Statutory Audit Interview Notes

Jul 23, 2024

Statutory Audit Interview for Vaishnavi Ghazre

Personal Introduction

  • Name: Vaishnavi Ghazre
  • Origin: Satara
  • Education:
    • Schooling: Satara
    • 11th-12th: Bremen Maharashtra College of Commerce, Pune
    • Currently pursuing: B.Com from Modern College, Pune
  • Career Objective: Aspires to be a competent and skilled Chartered Accountant
  • Personal Objective: To be a respected individual in society

Key Topics Discussed

External Confirmation

  • Definition: A method used to obtain audit evidence
  • Use Cases:
    • Loans and borrowings
    • Trade receivables and payables

Factors to Keep in Mind

  • Relevant information from the person providing confirmation
  • Properly drafted confirmation letter
  • Use positive confirmations, not negative ones

Key Audit Matters

  • Matters discussed with those charged with governance
  • Important aspects readers of financial statements should be aware of

Fixed Assets

  • Assets included on the asset side of the balance sheet
  • Generally depreciable

Depreciation

  • Definition: Amount spent on a company's assets
  • Logic: Benefits derived over a long period; expenses matched over the asset's useful life (matching concept)

Consistency Concept

  • Accounting policies should be used consistently
  • Any changes need to be properly disclosed

Financial Reporting Framework (FRF)

  • Basic set of rules/framework for companies (e.g., Schedule 3 of Companies Act)
  • Different from accounting standards

Indian Accounting Standards (IndAS)

  • IndAS 115: Revenue recognition for goods and services. Recognized when ownership, rights, and risks are transferred.

CARO Clauses

  • Fixed Asset Reporting: Proper verification, depreciation amount and percentage
  • Benami Property Reporting
  • Fraud Reporting: Fraud against central government or board/audit committee

Auditing Revenue

  • Substantive Analytical Procedures: Trend analysis, invoice assessment

Risk and Control Assessment

  • Purchases: Risks include duplicate invoices
  • Control Example: Unique ID for recorded invoices

Family Background

  • Father: Works in district central cooperative bank
  • Mother: Housewife, runs a stitching business
  • Brother: Engineer doing internship in Mumbai

Excel Skills

  • Fair knowledge of Excel
  • Shortcuts Example:
    • Paste Special: Ctrl + Alt + V
    • Create Table: Ctrl + T
    • Concatenate: Join two texts

Section 135 of Companies Act (CSR)

  • Companies must spend 2% of net profits on CSR activities like poverty eradication and education

Accrued Revenue

  • Earned but not yet received, shown in P&L

Knowledge of Taxation

  • Basic knowledge, included in syllabus

Exemptions in Capital Gains

  • Section 54F: Capital gain exemption on purchase of another property
  • Bonds: NHAI bonds for long-term capital asset gains

Provision for Doubtful Debts

  • Example: 13%, 4%, 26%, 16%; inconsistency may indicate manipulation
  • Justification: Aging analysis or awareness of debtor issues

Importance of Cash Flow Statement

  • Represents cash received and spent
  • Determines liquidity and capital budgeting decisions

Prepaid Expenses

  • Reduced from yearly expenditure in P&L
  • Shown as asset in balance sheet

Soft Skills Rating

  • Self-rated: 7/10
  • Improvement Plans: Business English classes and Pune-based communication skill groups

Additional Courses Interest

  • Financial modeling

Knowledge on Grant Thornton

  • Described as a big fifth organization, participated in G20 summit

Future Personality and Mindset Goals

  • Approachable, respected, loved for good qualities
  • Inspiration for many, competent CA
  • Broader mindset, open to learning and challenges

Why Chartered Accountancy?

  • Interested in financial world and business operations
  • Challenging and offers exposure to new things

Fit for Statutory Audit

  • Enjoys investigating and searching for the truth
  • Difference between audit and investigation: Audit ensures no misstatement

Levels of Assurance in Audit

  • Reasonable assurance sought in audit, not top level due to inherent limitations
  • Low level of assurance requires additional audit procedures

Questions About Firm Expectations

  • Learning attitude: Understand and retain information
  • Analytical skill and involvement in work

Feedback and Tips

  • Technical Terms: Use standard words from syllabus
  • Behavioral Answers: Confident and to the point
  • Reading: Annual reports and contextual understanding
  • Interview: Stay relaxed, and maintain a light smile