How have you used, or would you use, data analytics to improve audit quality?

What the interviewer wants to hear

• Tests full populations instead of only samples
• Journal entry testing and risk-based filters
• Revenue and three-way match analytics
• Duplicate payments, vendor master and Benford analysis
• Validates data completeness and documents the work

Model answer

Analytics let me look at whole populations instead of small samples, so I can target the riskiest items. The first step is always to check the data is complete and accurate, by reconciling extracted data to the trial balance. For management override, I run journal entry tests with filters such as manual entries to revenue, postings after the close, weekend entries, round amounts and unusual user and account combinations. For revenue, I match every invoice to dispatch records and cash receipts to spot sales without delivery or cut-off issues. In purchases, I look for duplicate invoices by supplier, amount and date, payments without purchase orders, and vendors sharing bank accounts or addresses with employees. Benford analysis on expenses can point to fabricated amounts. I use tools like IDEA, Excel Power Query or Power BI, keep the scripts and outputs in the file, and follow up exceptions with normal audit procedures.

More hard Auditor questions

• A client has made losses for three years and has a large loan repayment due in six months. How do you assess going concern?
• During the audit you find signs that a senior manager may be diverting payments to a vendor he controls. What do you do?
• Management refuses to book an audit adjustment you believe is material. How do you handle it?
• How would you audit management’s expected credit loss provision on trade receivables?
• The client runs on an ERP system. How do IT general controls affect your audit approach?
• You are the group auditor for an Indian parent with subsidiaries in the UAE audited by another firm. How do you plan and run the group audit?
• Related party transactions are a significant risk at a family-owned listed company. How would you audit them?
• The client’s CFO pressures you to sign the audit report today, but key evidence on a large provision is still pending. What do you do?
• Besides the main opinion, Indian statutory auditors report under CARO 2020 and on internal financial controls. How do you build this into the audit?