Practical guidance for exercising professional skepticism

A high-quality audit requires the exercise of professional judgment by the auditor and a mindset of professional skepticism. Because it is part of the auditor’s mindset, professional skepticism depends on the personal behavioural traits of those involved in the audit and is influenced by such things as the motivation, competencies, education, training and experience of each auditor.

The International Standards on Auditing (ISA) note that professional skepticism is necessary to the critical assessment of audit evidence. This includes questioning contradictory audit evidence and the reliability of documents and responses to inquiries and other information obtained from management and those charged with governance. It also includes consideration of the sufficiency and appropriateness of audit evidence obtained in light of the circumstances.

A recently-issued paper proposes practical ways in which the exercise of professional skepticism can be enhanced in an audit of financial statements and reflected in audit documentation by setting out a series of questions for different phases of the engagement. Using the questions may help identify the best means of demonstrating the exercise of professional skepticism in an effective manner.

Read the May 2013 paper on Practical Ways to Improve the Exercise and Documentation of Professional Skepticism in an ISA Audit. This 18-page paper was prepared by the Canadian Institute of Chartered Accountants (CICA) and the Institute of Chartered Accountants in Australia (ICAA). Learn more by reviewing other guidance materials on Professional Skepticism.