Tell me about a time when you encountered a discrepancy in financial data. How did you identify and resolve it?

Sample answer to the question

In my previous role as a Fund Accountant, I encountered a discrepancy in financial data when reconciling fund transactions. I noticed that the total amount of transactions recorded in the system did not match the amount reported in the financial statements. To identify the issue, I began by reviewing the transaction details, including the source documents and supporting paperwork. I also reached out to relevant stakeholders, such as the investment managers and custodian, to gather additional information. After a thorough investigation, I discovered that a manual entry error had occurred, resulting in the mismatched amounts. To resolve the discrepancy, I corrected the manual entry and updated the financial records accordingly. I also implemented a double-check process to ensure that similar errors would be caught in the future.

A more solid answer

During my time as a Fund Accountant, I encountered a discrepancy in financial data while reconciling the monthly investment transactions. I noticed that the total cash inflows and outflows did not match the expected figures based on the transaction records. To identify and resolve the issue, I followed a systematic approach. First, I performed a detailed analysis of the transaction data, comparing it with the corresponding trade tickets, bank statements, and investor reports. I also reached out to the investment managers and custodian to verify the accuracy of the transactions. Through this investigation, I discovered that an incorrect trade ticket was entered into the system, leading to the discrepancy. To resolve the issue, I promptly corrected the trade ticket and updated the cash flow records. Additionally, I implemented a rigorous double-check process for trade ticket entry to prevent similar errors in the future.

Why this is a more solid answer:

The solid answer expands on the basic answer by providing more specific details and demonstrating the candidate's analytical thinking and problem-solving abilities. The candidate describes a systematic approach to identify and resolve the discrepancy in financial data, showcasing their ability to use fundamental accounting knowledge and attention to detail. The answer also highlights the candidate's communication skills by mentioning their collaboration with investment managers and the implementation of a preventive measure.

An exceptional answer

In my role as a Fund Accountant, I encountered a discrepancy in financial data that required a comprehensive investigation and resolution. While reconciling the monthly investment transactions, I noticed a significant discrepancy in the net asset value (NAV) calculated for one of the funds. To tackle this challenge, I engaged in a multi-step process. First, I conducted a thorough review of the investment transactions, comparing them with the trade tickets, received statements, and investor allocations. I also examined the market prices and trading volumes to verify their accuracy. Additionally, I reached out to the fund's investment manager and custodian to ensure the completeness of the transaction data and to gather any relevant information. Through this meticulous analysis, I identified an error in the pricing feed, which led to the misrepresentation of the NAV. To resolve the discrepancy, I promptly collaborated with the pricing team to correct the error and update the NAV calculations. I also implemented an enhanced review process for pricing feeds, conducting regular checks and cross-referencing with independent sources. These measures not only resolved the immediate discrepancy but also strengthened the overall accuracy and reliability of the financial data.

Why this is an exceptional answer:

The exceptional answer surpasses the solid answer by providing a more detailed and comprehensive response. The candidate not only describes the discrepancy encountered but also explains the step-by-step process they followed to investigate and resolve the issue. The answer demonstrates the candidate's advanced analytical thinking, problem-solving abilities, and attention to detail. The candidate showcases their ability to collaborate with relevant stakeholders, such as the investment manager and custodian, to gather necessary information. Moreover, the candidate goes above and beyond by implementing an enhanced review process, showcasing their commitment to preventing future discrepancies. The exceptional answer aligns well with the required skills and knowledge for the Fund Accountant role.

How to prepare for this question

Review and familiarize yourself with accounting principles, financial industry regulations, and accounting software commonly used in the finance sector.
Develop strong analytical thinking and problem-solving skills by practicing identifying and resolving discrepancies in financial data.
Improve your attention to detail by working on tasks that involve reconciling financial records or conducting thorough reviews of financial information.
Enhance your communication skills, both written and verbal, as you may need to collaborate with colleagues and stakeholders to gather information and resolve discrepancies.
Explore case studies or real-life examples of financial data discrepancies to gain insights into different approaches and solutions.
Stay updated on current industry trends and best practices in fund accounting to showcase your knowledge and commitment during the interview.

What interviewers are evaluating

Fundamental accounting knowledge
Analytical thinking and problem-solving abilities