Besides the main opinion, Indian statutory auditors report under CARO 2020 and on internal financial controls. How do you build this into the audit?

What the interviewer wants to hear

• Identifies whether CARO and IFC reporting apply to the company
• Maps CARO clauses to procedures across the audit
• Tests design and operating effectiveness of controls over financial reporting
• Evaluates deficiencies and material weaknesses
• Ensures consistency between main report, CARO and IFC report

Model answer

At planning I confirm whether CARO 2020 applies, since some classes like small companies are excluded, and whether internal financial controls reporting under Section 143(3)(i) applies. I map each CARO clause to work we already do or need to add: fixed assets and title deeds to the PPE audit, inventory physical verification to the count, statutory dues to payroll and tax testing, loans and guarantees to the related party work, and frauds and whistleblower complaints to fraud procedures. For IFC, following the ICAI guidance note, I document key processes and risks, test the design and operating effectiveness of controls, including IT general controls, and evaluate any deficiencies for whether they are material weaknesses. Near completion, I check the three outputs are consistent: for example, a material misstatement corrected late may point to a control weakness, and a qualification in the main report should be reflected properly in CARO and IFC reporting.

More hard Auditor questions

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