Professional skepticism is an attitude that includes a questioning mind and a critical assessment of audit evidence. In exercising professional skepticism, the auditor should not be satisfied with less than persuasive evidence because of a belief that management is honest.

The auditor should also apply professional scepticism when forming the auditor’s opinion, by considering the overall sufficiency of evidence to support the audit opinion, and by evaluating whether the financial statements overall are a fair presentation of underlying transactions and events.

PCAOB standards define professional skepticism as an attitude that includes a questioning mind and a critical assessment of audit evidence, and it is essential to the performance of effective audits under Board standards.

Professional skepticism is an essential attitude that enhances the auditor’s ability to identify and respond to conditions that may indicate possible misstatement. It includes a critical assessment of audit evidence. This critical assessment is necessary in order for the auditor to draw appropriate conclusions.

Professional skepticism is an attitude that includes a questioning mind and a critical assessment of audit evidence.

An audit involves performing procedures to obtain sufficient appropriate audit evidence. The auditor’s professional judgement is applied in deciding which procedures are to be performed. Professional scepticism is identified by the International Standards on Auditing (ISAs) as the attitude of audit team members.

Professional skepticism is an important component of objectivity and essential ingredient for gathering the evidences which are necessary to support audit judgment. It is an attitude of professional which include questioning mind, alertness in conditions which may indicate possible misstatement due to fraud or error.

The extent, timing, and nature of audit procedures are determined by the application of both, professional skepticism, and judgment. It lets the auditor decide whether the audit evidence obtained is sufficient and appropriate for the audit.

Professional judgement applied in the audit brings added-value by a proper identification of the audit risks and the development of audit procedures, as well a certain determination of the workload and the evidence required to sustain the audit opinion.

For example, the International Standards on Auditing (ISA 200) define professional skepticism as follows: 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 evidence.

To show professional scepticism means:

1. having a questioning mind.
2. being alert to anything that may indicate misstatement due to error or fraud.
3. critically assessing audit evidence.

But what is professional skepticism in the context of an audit? In layman’s terms it is a mindset where an auditor does not simply accept information or audit evidence at face value. Rather, the auditor applies a reasonably questioning attitude while performing the audit.

The proposed SAS, if finalized in its proposed form, will hopefully further enhance audit quality and address concerns of professional skepticism. Bob Dohrer, CPA is Chief Auditor at the AICPA.

There is no doubt that lack of professional skepticism is frequently cited by audit regulators as a leading cause of lower quality audits.

First, it requires that the auditor, in forming conclusions about whether sufficient appropriate audit evidence has been obtained, evaluate the relevance and reliability of information to be used as audit evidence — notwithstanding the source (internal or external) of the information, or the methods used to obtain the evidence.