Preview Questions External Auditor | Role Specific Skill

Question 1: In auditing for compliance with the Anti-Bribery and Corruption Act (ABC), what should an auditor prioritize?

Which action should you take?

Choose only one option

Reviewing the bank's anti-bribery policies and employee training programs

Focusing only on the bank's financial statements

Evaluating the impact of bribery on the bank's profit margins

Reviewing the bank's marketing and advertising strategies

Question 2: In the context of regulatory compliance audits, how should an external auditor address issues related to cross-border banking regulations?

Which action should you take?

Choose only one option

By conducting interviews with external legal counsel only

By reviewing the bank's compliance with both local and international regulatory standards

By focusing solely on local regulations and ignoring international laws

By assuming compliance with international regulations based on past performance

Question 3: How should an external auditor assess the risk of non-compliance with regulations in a BFSI institution?

Which action should you take?

Choose only one option

By reviewing the institution's compliance reports and regulatory filings

By reviewing customer complaints related to compliance

By assessing the institution's risk management framework

By analyzing the institution's market position

Question 4: When analyzing financial discrepancies, what type of testing is most effective?

Which action should you take?

Choose only one option

Substantive testing

Stratified testing

Random testing

Control testing

Question 5: In a BFSI audit, what is the role of the external auditor in evaluating compliance with the Sarbanes-Oxley Act (SOX)?

Which action should you take?

Choose only one option

Ensuring the adequacy of internal controls over financial reporting

Reviewing the bank's financial statement disclosures

Verifying the accuracy of the bank's loan loss provisions

Auditing the company's market risk management policies

Question 6: How should an external auditor assess the risk of financial misstatement due to financial instrument complexities?

Which action should you take?

Choose only one option

Focusing solely on large transactions, disregarding the complexity of smaller ones

Relying on management's explanation of financial instrument complexity without further review

Ignoring the complexity if it does not affect the overall profit margins

By investigating the valuation models and assumptions used to value the instruments and their effect on the overall financial position