SENIOR LEVEL

Can you provide an example of a time when you applied critical thinking in an audit?

Sample answer to the question

In a recent audit, I was tasked with evaluating the effectiveness of the company's internal controls. I identified a potential risk in their inventory management system, as there was a lack of segregation of duties between the individuals responsible for inventory counts and inventory reconciliation. To address this issue, I conducted a thorough review of the system and recommended implementing a segregation of duties policy, where different individuals would be responsible for each step of the inventory process. This critical thinking approach allowed me to identify a potential risk and provide a practical solution to mitigate it.

A more solid answer

During a recent audit, I applied critical thinking to evaluate the effectiveness of the company's internal controls. As I reviewed their inventory management system, I noticed a potential risk due to a lack of segregation of duties between inventory counts and reconciliation. To mitigate this risk, I conducted a detailed analysis of the system, including process flows, documentation, and interviews with relevant personnel. I then presented my findings to the audit committee, outlining the potential consequences and recommending the implementation of a segregation of duties policy. My critical thinking skills enabled me to identify and address this risk, ensuring the integrity and accuracy of the company's inventory records.

Why this is a more solid answer:

The solid answer expands upon the basic answer by providing more details on the candidate's actions and thought process during the audit. It highlights their ability to conduct a thorough analysis, communicate findings effectively, and propose practical solutions. The candidate also demonstrates their understanding of the importance of internal controls and how critical thinking contributes to maintaining the integrity of financial records. However, the answer could be further improved by including specific outcomes or results of the implemented solution.

An exceptional answer

In a recent audit, I applied critical thinking skills to assess the effectiveness of the company's internal controls. While reviewing the procurement process, I noticed a potential vulnerability in the approval hierarchy. To further investigate, I conducted interviews with key stakeholders, analyzed data from the financial system, and performed transaction testing. Through this comprehensive approach, I discovered instances of unauthorized purchases due to weak controls in the approval process. To address this, I recommended implementing a system that would require multiple levels of approval for high-value purchases and regular reviews of the approval hierarchy. The implementation resulted in a significant reduction in unauthorized purchases, reducing financial risks for the company. This example showcases my ability to think critically, analyze complex situations, and provide practical solutions that have a tangible impact on the organization.

Why this is an exceptional answer:

The exceptional answer goes beyond the solid answer by providing a more detailed description of the candidate's actions and the outcomes of their critical thinking approach. It demonstrates their ability to conduct in-depth investigations, identify vulnerabilities, and propose effective control measures. The candidate also highlights the positive impact of their recommendations on the company's financial risks. This answer effectively addresses all the evaluation areas and showcases the candidate as an exceptional auditor with strong critical thinking skills.

How to prepare for this question

Familiarize yourself with auditing standards, accounting principles, and financial reporting to demonstrate your knowledge and expertise in the field.
Highlight previous experiences where you applied critical thinking during audits, and be prepared to discuss the specific challenges you faced and the actions you took to address them.
Practice analyzing complex situations and presenting your findings in a clear and concise manner.
Develop a thorough understanding of internal controls and risk management processes, and be prepared to discuss how you have evaluated and improved them in the past.
Research industry regulations, trends, and best practices to showcase your commitment to staying updated and maintaining an independent and objective stance.

What interviewers are evaluating

Critical thinking
Audit experience
Analytical skills
Problem-solving skills
Decision-making skills