Ethics: Definition Of Audit Professional Scepticism?

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Definition of Audit Professional Scepticism
According to International Standards on Auditing (ISAs) 200, “The auditor shall plan and perform an audit with professional scepticism recognizing that circumstances may exist that cause the financial statements to be materially misstated.” In other words, an auditor must have a questioning mind and be sceptical to any circumstances that may be a sign of possible misstatement due to error and fraud, and critically assess audit evidence. It does not mean that they should assume the management is totally dishonest but instead, they should bear in mind that the management is neither honest nor dishonest.
Professional scepticism is actually a sceptical mind-set that cause auditors to apply a questioning …show more content…

Therefore, it helps to ensure the audit works performed are of good quality.
Personal behavioural traits such as an auditor’s attitude and ethical values, and his level of competence which is his knowledge do affect his professional scepticism. This means that education, training and experience will influence professional scepticism. Therefore, audit firms are responsible to develop and polish their auditors to have a sceptical mind by planning and enforce policies that stress on the importance of professional scepticism in performing audit works.
Apart from personal behavioural traits, an auditor’s integrity also affects his professional scepticism. The justification will be discussed …show more content…

If the answer is no, they must perform more audit procedures to gather more audit evidence.
• Reliability of audit evidence
Auditors cannot straight away rely on the information from documents and responses to inquiries received from the clients. They must be sceptical about the reliability of those information before they use them as audit evidence. If they are doubtful about the reliability, for instance, they believe that the clients may have falsified the documents, they must investigate further and maybe modify or add additional audit procedures such as collecting more audit evidence from third parties.
• Risks of material misstatements due to fraud
Sometimes fraud may be created and concealed in a way that is so well-organized that it might be overlooked if auditors fail to perform reasonable care and skills. This always happens in entities that have knowledgeable people in accounting, finance and so on. Therefore, every auditor must maintain a questioning mind throughout the audit and set in his mind that material misstatement due to fraud may exist even though his past experience with the clients shows that the clients are indeed

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