A collaborative effort by D2P(Degree to Placement)

Telegram link (https://t.me/caplacements ) &

crowdsourcing of material for CA Fresher’s of Nov-22

Purpose: To help CA Fresher’s navigate well in the interview process, we have gathered
the information from various social media channel,

Disclaimer: Please note we are not authors of this document and we are just facilitating
candidates, so we don’t take the responsibility of authenticity of the contents, hence no
one takes any responsibility for any loss or damage that may occur to any candidate by
referring this

Points To Be Kept in Mind Before Referring

● This list contains technical round interview questions.

Why this?
 These questions are a compilation of questions asked from the candidates who
recentlygot interviewed in big4s and Corporates.
● TIPS for Interview Preparation-
1. You do not have to cram\learn everything word by word for Interview. Just
get a basic idea of everything so that you can explain that in your own
language.
2. Treat Interviews as two-way communication.
3. Just be yourself and try to explain as much as you can.

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 | CA. Deepak S. Mulchandani

Important Audit Terms

1. Access Control: Access control is a process that is integrated into an organization's IT

environment. It can involve identity and access management systems. These systems provide access
control software, a user database, and management tools for access control policies, auditing and
enforcement.

2. Accounting Estimate: Accounting estimate is an approximation of the amount to be debited or

credited on items for which no precise means of measurement are available. They are based on
specialized knowledge and judgment derived from experience and training.

3. Accounting Records: Accounting records are key sources of information and evidence used to
prepare, verify and/or audit the financial statements. They also include documentation to prove
asset ownership for creation of liabilities and proof of monetary and non-monetary
transactions.

4. Analytical Procedures: Analytical procedures are auditing procedures that involve analysis of
relationship between financial and non-financial data. These involve investigation of identified
variances and relationships that seem inconsistent with each other or with other available audit
evidence.

5. Applicable FRF: An applicable financial reporting framework is the set of rules used as guidelines
in the preparation of financial statements. The framework used is typically based on the type of
business and where it is located, as well as the applicable laws.

6. Appropriateness of audit evidence: Appropriateness is the measure of the quality of audit

evidence, i.e., its relevance and reliability. To be appropriate, audit evidence must be both
relevant and reliable in providing support for the conclusions on which the auditor's opinion is
based.

7. Arm’s Length Transaction: An arm's length transaction refers to a business deal in which buyers
and sellers act independently without one party influencing the other.

8. Assertions: Audit Assertions are the implicit or explicit claims and representations made by the
management responsible for the preparation of financial statements regarding the appropriateness of
the various elements of financial statements and disclosures.

9. Audit Risk Assessment: Audit risk assessment procedures are performed to obtain an understanding

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of your company and its environment, including your company's internal control, to identify and
assess the risks of material misstatement of the financial statements, whether due to fraud or error.

10. Assurance Engagement: “Assurance engagement” means an engagement in which a practitioner

expresses a conclusion designed to enhance the degree of confidence of the intended users other
than the responsible party about the outcome of the evaluation or measurement of a subject matter
against criteria.

11. Audit Documentation: Audit documentation refers to the records or documentation of procedures
that auditors performed, the audit evidence that they obtained and the conclusion that makes by
them based on the evidence obtained. Audit documentation is sometimes called audit working paper
or working paper.

12. Audit Evidence: Audit evidence is evidence obtained by auditors during a financial audit and
recorded in the audit working papers. Auditors need audit evidence to see if a company has the
correct information considering their financial transactions
13. Audit Opinion: An audit opinion refers to a certification accompanying financial statements and is
provided by the independent accountants involved in auditing of a company's books and records in
addition to being helpful in creating the financial statements.

14. Audit Risk: Audit risk is the risk that financial statements are materially incorrect, even though the
audit opinion states that the financial reports are free of any material misstatements. The purpose of
an audit is to reduce the audit risk to an appropriately low level through adequate testing and
sufficient evidence. The risks are classified into three different types: Inherent risks, Control Risks,
and Detection Risks.

15. Audit Sampling: Audit sampling is the use of an audit procedure on a selection of the items within
an account balance or class of transactions. The sampling method used should yield an equal
probability that each unit in the sample could be selected.

16. Auditor's Expert – “An individual or organization possessing expertise in a field other than
accounting or auditing, whose work in that field is used by the auditor to assist the
auditor in obtaining sufficient appropriate audit evidence.

17. Business Risk: Business risk is the possibilities a company will have lower than anticipated profits
or experience a loss rather than taking a profit. Business risk is influenced by numerous factors,
including sales volume, per-unit price, input costs, competition, and the overall economic climate
and government regulations.

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18. Comparative Financial Statements: Comparative financial statements are the complete set of
financial statements that an entity issues, revealing information for more than one reporting period.
19. Completeness Assertion: The assertion of completeness is an assertion that the financial statements
are thorough and include every item that should be included in the statement for a given accounting
period.

20. Compliance Framework: A compliance framework, also known as a compliance program, is a

structured set of guidelines and best practices that details a company's processes for meeting
regulatory requirements.

21. Materiality: Materiality is a concept or convention within auditing and accounting relating to the
importance/significance of an amount, transaction, or discrepancy.

22. Control Activities: Control activities are the policies, procedures, techniques, and mechanisms that
help ensure that management's response to reduce risks identified during the risk assessment process
is carried out. In other words, control activities are actions taken to minimize risk.

23. Control Environment: Control Environment is the set of standards, processes, and structures that
provide the basis for carrying out internal control across the organization. The board of directors and
senior management establish the tone at the top regarding the importance of internal control
including expected standards of conduct.

24. Control Risk: Control Risk is the risk of a material misstatement in the financial statements arising
due to absence or failure in the operation of relevant controls of the entity.

25. Inherent Risk: Inherent risk is the risk posed by an error or omission in a financial statement due to
a factor other than a failure of internal control. In a financial audit, inherent risk is most likely to
occur when transactions are complex, or in situations that require a high degree of judgment in
regard to financial estimates.

26. Detection Risk: Detection Risk (DR) is the risk that the auditor will not detect a misstatement that
exists in an assertion that could be material (significant), either individually or when aggregated
with other misstatements.

27. Audit Engagement: An audit engagement is an arrangement that an auditor has with a client to
perform an audit of the client's accounting records and financial statements. ... This information is
stated in an engagement letter, which is prepared by the auditor and sent to the client.

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28. External Confirmations: External confirmation is the process of obtaining and evaluating audit
evidence through a representation of information or an existing condition directly from a third party
in response to a request for information about a particular item affecting assertions in the financial
statements or related disclosures.

29. General Purpose Financial Statements: There are four main financial statements. They are: (1)
balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders'
equity. Balance sheets show what a company owns and what it owes at a fixed point in time.

30. TCWG: Describes the role of persons entrusted with the supervision, control and direction of an
entity. Those charged with governance ordinarily are accountable for ensuring that the entity
achieves its objectives, financial reporting, and reporting to interested parties. Those charged with
governance include management only when it performs such functions.-

31. Group Financial Statements: Group financial statements are financial statements that include the
financial information for more than one component. A component is an entity or business activity
for which financial information is separately prepared, and which is included in the group financial
statements.
32. Historical Financial Statements: are a record of financial activities which occur in the relevant past
period (say FY 19-20) and position as on date due to those past activities.

33. Initial Audit Engagement: An engagement in which either: (I) The financial statements for the prior
period were not audited; or. (ii) The financial statements for the prior period were audited by a
predecessor auditor.+

34. Inquiry: Inquiry consists of seeking information of knowledgeable persons, both financial and
nonfinancial, inside or outside the entity. Inquiry is an audit procedure that is used extensively
throughout the audit and often is complementary to performing other audit procedures.

35. Inspection: An inspection involves checking something, i.e., examining and assessing something. ...
In the world of business, inspection is the critical appraisal of materials, items, or systems involving
examination, testing, and gauging. Inspectors take measurements and make comparisons.

36. Intended Users: the owners and investors, management, suppliers, lenders, employees, customers,
the government, and the general public.

37. Interim Financial Statements: Interim financial statements are financial statements that cover a

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period of less than one year.

38. Internal Control: Internal control, as defined by accounting and auditing, is a process for assuring of
an organization's objectives in operational effectiveness and efficiency, reliable financial reporting,
and compliance with laws, regulations and policies.

39. IFRS: International Financial Reporting Standards, commonly called IFRS, are accounting
standards issued by the IFRS Foundation and the International Accounting Standards Board.

40. IT Environment: An IT environment is an integrated collection of technology components that

serves the needs of its users and the owner of the resulting system.

41. KAM: Key Audit Matters are those matters that, in the auditor's professional judgment, were of
most significance in the audit of the financial statements of the current period.

42. Material Weakness: A material weakness is a deficiency, or a combination of deficiencies, in

internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of the company's annual or interim financial statements will not be prevented or
detected on a timely basis.

43. Misstatement: A misstatement is the difference between the required amount, classification,
presentation, or disclosure of a financial statement line item and what is actually reported in order to
achieve a fair presentation, as per the applicable accounting framework.

44. Audit Opinion: There are four types of audit reports: and unqualified opinion, a qualified opinion,
and adverse opinion, and a disclaimer of opinion. An unqualified or "clean" opinion is the best type
of report a business can get.

45. Modified Opinion: The modified opinion means the future amendments which have to be followed
in order to make the financial statement transparent and clear. Modified opinion is somehow similar
to the qualified opinion where the auditors suggest the future procedures to avoid the misstatement
in the financial statements.

46. Adverse Opinion: An adverse opinion is a professional opinion made by an auditor indicating that a
company's financial statements are misrepresented, misstated and do not accurately reflect its
financial performance and health.

47. Disclaimer of Opinion: A disclaimer of opinion is a statement made by an auditor that no opinion is

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being given regarding the financial statements of a client. This disclaimer may be given for several
reasons. For example, the auditor may not have been allowed or been able to complete all planned
audit procedures.

48. Monitoring Internal Controls: Monitoring internal controls is essential to ensure controls are
operating efficiently. Monitoring involves the use of evaluations by management and third-parties
of the controls in place to identify issues and communicate these issues to the appropriate parties for
corrective action to be taken.

49. Nature of Audit Procedures: Refers to the type of procedures, and the mix of those procedures, to
address the audit risk for each account- assertion. Procedures could be controls testing, data
analysis, substantive analytics, key item testing, representative sampling, inquiries, representations,
etc.

50. Objectivity: Objectivity is an unbiased mental attitude that allows internal auditors to perform
engagements in such a manner that they believe in their work product and that no quality
compromises are made. Objectivity requires that internal auditors do not subordinate their judgment
on audit matters to others.

51. Opening Balances: The opening balance is the balance that is brought forward from the end of one
accounting period to the beginning of a new accounting period. The funds in a firm's accounts at the
start of a new financial period are called the opening balances.

52. Audit Strategy: An audit strategy sets the direction, timing, and scope of an audit. The strategy is
then used as a guideline when developing an audit plans. The strategy document usually includes a
statement of the key decisions needed to properly plan the audit.

53. Pervasive: Pervasive means found everywhere or spread everywhere. A pervasive misstatement
would be so serious that, to all intents and purposes the FS are useless. Similarly with a pervasive
lack of sufficient appropriate audit evidence. Pervasive problems (leading to a disclaimer or an
adverse opinion) are rare.

54. Preconditions of Audit: ISA 210 defines preconditions for an audit as follows: 'The use by
management of an acceptable financial reporting framework in the preparation of the financial
statements and the agreement of management and, where appropriate, those charged with
governance to the premise on which an audit is conducted'.

55. Predecessor Auditor: A predecessor auditor is an auditor who conducted the audit for a client in

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prior periods, but who no longer does so.

56. Professional Skepticism: Professional skepticism is the state of mind which is ready for the situation
that grabs out the errors or questions the financial events and other events while conducting an
assurance engagement. It's basically a skill just like the professional judgment which makes the
auditor alert for any particular situation.

57. Reasonable Assurance: Reasonable assurance is a high level of assurance regarding material
misstatements, but not an absolute one. Reasonable assurance includes the understanding that there
is a remote likelihood that material misstatements will not be prevented or detected on a timely
basis.
58. Related Party: A person or a close member of that person's family is related to a reporting entity if
that person has control, joint control, or significant influence over the entity or is a member of its
key management personnel.

59. Review Engagement: A review engagement is a type of engagement that provides a limited level of
assurance that a company's financial statements comply with the applicable financial reporting
framework. It gives users limited assurance on the accuracy or correctness of financial statements.

60. ROMM: The risk of material misstatement is the risk that the financial statements of an
organization have been misstated to a material degree. This risk is assessed by auditors at the
following two levels:

61. At the assertion level. This is further subdivided into inherent risk and control risk. Inherent
risk is the susceptibility of an assertion to misstatement because of error or fraud, before
considering controls. Control risk is the risk of misstatement that will not be prevented or
detected by a reporting entity's internal controls.
62. At the financial statement level. Relates to the financial statements as a whole. This risk is
more likely when there is a possibility of fraud.

63. Sampling Risk: Sampling risk is the risk that the auditor’s opinion would have been different if the
procedures were applied to the entire population of the data.

64. Significant risk – An identified and assessed risk of material misstatement that, in the auditor's
judgment, requires special audit consideration. Now special consideration is required. if likelihood /
probability of misstatement is very high and Amount involved is all high.
65. Special Purpose Financial Report: A special-purpose financial report is intended for presentation to

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a limited group of users or for a specific purpose. For example, special-purpose financial statements
are prepared for tax reporting, bank reporting, and industry-specific reporting.

66. Substantive Procedure: A special-purpose financial report is intended for presentation to a limited
group of users or for a specific purpose. For example, special-purpose financial statements are
prepared for tax reporting, bank reporting, and industry-specific reporting.

67. Sufficiency of Audit Evidence: The sufficiency of audit evidence is the amount or quantity of audit
evidence. You determine the amount of audit evidence you need by considering the risk of material
misstatement and the overall quality of the evidence you receive.

68. Test of Controls: A test of controls is an audit procedure to test the effectiveness of a control used
by a client entity to prevent or detect material misstatements. Depending on the results of this test,
auditors may choose to rely upon a client's system of controls as part of their auditing activities.

69. Tolerable Misstatement: A tolerable misstatement is the amount by which a financial statement line
item can differ from its true amount without impacting the fair presentation of the entire financial
statements. The concept is used by auditors when designing audit procedures to examine the
financial statements of a client.

70. Uncertainty: Uncertainty refers to epistemic situations involving imperfect or unknown information.
It applies to predictions of future events, to physical measurements that are already made, or to the
unknown.

71. Uncorrected Misstatement: An uncorrected misstatement is a misstatement that the auditor has
identified and accumulated during the audit that the client has not corrected (or adjusted), often
because of materiality or cost/benefit consideration.

72. Walk through test: A walk-through test is a procedure used during an audit of an entity's accounting
system to gauge its reliability. A walk-through test traces a transaction step-by-step through the
accounting system from its inception to the final disposition.

73. Written representations: are statements made by client management, confirming certain topics or
supporting audit evidence. These representations are needed by the auditor as supporting evidence
in an audit engagement, since management acknowledges its responsibilities in certain areas and
attests to various issues.

74. NTE: Nature covers what audit procedures will be performed for the company. Timing indicates

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when the audit procedures will be performed. Extent is how the audit will be performed on a test
basis of large or small sample sizes to gather evidence.

75. Inventory Risk: Inventory risk is the potential for a loss due to inventory planning and control
failures. E.g., Obsolescence, Loss, Theft, Stock Out.

76. R2R: Record to Report (R2R) is a Finance and Accounting (F&A) management process which
involves collecting, processing and delivering relevant, timely and accurate information. It provides
strategic, financial and operational feedback on how a business is performing.

77. Due Diligence: Due diligence is the investigation or exercise of care that a reasonable business or
person is expected to take before entering into an agreement or contract with another party, or an act
with a certain standard ofcare. It can be a legal obligation, but the term will more commonly apply
to voluntary investigations.

78. Impairment: the value of an asset is impaired when the sum of estimated future cash flows from that
asset is less than its book value.

79. Depreciation Vs Amortization Vs Impairment: As with any other asset, there is an estimated
lifespan and, thus, depreciation over time. Amortization is used to reflect the reduction in value of
an intangible asset over its lifespan. Impairment occurs when an intangible asset is deemed less
valuable than is stated on the balance sheet after amortization.

80. Provision Vs Reserve: The distinction between a reserve and a provision. A reserve is an
appropriation of profits for a specific purpose. ... In short, a reserve is an appropriation of profit for
a specific purpose, while a provision is a charge for an estimated expense.

81. Deferred Tax Asset: Items on a company's balance sheet that may be used to reduce taxable income
in the future are called deferred tax assets. The situation can happen when a business overpaid taxes
or paid taxes in advance on its balance sheet.

82. P2P: Procure to Pay involves the activities performed from the Need to purchase till the payment to
vendor.

83. O2C: The order-to-cash, also known as the O2C or OTC, process, refers to a company's business
process for the entire order processing system. This is a set of business processes to manage from
sales order right through to customer payments. It helps define your success as a company and your
relationships with customers.

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84. 3-way Match: "three-way match" concept refers to matching three documents - the invoice, the
purchase order, and the receiving report - to ensure that a payment should be made. The procedure is
used to ensure that only authorized purchases are reimbursed, thereby preventing losses due to fraud
and carelessness.

85. GRN: A goods receipt note (GRN) is created to record the delivery of items from your suppliers. A
GRN is created against an issued purchase order. When a GRN is created for an item, any pending
item quantity for an approved indent request will be automatically issued.

86. BoM: A bill of materials (BOM) is a comprehensive inventory of the raw materials, assemblies,
subassemblies, parts and components, as well as the quantities of each, needed to manufacture a
product. In a nutshell, it is the complete list of all the items that are required to build a product.

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