Professional scepticism: Establishing a common understanding and reaffirming its central role in delivering audit quality

In March 2012, the Auditing Practices Board (APB) of the UK Financial Reporting Council (FRC) issued guidance on professional scepticism. The document builds on the August 2010 APB Discussion Paper, Auditor Scepticism: Raising the Bar, and the subsequent Feedback Paper published in March 2011, which summarized the Responses to the Discussion Paper and outlined the actions that the APB, and other parts of the FRC, intended to take in light of the responses received.

The guidance document is written in an unusual format for an APB document, being much more discursive than is customary and drawing analogies from a diverse group of areas. This is because scepticism needs to be more broadly understood and drawing these analogies will facilitate that understanding. The APB is also keen to stimulate and provide input to an international debate on the issue of scepticism. The document will provide valuable input to that debate.

With this objective in mind, the document: explores the roots of scepticism and identifies lessons for its role in the conduct of an audit; discusses scientific scepticism and the scientific method; reviews the origins of the modern audit; and offers conclusions about professional scepticism in the audit. It also discusses the conditions necessary for auditors to demonstrate the appropriate degree of professional scepticism and lists five proposals to take these matters forward. To learn more, read the 23-page guidance Professionalscepticism: Establishing a common understanding and reaffirming its centralrole in delivering audit quality.