A walkthrough is a step-by-step review of a process or system to gain an understanding of its design and operation. It involves following a transaction from its initiation to its final …

What do you mean by walkthroughs and control testings? Read More »

What is MRL and why it is used and who takes it? If not received, then what will be the effect on audit opinion in audit report?

Leave a Comment / Technical, All, Statutory Audit, Internal Audit, Question Bank / By

MRL stands for Management Representation Letter. It is a letter obtained by the auditor from the management of the audited entity. The purpose of the MRL is to document management’s acknowledgement of its responsibility for the financial statements and to confirm various representations made to the auditor during the audit process. The MRL is used …

What is MRL and why it is used and who takes it? If not received, then what will be the effect on audit opinion in audit report? Read More »

If debtors’ confirmations are not received, then how would you deal with this kind of situation?

Leave a Comment / Statutory Audit, Internal Audit, Question Bank, Technical, All / By

If faced with a situation where debtors’ confirmations are not received during an audit, the following steps can be taken: 1. Alternative Audit Procedures: In the absence of debtor confirmations, the auditor can employ alternative audit procedures to obtain sufficient and appropriate audit evidence. This may involve performing analytical procedures, such as comparing the debtor …

If debtors’ confirmations are not received, then how would you deal with this kind of situation? Read More »

What is internal control?

Leave a Comment / Technical, All, Internal Audit, Question Bank / By

Internal control refers to the system of policies, procedures, practices, and structures established within an organization to safeguard its assets, ensure accuracy and reliability of financial reporting, promote operational efficiency, and comply with laws and regulations. The primary goal of internal control is to minimize risks and provide reasonable assurance that the organization’s objectives are …

What is internal control? Read More »

Difference between internal audit and icfr?

Leave a Comment / Technical, All, Internal Audit, Question Bank / By

Internal Audit and Internal Control over Financial Reporting (ICFR) are two distinct concepts under the Companies Act. Let’s explore the differences between them and refer to the relevant sections of the Companies Act. Internal Audit: Internal audit is a process conducted within an organization to assess and improve the effectiveness of risk management, control, and …

Difference between internal audit and icfr? Read More »

What do you mean by debt extinguishment?

Leave a Comment / Technical, All, Finance, Financial Management, Investment Banking, Statutory Audit, Internal Audit, Question Bank / By

Debt extinguishment occurs when a debt instrument is terminated. This occurs when the borrower repays the lender or bonds are retired by the issuer. Extinguishment may not involve full repayment of a debt; the two parties may agree on a lesser repayment amount if the borrower is unable to make a full repayment of the …

What do you mean by debt extinguishment? Read More »

What do you understand by debt covenant?

Leave a Comment / Statutory Audit, Internal Audit, Question Bank, Technical, All, Finance, Financial Management, Investment Banking / By

Debt covenants can simply be defined as agreements between the business and the creditors. Under this, the borrowing company is supposed to abide by certain conditions, in order to be entitled to receive the loan. If those conditions are not met, the borrower is considered to be a defaulter. For instance, “the borrower shall not …

What do you understand by debt covenant? Read More »

Difference between virtual certainty and reasonable certainty?

Leave a Comment / All, Finance, Statutory Audit, Internal Audit, Question Bank, Technical / By

Virtual certainty determination is a matter of judgement to be evaluated on a case to case basis , should be supported by convincing evidence, i.e., evidence available at reporting date in concrete form and cannot be based merely on forecasts of performance Reasonable certainty would normally be achieved by examining past records of the enterprise; …

Difference between virtual certainty and reasonable certainty? Read More »

What do you mean by walkthroughs and control testing?

Leave a Comment / Technical, All, Finance, Statutory Audit, Internal Audit, Question Bank / By

A walkthrough test is an examination of each step involved in a transaction. A transaction is traced right from the beginning to the end to understand the process flow A walkthrough test is an auditing technique that examines a process from initiation to completion. It is done on a very small sample – it may …

What do you mean by walkthroughs and control testing? Read More »

How will you carry out a risk-based assessment?

Leave a Comment / Technical, All, Internal Audit, Question Bank / By

● A risk assessment is a systematic process that involves identifying, analyzing, and controlling hazards and risks. It is performed to determine which measures are, or should be, in place to eliminate or control the risk in the workplace in any potential situation. ● The process of risk assessment generally includes the following steps: ○ …

How will you carry out a risk-based assessment? Read More »

What is the use and purpose of Excel Pivot Table, VLOOKUP, HLOOKUP, SUMIF, and Index Match?

Leave a Comment / Technical, All, Financial Management, FP&A, Statutory Audit, Internal Audit, Question Bank / By

● Pivot Table is an interactive way to quickly summarize large amounts of data. It is used to summarize, sort, reorganize, and group. It allows us to extract the significance from a large, detailed data set. ● VLOOKUP: It is a function that makes Excel search for a certain value in a column, to return …

What is the use and purpose of Excel Pivot Table, VLOOKUP, HLOOKUP, SUMIF, and Index Match? Read More »

Deferred tax asset and liabilities

Leave a Comment / Technical, All, Finance, Statutory Audit, Internal Audit, Accounting, Question Bank / By

Deferred tax asset When profits as per tax laws is more than profits as per books of accounts, A deferred tax asset is required to be created. Deferred Tax Asset journal entry Deferred Tax Asset A/C……. Dr To Profit & Loss A/C………. It is shown under the head of Non Current Assets in the balance …

Deferred tax asset and liabilities Read More »

What are the Golden Rules of Accounting?

Leave a Comment / Internal Audit, Accounting, Question Bank, Companies, Technical, All, Statutory Audit / By

Golden Rules of Accounting: 1 Debit The Receiver, Credit The Giver 2 Debit What Comes In, Credit What Goes Out 3 Debit All Expenses And Losses, Credit All Incomes And Gains Different types of Accounts: ❖ Personal: Personal Accounts are the ones that are related with individuals, companies, firms, group of associations etc. Eg Veer’s …

What are the Golden Rules of Accounting? Read More »

Journal Entries and Differences between Bad Debts and Provision for doubtful debts

Leave a Comment / Statutory Audit, Internal Audit, Accounting, Question Bank, Technical, All / By

Bad Debts Bad Debts amount to that portion of the debts which are either irrecoverable or whose probability of recovery is very rare. Bad Debt Account (Debit), Debtor’s Account (Credit) Provision For Doubtful Debts Provision for bad debts is the estimated percentage of total doubtful debt that needs to be written off during the next …

Journal Entries and Differences between Bad Debts and Provision for doubtful debts Read More »

Differences between Contingencies and Reserves

Leave a Comment / Technical, All, Statutory Audit, Internal Audit, Accounting, Question Bank / By

Contingencies A contingency reserve is retained earnings that have been set aside to guard against possible future losses. A contingency reserve is needed in situations where a business occasionally suffers significant losses, and needs reserves to offset those losses. Reserves Reserves are part of profits or gain that has been allotted for a specific purpose. …

Differences between Contingencies and Reserves Read More »

Journal Entries and Differences between Provision & Contingent Liability

Leave a Comment / Accounting, Question Bank, Technical, All, Statutory Audit, Internal Audit / By

Provision Provision liability reduces an asset’s value because of a present obligation arising out of a past event The event which can result in a provisional liability may or may not occur. The estimated amount of the provisional liability is not certain Any increase or decrease in provision liability gets recorded in the Profit and …

Journal Entries and Differences between Provision & Contingent Liability Read More »

Journal Entries and Differences between Accrued Payable & Accrued Expenses

Leave a Comment / Technical, All, Statutory Audit, Internal Audit, Accounting, Question Bank / By

Accrued Expenses Accrued Expenses is a term used in accounting where the expense is recorded in the books before it is paid for. Expenses are periodic and are listed on the balance sheet as Accrued Expenses as current liability in balance sheet such as Rent, wages, bank loan interest where payments are made monthly Interest …

Journal Entries and Differences between Accrued Payable & Accrued Expenses Read More »

What are the new requirements in CARO 2020

Leave a Comment / Statutory Audit, Internal Audit, Question Bank, Companies, Technical, All / By

To enhance the scope of the audit, the MCA in consultation with the National Financial Reporting Authority (NFRA) released the CARO 2020. It lists out the subject matters on which the applicable companies are mandatorily required to report. CARO 2020 is applicable for all statutory audits commencing on or after 1 April 2021 corresponding to …

What are the new requirements in CARO 2020 Read More »

What is sampling? How do you choose samples? Sampling Methods? ‘Audit sampling’ refers to

Leave a Comment / Technical, All, Statutory Audit, Internal Audit, Question Bank / By

‘Audit sampling’ refers to the application of audit procedures to less than 100% of items within a population relevant under the audit, such that all sampling units (i.e. all the items in the population) have a chance of selection (EQUAL chance in case of random sampling). This is to ensure that the items selected represent …

What is sampling? How do you choose samples? Sampling Methods? ‘Audit sampling’ refers to Read More »

What are the objectives of the entity behind the imposition of controls? Benefits of Understanding of Internal Control? Limitations of Internal Control?

Leave a Comment / Technical, All, Statutory Audit, Internal Audit, Accounting, Question Bank / By

Internal Controls are the policies and procedures that a company implements to ensure efficiency of business operations, reliability of financial reporting, compliance with laws & regulations, safeguarding of assets and prevention of frauds. Objectives of Internal Control A. Transactions are executed in accordance with management’s general or specific authorization; B. all transactions are promptly recorded …

What are the objectives of the entity behind the imposition of controls? Benefits of Understanding of Internal Control? Limitations of Internal Control? Read More »

What are the deficiencies of control (Specifically asking about Design Deficiency and Operating Effectiveness)?

Leave a Comment / Internal Audit, Question Bank, Technical, All, Statutory Audit / By

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A deficiency in design exists when (a) a control necessary to meet the control …

What are the deficiencies of control (Specifically asking about Design Deficiency and Operating Effectiveness)? Read More »

What are preventive and Detective Controls? Give an example.

Leave a Comment / Technical, All, Statutory Audit, Internal Audit, Question Bank / By

Preventive controls include security mechanisms, tools, or practices that can mitigate undesired actions. An example of preventive control is firewalls, anti virus software etc. Detective controls are designed to find and verify whether the preventive or corrective controls are working. Detective controls are designed to detect errors. Examples include audit trails, logs and CCTVs. Note: …

What are preventive and Detective Controls? Give an example. Read More »

What are controls? How are they different from Procedures?

Leave a Comment / Technical, All, Statutory Audit, Internal Audit, Accounting, Question Bank / By

Procedures are the systems that are set in place to meet the established standards of the organization. 1. Processes are the actions performed by accounting personnel that are not controls. Controls, on the other hand, are the actions that ensure safety and accuracy. 2. A process is what is being done while Controls ensure accuracy …

What are controls? How are they different from Procedures? Read More »

Difference between Internal Audit and External Audit?

Leave a Comment / Technical, All, Statutory Audit, Internal Audit, Question Bank / By

An internal audit is an independent assessment of an organization’s operations and financial reporting processes, conducted by employees of the organization or by an independent third party. The primary goal of an internal audit is to evaluate the effectiveness of the organization’s internal controls and to identify areas for improvement. An external audit (also known …

Difference between Internal Audit and External Audit? Read More »

Study Smart: The Ultimate Exam Guide by Yugantar Gupta
Scroll to Top