John Selwood and Peter Upton consider some practical aspects of auditor scepticism
There are two things the audit profession knows for sure about professional scepticism: it is very important and more of it is needed. It is high on the agendas of auditors, audit regulators, file reviewers, professional bodies like ICAEW, standard setters and other stakeholders. Yet despite this focus, professional scepticism remains a difficult concept to nail down. International Standards on Auditing (ISA) 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing defines professional scepticism as “an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence”. Even armed with this definition (and the ISA 200 application notes), professional scepticism can be a challenging concept for some members of audit teams to understand, develop, apply, demonstrate and document. It is difficult to see how professional scepticism can be manifest in a written audit methodology. It is hard to train auditors on. You can’t fit it on a checklist.
One interesting way of thinking more clearly about our professional scepticism is to start at the end. Ultimately, a sceptical auditor will obtain better audit evidence than one who is less sceptical. But being more sceptical is not necessarily about doing more or getting more evidence, although a sceptical auditor with a more enquiring or challenging approach to answers they are given is likely to ask appropriate additional questions in response to those answers.
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