Professional Skepticism
Professional skepticism is an attitude that includes a questioning mind, alertness to conditions indicating possible misstatement due to fraud or error, and a critical assessment of audit evidence.
Explanation
Auditors must maintain professional skepticism throughout the entire audit. This means not accepting evidence at face value, questioning contradictory evidence, and remaining alert to information that casts doubt on the reliability of documents or management representations. Professional skepticism does not mean distrust — it means the auditor neither assumes management is dishonest nor assumes unquestioned honesty.
Key Points
- •Maintained throughout the entire audit engagement
- •Questioning mind — neither assuming honesty nor dishonesty
- •Critically assess all audit evidence, especially contradictory information
Exam Tip
Professional skepticism is the most frequently cited reason for audit deficiencies in PCAOB inspection reports — expect it to be tested heavily.
Frequently Asked Questions
Related Topics
Fraud Risk Assessment
Fraud risk assessment is the auditor's responsibility to identify and assess risks of material misstatement due to fraud, including fraudulent financial reporting and misappropriation of assets.
Auditor Independence
Auditor independence requires that the auditor be free from financial interests, relationships, or influences that could compromise objectivity, encompassing both independence in fact and in appearance.
Test your knowledge
Practice scenario-based questions on this topic with detailed explanations.