How to Prepare for Statutory Audit Interviews at Big 4?

Introduction

Preparing for statutory audit interviews at a Big 4 firm can seem daunting, but with the right approach, it becomes manageable. Big 4 firms like Deloitte, PwC, EY, and KPMG focus on technical skills, problem-solving abilities, and your ability to adapt to dynamic work environments. This guide will break down essential areas to focus on, common interview questions, and tips to help you stand out. Let's simplify the preparation process and make it achievable!

What is a Statutory Audit?

A statutory audit is a legally required review of the accuracy of a company's or government's financial statements and records. A statutory audit aims to determine whether an organization provides a fair and accurate representation of its economic position by examining information such as bank balances, bookkeeping records, and financial transactions. As per the Indian Companies Act 2013, it is a compulsory audit for all companies.

Career Trajectory at Statutory Audit

Statutory Audit opens the door to multiple finance domains. Whether you prefer consulting or the industry side of things, this field offers countless opportunities. Here is a comprehensive list of career options that might interest you:

Consulting: If you want to explore consulting in the statutory audit domain, you can choose niches like FDD, Mergers and Acquisitions, Audit Functions, Corporate Finance, and Business Consulting.

Industry: If you are interested in the industry you can pick Business Finance, FP&A, Core finance functions, Corporate Strategy and Finance, Revenue Analysis, and Financial Reporting.

Statutory audit doesn't just build expertise in auditing—it's a springboard into dynamic finance roles.

What to Expect in the Statutory Audit Domain at Big 4?

Diverse Training Module: What makes the Big 4 stand apart in the eyes of clients and job-seekers is their investment in their employees. They organize regular training sessions that include both technical (Ind AS, Auditing Standards, Taxation, MS Office tools) and non-technical (Ethics, Integrity, Soft Skills). It is delivered online & in-person and for every work level. They are quite strict about the attendance and completion of these modules. Non-compliance might land you in trouble. The content is carefully designed and helps stay up-to-date with what's happening around India and globally.

Client profile: Working at Big 4 as a statutory audit professional will provide you with broad exposure to a variety of both listed & unlisted clients. Listed clients will give you a flavour of performing Ind AS & SEBI compliance.

Methodology: The Audit methodology and the tools deployed are class apart. You will witness how a project races from the planning stage to the completion stage with due compliance with the local GAAS at each step.

Documentation: The word on the floor is "work not documented is work not done". Big 4 takes SA 230 quite seriously. Here, as a part of a multi-disciplinary team, you will have to capture every aspect of the assignment correctly. It is mandatory to mitigate the risk and keep up with the local & global engagement quality standards.

Given that you'll be spending time in this environment, the quality will likely be instilled in your head for the rest of your professional career. As you move out, you'll see that your workings are self-explanatory (using legends, colour schemes, adding comments), your emails are worth reading (the overall structure and delivery are on point), and you ask the right questions at the right time (thanks to attending multiple kick-off meetings), you take proper notes, and that makes execution easier for you.

How to Apply for Statutory Audit at Big 4?

There are numerous ways to apply at Big 4. Here we will present some of the best options for you:

• Online Job Platforms: Despite having numerous ways why, we are putting this one first. In our experience, most of our students got selected at the Big 4 through online job portals like LinkedIn and Naukri.
• Cold Emails: Cold email is another way to apply at Big 4. You can start by collecting HR's email ID from LinkedIn, then follow a simple format to craft cold emails.
• Walk-ins: All the Big 4 post about their vacancies on online job portals with interview dates and schedules.
• Social Media Platforms: You can join relevant WhatsApp groups or Telegram channels to get updates about the vacancies from the Big 4.
• Reference: Employee referral is another way to apply at other top companies. For that, you can refer to your friends or acquaintances currently employed in a firm for a chance at statutory audit interviews.

Process for Statutory Audit Interviews at Big 4

Generally, the process at Big 4 for statutory audit interviews consists of 3 rounds. Like other top CA firms, it also starts with the HR round. It's to check your suitability for the role. Then you move on to the Manager round. It is also known as the technical round. In this round, you will have to face process-related technical questions. The next and final round is the director round.

Round 1: HR Round

It's the general screening round. It checks your soft skills, such as communication skills, presentation skills and confidence. So well crafted a professional resume and understanding of the company's operations. You can expect some generic questions like:

• Introduce yourself.
• In how many attempts did you clear your CA Final?
• Why did you choose statutory audit as a career path?
• Why should we hire you?

Round 2: Manager Round or Technical Round

The technical round at Big 4 starts with the introduction. Now, this part is tricky. While introducing yourself, try to direct it toward your domain. Thus, the interviewers will know what to ask you. As we are covering this for statutory audit, we will present some common questions that you may face during this interview:

• What type of statutory audit did you do during your articleship?
• How did you audit the cash and balance and revenue audit?
• How are you going to find out whether the invoice is fake or not?
• What do you know about CARO 2020 and changes in schedule 3?
• Cased based questions around CARO 2020
• Depreciation rate of Schedule II
• Difference between income tax depreciation and company rate depreciation.
• Questions related to limitations of internal audit.
• Tell us about CSR limits.
• Questions related to IND AS 115 & 116

Round 3: Director Round

The firms' partners will interview you in this director round interview at Big 4. They will ask you questions about your experience, skills and personal goals. They may ask you to solve case studies or business problems or to give a presentation on a topic of their choosing. The main objective of this round is to understand the candidate's presence of mind and creative thinking in assessing real life problems.

How to Prepare for Statutory Audit Interviews at Big 4?

Here is a brief presentation of the round-wise interview strategy so that can help you prepare better.

HR Round: Try to craft a professional resume covering all your skills and articleship experience. While facing the interview, don't just mug up things. Try to provide some personal input and personal experience. We recommend researching the company's background, mission and values. Keeping all these details in mind would help you to cakewalk this round. Below are a few tips you can follow to craft your resume better:

Resume Keywords for Statutory Audit:

While crafting a resume for a statutory audit role, try to include these keywords to pass the screening test:

• Fixed asset auditing
• Asset verification
• Physical asset count
• Asset register managemnet
• Depreciation calculation
• Asset impairment testing
• Compliance with accounting standards/IND AS
• Fixed asset counting
• Audit procedures for fixed assets
• Fixed risk assessment

Using these keywords in your resume will help the interviewer understand your experience and gives you an edge over others.

Manager Round or Technical Round: This round is the real deal. So you can not compromise your preparation at this stage. To prepare well for this round you can join online mentorship programmes, and brush up on your practical knowledge and experience.

Director Round or Partner Round: The partner round interview is an opportunity to show off your skills. So, based on your domain, pick any particular niche in which you have expertise. So when they ask your opinion on any specific scenario, just analyse the situation well and deliver the right strategy.

Pro Tips for Statutory Audit Interviews

• Don't stress over something that you don't know about. If you don't know anything, then clearly state that. But try to provide alternative topic information related to your domain. Explain your practical experience regarding that domain.
• According to the CA professionals, to get into the Big 4, you will require adequate communication skills. Hence, we suggest focusing on soft skills to get through the interview process.
• Communicate your queries with interviewers. It will help you make a good impression.

Common Statutory Audit Interview Questions & Answers

As promised, this blog aims to be a one-stop solution. So we just can't wrap it up by discussing the interview process and preparation tips. Let's dig deeper.

Q. What are audit assertions/financial statement assertions?

A. Audit assertions are the claims (implicit or explicit) made by management responsible for preparing financial statements regarding the appropriateness of various elements of financial statements and disclosure. They are also known as management assertions and financial statement assertions.

The auditor has to perform his audit to verify the assertions made by the management by obtaining sufficient and appropriate audit evidence.

Q. What are transaction-level assertions?

A. Transactions level assertions are made in relation to classes of transactions such as revenues, expenses and dividend payments. There are five types of transaction-level assertions.

• Occurrence: Transactions that are recognised in the financial records have occurred, i.e. did it happen?
• Completeness: Transactions that are completed and supposed to be recorded have been recognised in the financial statements.
• Accuracy: Transactions have been accurately reflected within the financial statements at appropriate amounts. i.e. have the correct pieces, quantities and calculations been used?
• Cut-off: Transactions have been recognised in correct and relevant accounting periods.
• Classification: Transactions have been classified properly and fairly presented in the financial statements.

Q. What do you understand by Materiality? How and on what basis does an auditor assess materiality?

A. Materiality refers to the benchmark used to obtain reasonable assurance that an audit does not detect any material misstatement that can significantly impact the economic decision of users of financial statements.

Determining materiality involves the exercise of professional judgment. A percentage is often applied to a chosen benchmark as a starting point in determining the materiality of the financial statement as a whole. While exercising professional judgment there are many factors that the auditor has to consider.

Some of them are:

• Size and nature of the entity
• The environment in which the entity operates
• The complexity of the transactions involved

Q. What is the applicability of CARO 2020?

A. It shall apply to every company including a foreign company except:

• a banking companies
• an insurance company
• a company licensed to operate under Section 8 of the Companies Act
• a one-person company and a small company
• a private limited company, not being a subsidiary or holding company of a public company, having a paid-up capital and reserves and surplus not more than one crore rupees as on the balance sheet date and which does not have total borrowings exceeding one crore rupees from any bank or financial institution at any point of time during the financial year and which does not have a total revenue (including revenue from discontinuing operations) exceeding ten crore rupees during the financial year as per the financial statements.

Q. What are the types of Audit opinions issued by the Statutory Auditor?

A. There are 2 types of Audit opinions issued by statutory auditors which are as follows:

Unmodified opinion.

• Unqualified Audit Report: The auditor issues an unqualified audit report to financial statements when auditors find no material misstatements after their testing. Therefore, this report contains an unqualified opinion from an independent auditor.

Modified opinion

• Qualified Audit Report: The qualified Audit report is the report issued by auditors to the financial statements:
  • Auditor having obtained sufficient and appropriate audit evidence, found misstatements that are material but not pervasive to the financial statements
  • Auditor is not able to obtain sufficient and appropriate audit evidence to support their opinion but the possible effects of undetected misstatements could be material but not pervasive.
• Adverse Audit Report: An adverse Audit Report is a type of audit report issued to the An adverse Audit Report is a financial statement when auditors found material misstatements in the financial statements. These misstatements individually, or in the aggregate are material and pervasive to the financial statements. When such findings are materially misstated for themselves and can potentially affect others' accounts and items in the financial statements, these are called pervasive.
• Disclaimer Audit Report: A disclaimer report is issued when an auditor is not able to obtain sufficient and appropriate audit evidence to support their opinion and the possible effects of undetected misstatements could be material and pervasive.

Q. What defines a reportable segment as per IND AS 108?

A. An entity should report separately information about an operating segment that meets any of the following quantitative thresholds:

• Its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10% or more of the combined revenue, internal and external, of all operating segments.
• The absolute amount of its reported profit or loss is 10% or more of the greater, in absolute amount, of (i) the combined reported profit of all operating segments that did not report a loss and (ii) the combined reported loss of all operating segments that reported a loss.
• Its assets are 10% or more of the combined assets of all operating segments. Operating segments that do not meet quantitative thresholds may be considered reportable and separately disclosed if management believes that information about the segment would be useful to users of the financial statements.

Conclusion

At CA Monk, we believe in turning aspirants into achievers. Whether understanding the latest audit regulations or acing statutory audit interviews, we're here to guide you every step of the way.

Remember, every interview is an opportunity to showcase your skills, passion, and dedication to the field of statutory audit. With the right mindset and preparation, you can leave a lasting impression and take a significant step toward achieving your professional goals.