Chartered Accountant interview questions and answers

I export GSTR-2B and the purchase register, match on supplier GSTIN, invoice number and taxable value, and bucket the results: matched, in books but not in 2B, in 2B but not in books, and value mismatches. For a textile client I handled, most gaps were suppliers filing late or keying the wrong invoice number. I sent each supplier a list every month, held credit that was not reflected, and tracked it until it appeared. Items in 2B but not in books usually meant a missing bill or a wrong GSTIN on someone else’s invoice, so I checked those with the purchase team before claiming anything.

Ind AS are converged with IFRS, while the older AS were based on earlier Indian practice. Ind AS use fair value more widely, need more disclosure and follow substance over form more strictly. For example, Ind AS 116 brings almost all leases on the balance sheet, and Ind AS 109 uses expected credit loss for receivables. Ind AS applies to listed companies, unlisted companies above a net worth threshold, and their holding, subsidiary, joint venture and associate companies. Banks, NBFCs and insurers have separate roadmaps. Smaller companies continue with AS. In my articleship I worked on one Ind AS client and several AS clients, so I have seen both formats.

I start by understanding the business: products, plants, revenue streams, related parties and last year’s issues. Then I set overall and performance materiality, usually on a revenue or profit benchmark, and document why. Next comes risk assessment under SA 315. For a manufacturer I had last year, the big risks were inventory valuation, revenue cut-off at year end and capital work in progress. I planned an inventory observation at two plants, cut-off testing on the last and first 15 days of dispatches, and a detailed look at capitalisation. I shared a timeline and a document request list with the client in the first week so nothing waited till the end.

The five steps are: identify the contract, identify the performance obligations, determine the transaction price, allocate the price to each obligation, and recognise revenue when or as each obligation is satisfied. Take a company that sells a machine with installation and two years of maintenance for one price. The machine, installation and maintenance may be separate obligations if the customer can benefit from each on its own. I would allocate the total price using standalone selling prices, recognise the machine on delivery, installation when complete, and maintenance evenly over two years. Any discount is spread across obligations unless it clearly relates to only one.

First I agree the debtor ledger total to the trial balance. Then I pick parties for external balance confirmation under SA 505, covering large balances plus a random sample of smaller ones. For parties who do not reply, I check subsequent receipts in the bank statement after year end, and if there are none, I trace the balance to invoices and delivery challans. I review the ageing report for old balances and check whether the provision is adequate, or under Ind AS whether the expected credit loss working is reasonable. In my articleship, this process found two customers with credit balances that were actually advances and needed reclassification.

On the start date, the lessee recognises a right-of-use asset and a lease liability. The liability is the present value of lease payments, discounted at the rate implicit in the lease or, usually, the incremental borrowing rate. The ROU asset is the liability plus initial direct costs and prepaid rent. After that, the asset is depreciated and interest is charged on the liability, so rent disappears from operating expenses. Short-term leases and low-value assets can be expensed instead. At my current company we have 40 retail store leases, so I maintain a lease register in Excel and update it for renewals, rent escalations and early terminations every quarter.

Deferred tax arises because accounting profit and taxable profit recognise some items in different periods. Under Ind AS 12, we compare the carrying amount of each asset and liability with its tax base. A common example is depreciation: if tax depreciation is higher than book depreciation in early years, the asset’s tax base is lower, which creates a deferred tax liability. Expenses allowed only on payment, such as some employee benefits, create a deferred tax asset. A deferred tax asset is recognised only if future taxable profit is probable. AS 22 looks at timing differences in the profit and loss account instead, but the idea is similar.

I first confirm the facts: the nature of the payment, the section that applies and whether any exemption or lower deduction certificate exists. If TDS should have been deducted, the company is treated as an assessee in default, owes the tax plus interest, and may face penalty. Also, part of the expense can be disallowed under Section 40(a)(ia) until the tax is paid. I would advise the client to deduct or pay the tax with interest now and file a revised TDS return. In the tax audit report, the default has to be reported in the relevant clause, and I would check whether the provision for tax needs an adjustment.

All three are modified opinions under SA 705. A qualified opinion is given when misstatements are material but not pervasive, or when the auditor cannot get enough evidence on an area that is material but not pervasive. An adverse opinion is given when misstatements are both material and pervasive, meaning the financial statements as a whole are misleading. A disclaimer is given when the auditor cannot get sufficient appropriate evidence and the possible effect is both material and pervasive. So the two questions are: is it a misstatement or a lack of evidence, and is the effect pervasive? An emphasis of matter paragraph is different; it does not modify the opinion.

CARO is an order under the Companies Act that asks the statutory auditor to report on specific matters in an annex to the audit report. It covers most companies, but excludes banking, insurance, one-person and small companies, and some private companies that meet size conditions. The clauses cover property, plant and equipment records and title deeds, physical verification of inventory, loans and guarantees given, deposits, statutory dues, defaults on borrowings, use of term loans, fraud, related party transactions, internal audit and cash losses, among others. In practice, I kept a CARO working file where every clause had evidence attached, such as the title deed list or the statutory dues ledger.

We close in five working days. Day one is cut-off: sales and purchases are booked up to the last day and goods in transit are identified. Day two is accruals and provisions, including salaries, rent, utilities and bonus. Day three is reconciliations: bank, GST credit ledger against 2B, intercompany balances and major vendor and customer ledgers. Day four is the review, where I run a flux analysis against last month and budget and ask for reasons for any line moving more than a set limit. Day five is the management pack. In my current role I moved the close from nine days to five by fixing the accrual template and starting bank reconciliations daily.

Two days before a board meeting, while reviewing the quarterly results of a logistics client, I noticed that fuel expenses for one region had been booked twice through an interface error, overstating costs by about ₹38 lakh. I told the finance controller the same hour, showed the duplicate entries and suggested reversing them before the results went out. We checked the other regions too and found no more duplicates. The corrected results went to the board on time. Afterwards I suggested a check in the interface that flags duplicate invoice numbers, and the IT team added it the next month. Since then, I always run a duplicate test before any close.

At a trading client, I proposed a provision of about ₹12 lakh against a customer who had not paid for 14 months. The owner refused, saying the customer was an old friend and would pay. I did not argue about the friendship. I showed him the ageing, the three unanswered reminder emails and that the customer had also stopped buying from them. I explained that without a provision the audit report would need to be modified. He agreed to a partial payment plan with the customer, and we provided for the balance not covered by the plan. When two instalments came in later, the provision was reversed correctly.

My final exams overlapped with the tax audit season in my last year of articleship. I told my principal early and we agreed on a plan: I would finish my four tax audit files before taking study leave, and hand over two ongoing GST clients with notes. I worked on files from nine to six and studied from seven to eleven, with Sunday kept for full-length mock papers. I kept a simple tracker of each file’s status so my senior could see where things stood. All four files were closed before the deadline, and the handover notes meant nobody had to call me during study leave.

A restaurant owner called me in a panic about a GST notice asking why his output tax in one return was lower than in another. I read the notice and his returns and found that one month’s sales were reported in GSTR-1 but tax was paid short in GSTR-3B because of a data entry slip. I explained it to him in three lines: what the department noticed, why it happened and what it would cost, which was the short tax plus interest. I paid the difference through DRC-03 with his approval, drafted a reply with the working, and set up a monthly check comparing both returns before filing.

Our team reconciled 26 bank accounts manually every month, and it took two people most of the first week. I built a Power Query workbook that pulled bank statements and the ledger, matched on amount, date and cheque or UTR number, and listed only the unmatched lines. I tested it for two months alongside the manual process to be sure it gave the same result. After that, the reconciliation took about a day, and the team used the saved time to follow up on old unmatched items, which cleared about ₹9 lakh of suspense entries. I also wrote a one-page guide so anyone could run it.

While filing a quarterly TDS return for a client, I entered the wrong challan against a group of deductees, so the return was processed with a short payment default. I noticed it when the justification report came. I told my manager the same day, explained what went wrong and filed a correction statement matching the right challan. The demand was cleared without extra cost. Since then, I tick each challan against the return before uploading and ask a colleague to check any return above a set number of entries. It was a small error, but it taught me to build checks into repeat work instead of trusting memory.

In four years of practice, I audited about 15 companies and saw many finance teams from the outside. I enjoyed understanding businesses, but I always handed over findings and moved to the next file. I want to own the numbers and see decisions through: budgeting, month-end close, working capital and tax planning for one business. Your role covers controllership for a growing manufacturing company, which fits my audit experience in manufacturing clients. I know industry has its own pressure, such as monthly closes and board packs, and I am comfortable with that. I would rather be the person fixing the controls than the one reporting on them.

I have looked at offers from campus placements and roles similar to this one, and for a newly qualified CA in a Mumbai finance team, I am expecting a CTC in the range of ₹10 to 12 lakh a year. I cleared both groups in my first attempt and have three years of articleship covering statutory audit, GST and tax audit, so I can contribute from the first month. That said, I care about the learning and the role, and I am open to discussing the structure, such as fixed pay, variable pay and benefits, if the overall package is fair.

My notice period is two months. I am currently leading two statutory audits that close in the next six weeks, and I would like to finish them or hand them over properly, because walking out mid-audit would hurt the clients and my team. If you need me sooner, I can ask my partner about an early release once the fieldwork is done, which could bring my joining date forward by two or three weeks. I would rather give you a date I can keep than promise an early one and then ask for an extension.