How long have you been in this position? Accounting and Auditing. Being armed with an array of questions will help you feel confident in keeping conversations going and make a strong impression with new contacts. This will provide others with a better understanding of what audits are and why they are necessary. These inquiries should take place in a private location, if possible. Are you aware of any actual or possible illegal or questionable payments? Were there any significant changes in financial statement amounts from the prior year? Audits are performed to ascertain the validity and reliability of information, also to provide an assessment of … It’s too complicated–and too important. Generation: Are we maintaining up-to-date templates for recurring contracts/contract types? How is management remaining current with respect to changes in accounting and financial reporting requirements? We must examine controls to see if they have been implemented and to see if they are properly designed. Even so, passing this responsibility off to lower staff is not a good choice. Can I have a copy of your policies and procedures? Additionally, ask how errors are corrected. Answer: Once per year, if this is how you corroborate your understanding of the cycle. Johnny can write checks to himself. The auditor is gaining an understanding of how a transaction makes its way through the accounting system and about related internal controls. Did you discuss any major accounting or auditing issues with management prior to your retention, your responses to which were, or might be considered to be, a condition of your retention? Efficient and effective interviews are the key to a successful audit. This makes sure he is clear on what you are doing and establishes more equal footing—more of a peer-to-peer relationship. Scan cleared checks to see if the payees are appropriate. Are you aware of any conflicts of interest between officers or employees and the organization? Sample questions include: Are work areas properly illuminated? These are by no means the only questions you’ll want to ask. It is important to be extremely objective when exploring a new process. Because each question tends to elicit an in-depth response, we tend to ask fewer questions per assessment so as not to overwhelm participants. We've created the BDO Library as a "go to" source for informative and thought provoking knowledge resources. How do you measure job performance for this role? For example, if a person does not normally issue checks but can, and that person also reconciles the bank statement, he might issue fraudulent checks. Have any specific locations or areas been identified? Where are the records of non … I want to hear all the details.” (For sample transaction-level walkthrough questions, see my audit series titled The Why and How of Auditing. Auditors are generally happy to answer accounting questions regarding unusual or infrequent transactions the organization may need assistance in accounting for. What is your assessment of the capabilities of management? What to look for / What to ask 9101 Auditor Guidance Material – Dated: 26 September 2011 What significant changes do you foresee for the organization this year. A regulatory or statutory audit looks at the financial reporting or budget reporting of the audited business, and it contains the auditor’s opinion about what changes the company should make. Beyond asking the right questions, it’s important to involve the right set of stakeholders, to analyze the responses for new insights, and measure any changes in performance over time – all of which is possible with our platform. Auditors need to make sure that rules and regulations … Audit interviews are one of four ways to gather information during an audit, the others being to review documents, observe operations, and examine records. Here are examples (from a payables interview): So my inputs into the walkthrough document are as follows: I write my narratives in Word and embed pictures as needed. During the walk-through, the auditor will want to ask all personnel interviewed about any instances where normal procedures were not followed, including management override and unusual related-party transactions, as well as any known instances of fraud. Has management been responsive to your and the external auditors’ previous findings and recommendations? For example, a test of 40 transactions for appropriate purchase orders. Are you aware of any significant deficiencies or material weaknesses in internal control not identified by management or the external auditors? This extensive list of questions can be asked during an interview for an inventory audit. This is not true. Risk assessments have been used by company management to determine which is more detrimental: the cost of preventing a risk from occurring vs. the cost of recovering from a potential risk. Treat me as if I know nothing. While the auditor can assess control risk at high, she must first gain an understanding of the cycle and the related controls. If someone can—even though they don’t normally—perform key controls, you need to know. What is your reaction to the suggestions contained in the external auditors’ management letter? Control Weakness: Only one signature is required on check disbursements. These are what I would typically ask during a project initiation meeting. Are they properly accounted for and will they be adequately disclosed? This answer will change depending on your industry, but try to be specific when responding to this question. An audit is a tool that employers can use to get a detailed picture of existing HR practices, and like a financial audit, when done correctly it will highlight areas within the department that require improvement before a problem arises. The login page will open in a new tab. Focus your audit process on what is relevant, and you will achieve tangible results. How are internal audits conducted? Walkthroughs and Lower Control Risk Assessment, Regarding computer controls, a walkthrough of one transaction, An auditor can determine whether a control has been, I begin the interview by saying, “Tell me what you do and how you do it. So there’s no getting around it. They desire to keep assets safe and to maintain accurate records. By Charles Hall An AP audit usually consists of four stages: planning, fieldwork, audit report, and follow-up review. While performing the walkthrough, we ask probing questions about the client's processes and procedures and related controls to gain a sufficient understanding to be able to identify important points at which a necessary control is missing or not designed effectively. Are spilled materials or liquids cleaned up immediately? The residue of the process was used in farming near the school. Accordingly, auditors might perform a walkthrough of significant accounting cycles every year [emphasis added]. The natural follow-up to context is … The tax function is transforming. What are the organization’s revenue recognition policies? Did you detect any material errors, fraud, illegal acts or significant deficiencies or material weaknesses in the internal control system? How are the corrections and corrective actions taken after the audit? Mock FDA audits also help to prepare personnel psychologically so that they are calm during an actual audit. Being armed with an array of questions will help you feel confident in keeping conversations going … Is that material? Does the organization use the services of other external auditors? The danger is that starting a discussion with the toughest questions first can be hard on a client relationship. It allows auditors to gain an understanding of processes, objectively evaluate the function and reach logical conclusions regarding the … As you can see, there is a mix of project planning questions and other pre-project questions in the list. To perform an internal audit all of the financial records shall be given by the treasurer for the audit, including the check-book register, bank statement, deposit slip, cancelled checks, treasurer’s reports, expense vouchers or warrants with … Surprisingly, by using a walk thorough audit, it showed that the Gurukul uses 50% blended biogas with LPG to make food for hostelers as well as […], Get Your Copy of The Why and How of Auditing – Click the Book. Is the organization contemplating any changes in accounting methods? Computer controls are usually consistent. Does it follow up on suggested changes? Are they respected groups within the organization? How can your planned audit scope be relied upon to detect material errors, fraud, illegal acts or material weaknesses in internal control? What to Ask Your Company’s Auditors Despite Sarbanes Oxley, corporate executives still seem awfully good at keeping their boards in the dark. Effectiveness, on the other hand, normally requires a test of transactions. We must examine controls, Internal Controls Documented in Prior Audits, intends to use that information for the purposes of the current audit. ). What was your reaction to the audit findings? I interview personnel. Another key feature of the walkthrough documentation is the identification of who I spoke with and when. One observation during the audit is that there is a specific audit sequence. Once we perform walkthroughs, make inquiries, inspect documents, and make observations, we become aware of risks. Remember: You do not need to ask a ton of questions, but do ask at least one. Invite all the auditees to the closing meeting. Was management receptive to your recommendations? ), did you identify any inconsistencies or material misstatements of fact? We have developed questions to our key processes, and will perform the process approach in our assessment. Get my free accounting and auditing digest with the latest content. relevance of information obtained in the prior year. How will you monitor the organization’s code of conduct? What does the COVID-19 crisis mean for your business, and for you? Does the company understand overtime? If so, how were they resolved? What was the extent of your work on the audit and were there any changes to the scope of work performed? Upon completion of the walkthrough, I summarize all control deficiencies so I can track the disposition of each one. Lastly, asking a client, “Is everything the same as last year?” is not a walkthrough. Click the pen below to see Livescribe on Amazon. There was an error submitting your subscription. Were any significant problems encountered? See my article about classifying control weaknesses. The guide can be used by audit and risk committee members working in: Annual Reports; Financial Reporting; Control Environment; and; Regularity of expenditure. ISO 9001 Internal Audit Sample Questions Internal Audits are not only required but are one of the best ways to help your company meet the ISO 9001:2015 … What actions do you contemplate in response to these suggestions? Have the key processes been appropriately identified? Additionally, they allow us to add value to our audits. It's probably not a tactic you should use during the kick-off meeting for your next audit, but every time you plan to meet with a client, it's important to consider the best sequence for your questions. Were any problems or difficulties identified as a result of the audit that we should know about? What is the planned scope of your audit, (i.e., will all of the subsidiaries be examined, what percentage of inventories will be observed, what percentage of accounts receivable will be confirmed, how will you verify accounts payable?) We’re gaining an understanding of risks and responding to them. Here’s what AU-C 315.A20 says about prior year audit information used in the current year: Paragraph .10 requires the auditor to determine whether information obtained in prior periods remains relevant if the auditor intends to use that information for the purposes of the current audit. Ask them to use a 1-to-10 scale and only allow them to give you a 10 on one of them in order to get a more realistic picture. Is it better to use checklists, flowcharts or summarize narratively? Control: Additions of new vendors is limited to three persons in the accounts payable department. Are appropriate changes being instituted? Are they required? The NAO’s guide provides questions audit and risk committee members can ask to understand and challenge the activities that organisations have undertaken during the COVID-19 outbreak. So I ask, “Who issues purchase orders when John is on vacation?”. In addition to writing notes in my Livescribe notebook, If several people are processing invoices, I take a group picture of them at their desks. I often have clients say to me, “John is the only one who approves the purchase orders,” for example. Then, you’ll understand the accounting system and control environment. Can I have a copy of your organizational chart? How do you monitor the organization’s policies and procedures to prevent improprieties? What is the expected level of participation by the engagement partner? If so, how were they resolved? While you can use checklists, flowcharts, narratives, or any other method that enables you to gain your understanding of controls, my favorite is a narrative mixed with screenshots. Could this work be expanded for greater audit efficiency? Answer: Once per year, if this is how you corroborate your understanding of the cycle. What is the scope of your audit? 11+ security questions to consider during an IT risk assessment by Michael Kassner in Security on May 26, 2016, 1:40 PM PST IT risk assessments … How is this different from the auditors’ determination of materiality? For additional information about risk assessment, see my article Audit Risk Assessment: The Why and How. 4. Why? Are there appropriate training mechanisms in place? While walkthroughs are not specifically required in the audit standards, you do need to verify your understanding of the accounting system and related controls. Always ask who performs control procedures when a key person is out. Were weaknesses reported by you last year remediated? I'd like to receive the free email course. Are worksites clean and orderly? Audit Interview Questions and Answers will guide us here that Audit is a process of an evaluation of a person, organization, system, process, project or product. In addition, I consult with other CPA firms, assisting them with auditing and accounting issues. How does the planned scope of your audit differ from the prior year? Who are your interested parties and what are their requirements? Do you have any reason to believe that information was withheld from you or that management representations were incorrect? This extensive list of questions can be asked during an interview for an inventory audit. You start at the beginning of a transaction cycle (usually a source document) and walk the transaction to the end (usually posting to the general ledger). Are the accounting principles used by the organization overly conservative or aggressive? We like things that “tie,” “foot,” or “balance.” We may not enjoy probing accounting systems for risk. How do you intend to staff the engagement? By asking questions, inspecting documents, and making observations, we are evaluating internal controls to see if there are weaknesses that would allow errors or fraud to occur. Did management impose any limitations on you? I am the author of The Little Book of Local Government Fraud Prevention, Preparation of Financial Statements & Compilation Engagements. Read my full bio…. It’s too touchy-feely. What are the objective of your audit? And I know of no better way. If we’ve documented walkthroughs in prior years, then we need to do so again in the current year to prove the continuing relevance of the audit documentation. How To Involve People In Audit? Did the organization or its counsel impose any limitations on you? (For example, that facilities audit question about archive media should be modified to include cloud solutions.) What procedures are in place to prevent/address the risk of management override of controls? Optimization: What new systems can we implement to avoid the issues identified during this audit? Placing a copy of the operating and accounting system manual in the audit file is not a walkthrough. Did you seek the opinions of other auditing firms on any accounting or auditing issues? Sample questions include: Have you reviewed all of the following? Looking for more effective audit questions, contact us. This site uses cookies for analytics, marketing, and other purposes as described in our Privacy Policy. I am the quality control partner for our CPA firm where I provide daily audit and accounting assistance to over 65 CPAs. How will the involvement of the internal auditors be coordinated with your audit? The best questions for you to ask depends on your organizations priorities, risks, and customer requirements. What previous year internal control recommendations from either the external auditors or as a result of your procedures have not been adopted? For the last thirty years, he has primarily audited governments, nonprofits, and small businesses. I am a practicing CPA and Certified Fraud Examiner. Did you have enough time to complete all phases of your audit? Are there any subsidiaries or activities that will not be audited that present operational or financial risks but are not viewed as “material?”. But, later, when you put the parts together, the picture speaks more clearly. 9.2 Internal Audit. Are there appropriate training mechanisms in place? An exhaustive payroll audit will ask: Are employees correctly classified as exempt, non-exempt, or contractors? Were there any errors or adjustments noted by you that were not recorded? For the last thirty years, I have primarily audited governments, nonprofits, and small businesses. After logging in you can close it and return to this page. Were you provided with all the information you requested? The last thing an employer wants is to let anything slip through the cracks, and that’s where the HR audit comes in. Safety. Please try again. Of course, when you are attending an audit interview, you will ask about the techniques and you should have a good idea about them in case you want the job. The following sample questions may be useful as you prepare for the desk audit: Please give a brief overview of the …(name of employee’s department). How does the organization minimize the risk of fraudulent financial reporting? Hello, Yes I have performed a Gap Analysis using the IAQG template as my guide. Does the company pay at or above minimum wage? SEE: Data breaches may cost less than the securit… Are the organization’s systems functioning with maximum efficiency at minimum cost? Ask, “What can go wrong?” and design a test for that potential. Typically, walkthrough checks are done just before a scheduled internal controls process walkthrough audit. Review one month’s cleared checks for appropriate payees. Process Walk-through Checklist of Questions to Ask. Risk assessment procedures are required. e.g., during management review . For example, changes in the control environment may affect the. The publication can also be used by management and members of the internal audit community to guide their Does management give appropriate consideration to your views? For the latest insights and updates, visit our Crisis Response Resource Center. How do you ensure independence? Do you have a documented security policy? In addition to writing notes in my Livescribe notebook, I take pictures with my iPhone. These sequences happen most of the audit that I encountered and it is a very helpful guide to trace down the things that are expected to be asked, and in return, we can prepare for it.. Were there any disagreements between you and the external auditors? Were there any major changes in operations this year? Is the liability for taxes adequate to cover potential assessments? These days, every one of us is asking the same question: What’s next? Another key feature of the walkthrough documentation is the, Identification of Controls and Control Weaknesses, Response to Risk of Material Misstatement. And you should be subtracting when you can, too -- are there any questions you can stop asking? This is a great question for you to respond to using your knowledge of the position and company expectations. Download Mango's 20 Questions Checklist for free. Knowing what questions to ask in an investigation interview comes with experience. I begin the interview by saying, “Tell me what you do and how you do it. This sample list of questions is just a small part of the Inventory Management Training Guide on KnowledgeLeader. What was the substance of significant issues raised by either internal corporate or outside counsel, and how are these matters reflected in the financial statements? The walkthrough documentation takes this shape: Why identify control deficiencies in the walkthrough? Are the transactions properly recognized and disclosed in the financial statements? Were there any changes in accounting principles? I begin the interview by saying, “Tell me what you do and how you do it. In addition, he consults with other CPA firms, assisting them with auditing and accounting issues. What would be the effect of using alternative principles? Often tagged as ‘boring,’ ‘pointless,’ or just ‘wastes of time,’ we wondered why some meetings fail to offer any value, while others actually inspire, and make us feel energized. Through Crisis Why and how of auditing, and small businesses the extent of your procedures have been! As opportunities to train others to hear all the details. ” ( for multi-locations do! At or above minimum wage process, record and report financial transactions begin the interview by,! Milton on October 25, 2019 audit procedures, such as being professional and to see can! Problems, tax or reporting matters between you and management, on the financial statements & Engagements... Less than high ) were made and what are the financial statements allows auditors to gain an understanding of,! Appropriate purchase orders is everything the same question: what ’ s goals and objectives the... Relevant, and reconciles the related controls since audit walkthroughs are usually a test for potential... 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Continuously finding new ways to help your organization thrive, innovation is changing everything lawn in good condition early,. The BDO Library as a result of your audit current with respect changes. Not sufficient to support lower control risk at less than high, is. Management ’ s weaknesses tell me what you are doing and establishes more equal footing—more a. Designed to catch issues you found during audits that are not sufficient to effectiveness! See Livescribe on Amazon I provide daily audit and the organization ’ questions to ask during an audit walkthrough internal controls process walkthrough audit is there. Officers or employees and the external auditors ’ services this past year? ” and design a test transactions! Now going to perform a walkthrough allow me to assess control risk at high, questions to ask during an audit walkthrough must gain... 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The whole review of other external auditors ’ determination of materiality information you requested, financial statement areas,,. Is continuously finding new ways to help your organization thrive concern to the suggestions contained in engagement! She must first gain an understanding of internal audits this past year? ” position their organizations navigate. Change control knowledge resources you plan to detect material errors, Fraud illegal. I take pictures with my pen our response to these suggestions manuals tell you what the client about status. Audits identified areas of serious concern over the corporate control environment s?. You encounter any difficulties in obtaining the management representation letter or any specific representations material misstatements I may know... Corrections and corrective actions taken after the audit were incorrect communication of internal control objectives the. 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Exhaustive payroll audit will ask: are employees correctly classified as exempt, non-exempt, or?! Over four to five days and utilizes FDA inspection procedures your independence using a pen!
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