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1.
Why do companies require audits?
How to Answer
This question tests your understanding of the audit process beyond just the technical aspects one would learn through college coursework. Being able to answer this question shows you have a firm understanding of one of the basics of the profession.
Answer Example
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Brian Schuchart wrote: "Audits can be required for a variety of reasons. Most commonly, lenders and investors demand audits to ensure that an organization's accounting and financial reporting is free of material misstatement or errors. Some organizations, such as not-for-profits, may be required to have an audit performed by a regulatory body or grant stipulation. In some cases, an organization may choose to have an independent audit performed as good practice."
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2.
How do external auditors rely on the work of internal auditors?
How to Answer
As part of their responsibilities, internal auditors document policies and procedures. In some cases, external audit firms can rely on the work of the internal audit team in conducting the financial statement audit.
Answer Example
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Brian Schuchart wrote: "An internal audit team often documents and assesses internal controls for their organization. In some cases, the external auditors can leverage this work in completion of their financial statement audit. In other words, they don't need to duplicate the work of the internal audit team. However, an external audit firm will often need to do their own transaction testing and therefore cannot rely on the internal audit team's work."
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3.
What would you do if during an audit you found an accounting practice that was suspicious?
How to Answer
This is an opportunity to highlight your integrity and honesty. The high-level answer should be obvious - that the concern must be addressed immediately.
Answer Example
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Brian Schuchart wrote: "If I was working on an audit and discovered a practice that I found questionable, I would immediately voice my concern to my manager. As a more junior internal auditor, perhaps I was misinterpreting the situation. If not, my manager would provide good counsel on next steps to resolve the situation. The most important thing is to be honest and ethical - two character traits that I am proud to say I possess."
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4.
What is the purpose of the internal audit function?
How to Answer
This question is an opportunity to show what you know about the profession of internal auditing. In addition to mentioning the purpose of internal audit, also mention some key responsibilities.
Answer Example
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Brian Schuchart wrote: "Internal Audit teams exist to offer risk management to an organization by catching errors, flaws and fraud before an external audit is conducted. The Sarbanes-Oxley Act amplified the need for internal audit functions by requiring management of a company to certify in writing that the financial statements are accurately presented. Internal audit teams help give management confidence in the financials by evaluating the effectiveness of internal controls, corporate governance and accounting processes."
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5.
Have you sat for the CPA exam or are you planning to sit for the CPA exam?
How to Answer
Obtaining a CPA license is a major step an auditor (both internal and external) can take to show they are committed to growing in the accounting profession. These days, many students are able to sit for the CPA exam before they graduate. Additionally, many internal auditors have already spent enough time in public accounting to satisfy the hours worked requirement.
Answer Example
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Brian Schuchart wrote: "Becoming a CPA is a major goal for me in my career, as it will help me grow in the accounting and auditing profession. By starting my career in public accounting, I have already satisfied the hours-worked requirement for obtaining a CPA license. Additionally, I have already sat for and passed two parts of the exam. My goal is to sit for and pass the remaining two parts of the exam within the next twelve months."
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6.
How do you mitigate and manage stress?
How to Answer
The life of an internal auditor can be stressful, with a lot of travel and deadlines The interviewer wants to gain insight into how you react to stressful situations.
Answer Example
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Brian Schuchart wrote: "Due to tight deadlines, travel and other demands of the internal auditor role, stress is inevitable. However, there are steps I take to help mitigate stress. First, I try to be as organized as possible. I am constantly prioritizing my workload to make sure time-sensitive tasks are handled before they are due. Next, I try to leave work at work. When not at work, I enjoy hiking, cooking and traveling. Being able to enjoy these activities makes me feel calmer and rejuvenated at work."
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7.
Why do you want to be an internal auditor?
How to Answer
This question is a way for the interviewer to find out a little bit about what makes you tick. Be honest and direct - don't give a phony answer that the interviewer will see through. Try to tie the roles and responsibilities of an internal auditor to your background.
Answer Example
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Brian Schuchart wrote: "Since I was young, I have always liked math and have been good with numbers. I took an accounting class in high school and really enjoyed it - the concepts came naturally to me. As I researched careers in accounting, auditing really appealed to me because it is almost like being an accounting 'detective'. Furthermore, I would enjoy working for one company as opposed to multiple clients. Given this, I think working as an internal auditor will be a great way to apply my skill set in math and accounting to an exciting career."
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8.
What qualities or skills do you believe a good internal auditor should possess?
How to Answer
This question is a good opportunity to show you have an understanding of what qualities make a good auditor generally, and a good internal auditor specifically. Some key areas to hit are ethics (honesty/integrity), ability to interact with others in the organization (communication skills, people person), ability to limit mistakes (focused/attention to detail) and ability to get to the correct answer (skeptical/inquisitive/problem solver).
Answer Example
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Brian Schuchart wrote: "First and foremost, I believe an internal auditor should be honest and have great integrity. Without this, it will be impossible for the person to perform the role effectively. Next, the auditor should have the education and technical skills to perform the job. They should have exceptional people skills as they will be required to communicate effectively with colleagues, external auditors and other parties. Finally, they should have an inquisitive mind and a keen attention to detail."
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9.
Where do you see yourself in five years?
How to Answer
This question is a good opportunity to highlight that you want to continue growing professionally and help the organization grow. This question is not a good opportunity to say you want the interviewer's role. The interviewer is trying to see that you have goals for your career.
Answer Example
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Brian Schuchart wrote: "If I am fortunate enough to be hired for this role, my goal in the near term is to learn as much as possible about our organization. An internal auditor has a unique opportunity to learn about the policies and procedures of many departments, and that is insight that I will not take for granted. I would also like to be viewed as a leader in the organization by my colleagues. As long as I am growing professionally and acquiring new knowledge and skills, I believe I would be very happy."
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10.
What are the differences between an audit, a review and a compilation?
How to Answer
Audits, reviews and compilations are the three main types of engagements an auditor will perform. Being able to articulate the differences between these services is essential. Conversely, not being able to state the differences could be a disqualifier from the role you are interviewing for.
Answer Example
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Brian Schuchart wrote: "The main differences between the three types of engagements are the scope of services performed and the level of assurance provided. A compilation is simply financial statement preparation by the auditor based on representations from management. In a compilation, the auditor is not required to provide any assurance that the financial statements are accurate and free from errors/fraud. A review is more involved, and requires the auditor to perform analytical procedures and inquiries of management to ascertain that information contained in the financial statements is correct. In a review, the auditor provides limited assurance that the financial statements do not require any material modifications. In an audit, the auditor provides assurance that the financial statements are free of material misstatement or errors. This requires the auditor to expand the scope of the engagement to test ending balances, perform tests of internal controls, acquire third party confirmations and physically confirm assets, among other procedures."
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11.
How do you feel your education has prepared you for the internal auditor role?
How to Answer
Be sure to highlight all of the different subjects within accounting you have studied to show you have a well-rounded education. To not sound like a 'know it all', make sure to acknowledge that there is still plenty to learn once you have been hired.
Answer Example
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Brian Schuchart wrote: " I have been fortunate enough to study various accounting subjects at a great business school, including auditing, financial accounting and taxation. In addition to book learning, the accounting curriculum also allowed us to interact with accounting and auditing professionals on a regular basis, as well as obtain on-the-job immersive experience as part of a robust co-op program. The knowledge and experience obtained from this coursework provided me with a solid foundation for my future career. Of course, there will always be more to learn as I grow in the profession."
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12.
How would you deliver excellent customer service to colleagues within the organization?
How to Answer
Being able to interact and communicate effectively with colleagues is a key skill for an internal auditor, and also shows that the candidate possesses the ability to grow into larger roles within the organization such as manager and director. Even new internal auditors will need to email and call colleagues at all levels within the organization, so be sure to mention that you have attention to detail and are responsive.
Answer Example
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Brian Schuchart wrote: "I believe that being able to communicate with our colleagues effectively will be key from day one. Whenever I communicate with anyone, I make sure that I am responsive. If I can't give someone the information they are seeking right away, I make sure to let them know the anticipated timing. If there are unexpected delays, I provide updates. I would also make sure I review any documents or emails I send to other departments in order to build trust in my abilities. Finally, I would act professionally while out in the field at our company's various locations."
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13.
Explain how the Sarbanes-Oxley Act changed the auditing profession.
How to Answer
The Sarbanes-Oxley Act is major legislation passed in 2002 that substantially changed the accounting and auditing professions. It was enacted in response to major fraud scandals such as Enron and WorldCom. The interviewee should know the Act in detail as it is a key driver of the profession, but a summary here will suffice.
Answer Example
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Brian Schuchart wrote: "The Sarbanes-Oxley Act was passed into legislation in 2002 in response to fraud scandals like Enron. The goal of SOX was to protect investors and employees from fraudulent reporting. As a result, there is a greater onus on auditors to provide assurance that financial statements are free of material misstatement. For example, auditors are now required to test a company's internal controls and report on their effectiveness. Additionally, there are stricter requirements for financial statement disclosures."
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14.
Are you open to travel with this position?
How to Answer
The topic of travel will almost certainly come up during your interview. Many large companies have a centralized internal audit function, where the internal audit team travels to various locations to perform their duties. Given this, be prepared to articulate how much travel you are comfortable with (for example, 25%, 50%, etc). Most job descriptions will include the expected amount of travel. The interviewer is gauging whether you are a candidate that is willing and able to meet the travel requirement, so try to align your answer with the expectation of the role.
Answer Example
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Brian Schuchart wrote: "I am definitely open to travel. I saw on the job description that travel is estimated to be 25%-50%, which I am comfortable with. Since I am still growing in the profession, I think traveling would be a fantastic opportunity for me to immerse myself in the role and learn as much as possible from my colleagues."
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15.
What is your experience with presenting to senior executives?
How to Answer
An internal auditor will at times be expected to present to senior leadership. Highlight that you not only have experience presenting in front of leadership, but also that you are comfortable doing it. Be specific with what you presented.
Answer Example
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Brian Schuchart wrote: "I have ample experience getting in front of leadership and presenting. In my previous role as senior accountant, I would present to the CEO, CFO and other senior leaders during our monthly Finance Review meetings. I always felt the need to prepare in advance for any questions that might arise, and would often circle back promptly on follow-ups that developed during those meetings."
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16.
How would you handle working in an increasingly remote environment?
How to Answer
This is a question to gauge if you are disciplined enough to work from home. Be sure to touch on how you would stay focused and communicate with team members. Even after things return to normal, remote work may continue to be more common across many industries including auditing.
Answer Example
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Brian Schuchart wrote: "I have experience working remotely. At my internship, we were able to work from home on Fridays since it was summer. I enjoyed working from home, and was able to stay on task and communicate effectively with my team members. There were some ground rules I implemented, such as maintaining regular hours, keeping my morning routine as if I was going to the office, and scheduling breaks to take care of non-work related tasks. I also had a standing meeting with my manager and team members every morning to discuss priorities for the day. Working remotely would not impact my productivity or the timeliness with which I correspond with colleagues."
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17.
What is the purpose of audit documentation?
How to Answer
This is a technical question to see if you are able to articulate the information that is gathered in the field to support the audit. According to auditing standards (pronouncement AU-C Section 230), the two primary purposes of audit documentation are 1) to provide evidence to support the auditor's conclusion and 2) to provide evidence that the audit was planned and performed appropriately.
Answer Example
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Brian Schuchart wrote: "There are a couple of important purposes of audit documentation. First, the documentation needs to support the conclusion that the auditor reached in the audit report. Secondly, the documentation serves as evidence that the audit was planned and performed in accordance with generally accepted auditing standards."
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18.
How do you keep up with the latest developments in auditing standards?
How to Answer
This question is to see if you take the initiative to stay current on the latest accounting developments. If you are a CPA, talk about how you use mandatory continuing education requirements to stay up to date on the latest trends and regulations.
Answer Example
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Brian Schuchart wrote: "I stay up to date in various ways. First, in school we learned the latest and greatest pronouncements and standards. I also subscribe to e-newsletters from the American Institute of Certified Public Accountants for auditing standards updates and the Financial Accounting Standards Board for updates to generally accepted accounting principles. Additionally, since I am a CPA, I stay up to date with new standards with continuing education courses."
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19.
What is the difference between fraud and error?
How to Answer
This is a technical topic covered in the auditing standards under AU-C Section 240. The key difference between fraud and error is that the former is intentional and the latter is unintentional. There are two main types of fraud that an internal auditor should be concerned with: fraudulent reporting and misappropriation of assets (ie theft).
Answer Example
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Brian Schuchart wrote: "The main difference between fraud and error is that fraud is intentional and errors are unintentional. As internal auditors, we are primarily concerned with financial misstatements that are caused by fraudulent financial reporting and misstatements that are caused by theft and other misappropriation of assets."
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20.
In an audit, who is primarily responsible for the prevention and detection of fraud?
How to Answer
According to auditing pronouncement AU-C Section 240, a company's management is primarily responsible for detecting fraud and preventing it in the first place by having effective internal controls. An auditor must conduct an audit in accordance with GAAS (generally accepted auditing standards). However, given the limitations of an audit, there is an inherent risk that not all material misstatements will be detected. Given this, an internal auditor's role is integral in giving management confidence in both the financial statements and internal controls.
Answer Example
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Brian Schuchart wrote: "Ultimately, it is a company's management that is responsible for preventing and detecting fraud within their organization. They can achieve this by implementing effective internal controls and committing to a culture of honesty and ethical behavior. As internal auditors, our jobs are extremely important as by carrying out our responsibilities, we are giving management confidence in both the financial statements and the company's internal controls."
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21.
What are some ways that internal audit interacts with external auditors?
How to Answer
Auditing standard AU-C Section 322 The Auditor's Consideration of the Internal Audit Function covers what the external auditor's ability to rely on the work of internal auditors. According to the standard, the two parties (internal and external auditors) can: hold periodic meetings, schedule audit work, provide access to the internal auditors' working papers, reviewing audit reports, and discussing possible accounting and auditing issues.
Answer Example
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Brian Schuchart wrote: "As an internal auditor, I would interact with the company's external auditors in several ways. First, we would work together to schedule audit work and hold several planning and review meetings. I would also provide access to our working papers and other files as needed. Additionally, we would discuss any accounting issues discovered during the audit."
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22.
What are some of the ways that you can show professionalism when out on an internal audit assignment?
How to Answer
In public accounting (as well as many other service-based professions), showing professionalism while interacting with clients is essential. For an internal auditor, colleagues in other divisions should be considered their 'clients'. The interviewer is gauging how much awareness the candidate has.
Answer Example
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Brian Schuchart wrote: "It is extremely important to display professionalism when we are out in the field conducting internal audit procedures at the company's various locations. First and foremost, I know that I must look the part by adhering to the appropriate dress code. For some assignments, a suit is appropriate. For others, business casual attire. Secondly, I know I must act professionally. This means speaking respectfully to all personnel, whether it is the company's CFO or a personal assistant. I shouldn't take personal phone calls or play music loudly. As a general rule, I shouldn't do or say anything that would harm our team's reputation."
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23.
How do you manage your manager? In other words, what steps do you take to make sure you get what you need from your boss and make both your lives easier?
How to Answer
Also known as 'managing up', 'managing your manager' is a soft skill that can be developed over time. It essentially means doing whatever is necessary to make your manager's job easier. Some clear-cut benefits of managing up include increased productivity and better working relationships between boss and employee.
Answer Example
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Brian Schuchart wrote: "I am a firm believer in the benefits of managing my manager. At the end of the day, I want to make the internal audit engagements we work on together run as smoothly as possible. One area where I really focus on is communicating and prioritizing workload on a regular basis. This ensures that I'm always working on the highest-priority items. Another thing that is crucial is understanding my manager's style. For example, do they like regular check-ins by email throughout the day, scheduled catch-up meetings, etc. Then I tailor my communication to their style."
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24.
In your opinion, why is it important for organizations to have effective internal controls?
How to Answer
Internal controls are rules, regulations and safeguards that an organization puts in place to ensure integrity of financial information and to prevent fraud. There are several benefits to having robust and effective internal controls, including preventing fraud/theft, improving accuracy of financial reporting, and complying with laws and regulations.
Answer Example
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Brian Schuchart wrote: "Internal controls are vital for organizations of all sizes. First and foremost, internal controls are necessary to be in compliance with all relevant laws and regulations. Additionally, strong internal controls are necessary to prevent fraud and theft by employees. Finally, strong and effective internal controls result in improved timeliness and accuracy of financial reporting, which makes for smoother audits."
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25.
Describe your experience using ERP and general ledger software systems
How to Answer
An internal auditor will need to be able to navigate ERP and general ledger software systems. Speak specifically to the ERP and other accounting systems you have used and some of the functions you performed. Many job descriptions specifically state which accounting software the company uses. In any event, make sure to highlight that you are quick to learn new software systems.
Answer Example
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Brian Schuchart wrote: " In my last role, I used SAP to pull down transaction-level data to perform analytical procedures. In previous accounting roles, I used Hyperion to book journal entries and run queries. Since I have an underlying understanding of accounting, I am easily able to learn new software packages and I welcome that challenge."