Preview Questions External Auditor | Role Specific Skill

Question 1: In risk assessment for BFSI, which of the following is a key risk factor that auditors should focus on?

Which action should you take?

Choose only one option

The company's market share and brand strength

The company's revenue and profitability

The company's regulatory compliance and capital adequacy

The company's human resource management

Question 2: 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 3: In the context of BFSI, which standard is critical for audit documentation?

Which action should you take?

Choose only one option

ISA 230

IFRS 16

SOX Act 404

IAS 230

Question 4: What role does an external auditor play in ensuring compliance with the Foreign Account Tax Compliance Act (FATCA) in BFSI?

Which action should you take?

Choose only one option

Reviewing the bank's compliance with FATCA reporting requirements

Examining only the tax returns of foreign account holders

Focusing solely on foreign exchange regulations

Ignoring FATCA compliance if no foreign clients are identified

Question 5: What approach should an external auditor take when investigating a sharp decline in the profitability of a BFSI institution?

Which action should you take?

Choose only one option

Investigate changes in operational costs and revenue sources

Review the institution's capital adequacy ratio

Compare the decline with industry-wide profitability trends

Analyze fluctuations in market interest rates and their impact

Question 6: What is the most critical step for an external auditor when investigating the adequacy of a bank's reserves for future contingencies?

Which action should you take?

Choose only one option

Analyzing the bank's risk management framework and ensuring reserves align with industry standards

Accepting management's judgment on reserves without independent verification

Reviewing the reserves in isolation, without considering overall risk exposure

Focusing only on the reserves' impact on profit and loss statements