Preview Questions External Auditor | Role Specific Skill

Question 1: What is the most important consideration when documenting the audit scope and methodology in a BFSI institution audit?

Which action should you take?

Choose only one option

Ensuring the audit process aligns with industry standards

Ensuring the methodology used is aligned with international audit practices

Ensuring the documentation focuses on material transactions

Ensuring the scope covers only regulatory compliance

Question 2: What is the primary focus of an external auditor when assessing compliance with the IFRS 9 regulations for a BFSI institution?

Which action should you take?

Choose only one option

Evaluating the adequacy of liquidity reserves

Assessing the institution's financial instrument classifications and impairments

Reviewing the bank's credit risk management strategies

Verifying loan loss provisions

Question 3: What is the best practice for an external auditor to ensure transparency when reporting on a financial institution's loan portfolio?

Which action should you take?

Choose only one option

Reporting only on loans that are performing well

Limiting the documentation to loans with a value exceeding a threshold

Avoiding reporting on loans to related parties

Documenting all significant loans, including those with high credit risk

Question 4: Which of the following financial reporting standards should an external auditor focus on when auditing a financial institution in BFSI?

Which action should you take?

Choose only one option

International Financial Reporting Standards (IFRS)

Generally Accepted Accounting Principles (GAAP)

Basel III guidelines for liquidity ratios

Local banking regulations for non-financial firms

Question 5: When assessing the risk of non-compliance with banking regulations during an audit, what should be the external auditor's first step?

Which action should you take?

Choose only one option

Review the regulatory reports and compare them to financial statements

Examine the bank's capital structure without considering regulatory constraints

Look for errors in financial transactions without focusing on compliance

Review all internal control processes without regulatory guidance

Question 6: How should an external auditor document discrepancies found in a BFSI institution's financial reports?

Which action should you take?

Choose only one option

By reporting discrepancies only if they are material

By providing a general summary of the discrepancies

By creating detailed work papers that highlight the issue and the impact

By documenting only the most severe discrepancies