Preview Questions External Auditor | Role Specific Skill

Question 1: What is the primary focus of an external auditor when assessing a BFSI institution's compliance with the Anti-Bribery and Corruption (ABC) laws?

Which action should you take?

Choose only one option

Analyzing customer feedback on business ethics

Assessing internal policies and procedures to prevent bribery and corruption

Reviewing transaction data for evidence of fraudulent activities

Evaluating the company's market risk management policies

Question 2: When auditing a financial institution's regulatory compliance, which of the following should be considered a critical factor?

Which action should you take?

Choose only one option

The extent to which the institution has implemented compliance training for all employees

The general size and market share of the institution

The institution's branding and marketing strategies

The ratio of executives with banking experience to non-executives

Question 3: When assessing the completeness of liabilities in a BFSI company's financial statements, which audit procedure is most effective?

Which action should you take?

Choose only one option

Sending bank confirmations for outstanding loans

Verifying the company's future obligations with creditors

Sampling liabilities and comparing to accounts payable

Reviewing the bank's loan portfolio for unpaid amounts

Question 4: What analytical procedure should an external auditor use to assess the valuation of a bank's financial instruments, particularly during periods of market volatility?

Which action should you take?

Choose only one option

An analysis of the institution's liquidity ratios

A review of the pricing models and assumptions used for valuation

A comparison of the bank's portfolio with market benchmarks

A detailed review of the bank's risk-weighted assets

Question 5: Which method should be used to assess the effectiveness of internal controls during a financial audit in BFSI?

Which action should you take?

Choose only one option

Perform a walkthrough of key controls and test their operation

Perform analytical procedures only without control testing

Review the general ledger entries without performing any tests

Rely solely on management's representation of controls

Question 6: What is the most reliable method to evaluate the effectiveness of a bank's internal audit function during a financial audit?

Which action should you take?

Choose only one option

Ignore the internal audit function and focus on financial statement review

Rely solely on the internal audit's self-assessment without third-party review

Test internal audit procedures only in a limited scope without full evaluation

Perform an independent evaluation of internal audit reports and findings