Preview Questions External Auditor | Role Specific Skill

Question 1: What is the external auditor's responsibility in assessing a BFSI institution's adherence to the National Financial Reporting Standards (NFRA)?

Which action should you take?

Choose only one option

Verifying the accuracy of the financial statements

Reviewing the institution's internal audit function

Ensuring proper documentation of financial transactions

Ensuring compliance with governance standards

Question 2: When investigating discrepancies in the financial statements of a BFSI institution, which technique would provide the most comprehensive insights?

Which action should you take?

Choose only one option

Interviewing key management personnel

Comparing financial statements with industry averages

Ratio analysis of key financial metrics

Reconciliation of the institution's general ledger to supporting documents

Question 3: In a financial audit of a financial institution, how should an external auditor assess the accuracy of interest income recognition?

Which action should you take?

Choose only one option

By verifying interest income against customer complaints

By checking the cash flow statements for interest payments

By reviewing loan agreements and verifying interest accruals

By comparing interest rates with the market average

Question 4: What is the role of an external auditor in documenting the evaluation of credit risk management policies in a BFSI audit?

Which action should you take?

Choose only one option

To ensure proper documentation of loan agreements

To evaluate the consistency of the bank's credit policy with regulatory standards

To assess the accuracy of credit risk exposure reports

To verify that the institution's credit risk management practices are effective

Question 5: When auditing a financial institution's pension obligations, which approach is most effective in ensuring accuracy and compliance with IAS 19?

Which action should you take?

Choose only one option

Focus solely on historical pension payments without adjusting for current assumptions

Rely on management's narrative for pension funding status without detailed review

Review actuarial assumptions and the calculations for pension liabilities

Compare pension obligations to industry averages without verifying assumptions

Question 6: Which machine learning technique can be applied for identifying patterns of financial fraud?

Which action should you take?

Choose only one option

Clustering

Regression

Classification

Reinforcement learning