Answers / Audit & Assurance
Audit Interview Questions
ISA framework, materiality, audit risk, and professional judgment — for Big-4 audit interviews and exams.
44 questions · model answers · common mistakes
Audit Risk & Materiality
- Explain the concept of materiality.
- Walk me through the audit risk model.
- Explain the COSO framework.
- Describe how you would plan the audit of a new client.
- What is the difference between 'materiality' and 'performance materiality'?
- What is the difference between a control deficiency, a significant deficiency, and a material weakness?
- Explain how you determine overall materiality and performance materiality for a new audit client. What factors influence your judgment?
- Explain how you would determine the overall materiality and performance materiality for a new audit client. What factors would you consider, and how would you document your conclusions?
- Describe a scenario where you would need to revise performance materiality during an audit engagement, and walk me through the steps you would take to communicate this change to the audit team and the impact on the audit scope.
- What makes a risk a 'significant risk', and how does that classification change your audit response?
Audit Evidence & Procedures
- How do you test revenue cut-off?
- How do you perform journal entry testing?
- How do you audit accounting estimates?
- Explain the ECL model under IFRS 9.
- How do you handle an inventory count that doesn’t go well?
- How do you test a provision for litigation?
- How do you test depreciation?
- How do you audit related party balances?
- How do you test the completeness assertion for revenue?
- What is the difference between a test of controls and a substantive procedure in the context of auditing revenue recognition, and how would you design a test of controls for a company with multiple revenue streams?
- How would you use data analytics in the audit of revenue recognition, and how do you evaluate the results?
- Explain how you would design a test of controls for a company with multiple revenue streams, including evaluating the design and operating effectiveness of internal controls over revenue recognition.
- Describe a situation where you might use data analytics in the audit of revenue recognition, and explain how you would evaluate the results of these analytics.
- Describe the steps you would take as an auditor to evaluate the work of an expert, such as a valuation specialist, who has been engaged by the company to estimate the fair value of certain assets.
- How do you audit revenue recognized over time under IFRS 15, and what are the key risks?
- When would you use positive versus negative confirmations, and why are negative confirmations weaker evidence?
- What drives audit sample size, and how do statistical and judgmental sampling differ?
- How would you audit cash and bank, and what is kiting?
Audit Reports & Opinions
- Explain going concern assessment.
- Explain the difference between Emphasis of Matter and Other Matter.
- What do you do if a subsequent event changes the financial statements?
- A client has a significant but routine revenue stream and a smaller, highly complex revenue stream from new, bespoke contracts. Management's estimates for the bespoke contracts are subjective. Which of these, if any, is more likely to be a Key Audit Matter (KAM) and what factors would drive your decision?
- What is the difference between a qualified opinion and an adverse opinion?
- What is a Key Audit Matter (KAM) and how is it determined?
- What is the difference between a modified opinion and a Key Audit Matter (KAM)? Can the same issue be both?
- What is the auditor's responsibility regarding going concern? If management's assessment covers only 6 months from the reporting date, is that acceptable?
- How would you evaluate the reasonableness of management's going-concern assumptions when they rest on external factors like market trends or regulatory change?
- How is a material uncertainty related to going concern reported, and how does that differ from a qualified opinion?
Fraud & Professional Skepticism
- How do you assess management bias?
- How do you handle a disagreement with management about an accounting treatment?
- How do you audit fair value measurements when there is no active market and management uses significant unobservable inputs (Level 3)?
- How would you evaluate the risk of material misstatement due to fraud for a company with a complex revenue-recognition policy, and what procedures address it?
Group Audits & Specialized Areas
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