Can you share an example of a potential risk you identified during an audit? How did you suggest mitigating actions?

Sample answer to the question

During an audit of a manufacturing company, I identified a potential risk in their inventory management process. Upon reviewing the company's procedures, I noticed that the inventory count was only being conducted once a year, which could lead to inaccuracies and discrepancies throughout the year. I suggested implementing monthly or quarterly inventory counts to mitigate the risk and ensure the accuracy of inventory records. This would allow the company to identify any discrepancies early on and take appropriate actions to address them.

A more solid answer

During an audit of a manufacturing company, I conducted a detailed analysis of their financial statements and identified a significant potential risk related to their accounts receivable process. Upon further investigation, I discovered that the company was not performing regular credit checks on their customers, which increased the risk of bad debt and potential loss. To mitigate this risk, I suggested implementing a credit check policy for new customers and conducting periodic credit reviews for existing customers. I also recommended establishing collection procedures and working closely with the sales team to monitor credit limits and payment terms.

Why this is a more solid answer:

The solid answer provides a more comprehensive example of a potential risk identified during an audit and suggests multiple mitigation actions. It demonstrates the required skills and qualifications, such as analytical thinking, attention to detail, and critical thinking. However, it could still benefit from more specific details and examples, as well as a stronger emphasis on communication and project management skills.

An exceptional answer

During an audit of a healthcare organization, I identified a potential risk in their compliance with HIPAA regulations. While reviewing their privacy policies and procedures, I noticed that the organization did not have a formal process in place for monitoring and auditing access to patients' electronic health records (EHRs). This posed a significant risk of unauthorized access and potential violations of patient privacy. To mitigate this risk, I suggested implementing a robust access control system that would track and monitor all access to EHRs, including user permissions, logging, and regular audits. I also recommended conducting regular training sessions for employees to ensure their understanding and compliance with HIPAA regulations.

Why this is an exceptional answer:

The exceptional answer provides a highly specific example of a potential risk identified during an audit and suggests a comprehensive set of mitigation actions. It not only demonstrates the required skills and qualifications but also goes above and beyond by addressing a critical issue related to regulatory compliance. The answer includes specific details and examples, showcasing the candidate's expertise and ability to think proactively. However, it could still benefit from further elaboration on project management and leadership skills.

How to prepare for this question

Familiarize yourself with relevant audit methodologies and accounting principles to confidently discuss risk identification and mitigation.
Review case studies or real-life examples of audit risks and strategies for mitigating them.
Practice analyzing financial statements and identifying potential risks based on the information provided.
Brush up on your knowledge of applicable laws and regulations, especially those related to the industry you are applying for.
Prepare examples from your past experiences where you successfully identified and suggested mitigation actions for potential risks.

What interviewers are evaluating

Analytical thinking and attention to detail
Strong communication and presentation skills
Ability to work independently and as part of a team
Proficiency in auditing software and Microsoft Office suite
Project management and leadership skills
Critical thinking and problem-solving abilities