What is Professional Scepticism?

An effective audit requires the scepticism in both personal and professional barriers as one of the crucial techniques. However, it is difficult to achieve and there is a large amount of people believe that auditors work without the enough sceptical attitude. To improve the professional scepticism application, the professional scepticism working group is combined with many educational bodies and accounting standards in the global range.

In Australian auditing standards, professional scepticism is described as the attitude including the questioning mind, critical assessment of audit evidence as well as stay cautious to avoid the mistakes and errors. The standards not only require the auditor to plan and perform the audit with professional scepticism but also recognise the situations possibly lead to the material misstated financial report. In this way, work quality is influenced by the different forms of guarding against auditors’ own biases.

When auditors cannot question enough and always believe their knowledge and understanding is better than other people, it is regarded as the overconfidence circumstance. Besides, when the auditors only corroborate the things they are told without searching the opposing evidence, it means they failed in confirmation bias.

In addition, when the auditor assumes that evidence that they have seen before, there is further evidence required in anchoring bias. Another key bias is availability that provides more readily available evidence. The biases might unconsciously drive auditors’ behaviours and auditors should not assume that client presents the real and complete circumstance. The process is important for auditors to judge and justify all the actual evidence to support what they are concluding instead of making conclusion recklessly.

Not only seeking the evidence that backs up the assumptions but also gathering the contradictory evidence and seeking the feedback from people who make the right conclusion are required to complemented by auditors. Professional accountants especially in the large companies may face the unconscious bias problem as the long working time can result in cognitive overload or fatigue. To minimize the unconscious bias’s influence on informal procedures, planning the structured process is one of effective methods.

Holding a questioning mind and giving auditors the ability to challenge the clients can be improved by training to help auditors gain more experience and knowledge. Therefore, staff can find theory knowledge such as accounting standards and acceptable accounting treatments and methodologies are in place after their experience’s improvement.

It is also important to describe in the different angles for the circumstance and increase the chance in testing the opposite situation. Having the evidence to be satisfied with the suitable balance, disclosure or transaction where auditors working is crucial to properly justify auditors’ position. In audit scepticism, some people believe that the engagement risk assessment is the most critical stage to minimize the assessed risks to acceptable stage for leaders to assess the engagement risks with the client and devise procedures and strategies.

There are the appointment of an engagement quality control review (EQCR) partner and brainstorming meetings that both improves to check the completed work whether the further clarification or the procedures are required to do. The in-built professional scepticism that the most highly technically skilled people hold, which enables them to drill down into the accounts and can solve challenges and ask questions confidently. These best quality auditors can understand the links between the different financial report areas and the interaction way with the management performance and the reward systems. Playing the role as professional scepticism and understanding the auditing business including the risks, auditor needs more efficient audit work with the cautious attention. University can help accounting students to realise that scepticism is more rely on the process of creating and justifying different ideas than the conclusion and result of the ideas.

However, the scepticism should be hold in the appropriate degree as the auditors cannot get the job done if they distrust and question every single thing. It requires auditors hold the ability to pick and choose where experience holds the important place in understanding where the red flags are as well as which amounts the auditors need to pursue in the more specific detail. Good auditors know how to utilise the scepticism well in the auditing work and get the better result.

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