Professional scepticism

According to the AUASB Glossary, professional scepticism is ‘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’.

Further, ASA 200.A18-20 (ISA 200.A18-20) indicates that professional

scepticism includes:

• questioning the reliability of documents and information and

explanations provided by management

• being alert to contradictory evidence

• questioning the sufficiency and appropriateness of audit evidence

and not necessarily accepting the most readily available audit

evidence

• being alert to conditions that may indicate risks of fraud

• critically challenging management judgments, assumptions and

estimates.

Professional scepticism is important, as it enhances the auditor’s

ability to exercise professional judgement in identifying and

responding to conditions that may indicate possible misstatements in

the financial report. Therefore, professional scepticism is critical

to enabling auditors to draw appropriate conclusions in the conduct of

their work. It is also essential to auditors fulfilling their ethical

requirements of objectivity and independence.