Preview Questions External Auditor | Role Specific Skill

Question 1: When analyzing financial discrepancies, what type of testing is most effective?

Which action should you take?

Choose only one option

Substantive testing

Stratified testing

Random testing

Control testing

Question 2: In assessing the operational risk of a financial institution, which of the following is most important?

Which action should you take?

Choose only one option

Test only the front-office operations without considering back-office risks

Focus only on the size and complexity of the bank's operations

Compare the bank's risk profile with other similar institutions in the market

Evaluate the effectiveness of business continuity plans and disaster recovery procedures

Question 3: When performing an audit of a BFSI institution, how does an external auditor assess compliance with the Dodd-Frank Act?

Which action should you take?

Choose only one option

By reviewing the bank's consumer protection policies and practices

By analyzing the bank's exposure to foreign markets

By evaluating the capital adequacy ratio of the bank

By assessing the institution's financial risk models

Question 4: What is the external auditor's role in assessing compliance with the Payment Card Industry Data Security Standard (PCI DSS) in BFSI?

Which action should you take?

Choose only one option

Evaluate the institution's adherence to PCI DSS standards regarding credit card data security

Verify the effectiveness of marketing campaigns for credit card services

Assess the effectiveness of loan approval processes

Review transaction data for anomalies without focusing on security standards

Question 5: Which financial document is most critical for identifying misstatements in revenue recognition?

Which action should you take?

Choose only one option

Income statement

Balance sheet

Statement of retained earnings

Statement of cash flows

Question 6: Which of the following would constitute a violation of regulatory compliance for a financial institution regarding financial statements?

Which action should you take?

Choose only one option

The omission of significant transactions related to financial risk exposure

The inclusion of non-financial information on the balance sheet

The misreporting of customer deposits in the liability section

The inclusion of marketable securities on the income statement