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“The IAASB’s International Standards on Auditing (ISAs) explicitly recognise the fundamental importance of professional scepticism”, states Prof Arnold Schilder, IAASB Chairman. “Nevertheless, adopting and applying a sceptical mindset is ultimately a personal and professional responsibility to be embraced by every auditor. It is an integral part of the auditor’s skill set, is closely interrelated to the fundamental concepts of auditor independence and professional judgment, and contributes to audit quality. The auditor’s education, training and experience are therefore critical. Audit firms themselves have an important role to play in cultivating a sceptical mindset in auditors, as do regulators, oversight bodies, and those charged with governance.”
“The public expects high-quality audits. While what that means depends on one’s perspective, a defining feature is the exercise of professional judgement together with a ‘healthy dose’ of professional scepticism by the auditor. A sceptical attitude enhances the auditor’s ability to identify and respond to conditions that may indicate possible misstatement due to error or fraud and critically assess audit evidence”, notes James Gunn, IAASB Technical Director.
The Q&A publication focuses on the requirements and application material in the ISAs and the IAASB’s quality control standard that are of particular relevance to the proper understanding and application of professional scepticism during an audit of financial statements. In addition, answers are provided regarding what audit firms and auditors can do to enhance awareness of the importance of professional scepticism, identify aspects of an audit where professional scepticism may be particularly important, and how professional scepticism can be evidenced.