Professional ScepticismProfessional Scepticism

Professional Scepticism

26 Under ASA 200, the auditor needs to plan and perform an audit with an attitude of professional scepticism recognising that circumstances may exist that cause the financial report to be materially misstated. Due to the characteristics of fraud, the auditor’s attitude of professional scepticism is particularly important when considering the risks of material misstatement due to fraud. Professional scepticism is an attitude that includes a questioning mind and a critical assessment of audit evidence. Professional scepticism requires an ongoing questioning of whether the information and audit evidence obtained suggests that a material misstatement due to fraud may exist.

27 The auditor shall maintain an attitude of professional scepticism throughout the audit, recognising the possibility that a material misstatement due to fraud could exist, notwithstanding the auditor’s past experience with the entity about the honesty and integrity of management and those charged with governance.

28 As discussed in ASA 315, the auditor’s previous experience with the entity contributes to an understanding of the entity. However, although the auditor cannot be expected to fully disregard past experience with the entity about the honesty and integrity of management and those charged with governance, the maintenance of an attitude of professional scepticism is important because there may have been changes in circumstances. When making enquiries and performing other audit procedures, the auditor exercises professional scepticism and is not satisfied with less-than-persuasive audit evidence based on a belief that management and those charged with governance are honest and have integrity. With respect to those charged with governance, maintaining an attitude of professional scepticism means that the auditor carefully considers the reasonableness of responses to enquiries of those charged with governance, and other information obtained from them, in light of all other evidence obtained during the audit.

29 An audit performed in accordance with Auditing Standards rarely involves the authentication of documents, nor is the auditor trained as or expected to be an expert in such authentication. Furthermore, an auditor may not discover the existence of a modification to the terms contained in a document, for example through a side agreement that management or a third party has not disclosed to the auditor. During the audit, the auditor ordinarily considers the reliability of the information to be used as audit evidence including consideration of controls over its preparation and maintenance where relevant. Unless the auditor has reason to believe the contrary, the auditor ordinarily accepts records and documents as genuine. However, if conditions identified during the audit cause the auditor to believe that a document may not be authentic or that terms in a document have been modified, the auditor ordinarily investigates further, for example confirming directly with the third party or considering using the work of an expert to assess the document’s authenticity.