7th January,

2009

14th February, 2018

1st October, 2018

“Professional Skepticism –
The Soul of Audit”
 As per SA 240 Professional
Skepticism means

An attitude of questioning mind

Being alert to conditions which may indicate

possible misstatements due to error or fraud

A critical assessment of audit evidence

Professional Skepticism is to applied
from the beginning of client acceptance
and throughout the whole audit process
till the conclusion of auditing.
 Avoiding
inappropriate Negotiate more
assumptions and forcefully with the
audit conclusions client

Identify fraud or
unusual Expand budgeted
circumstances audit hours

Importance
of
Professiona Generate more
Provide Additional
audit evidence l alternative
Skepticism explanations

The list of benefits continue.......

 Core elements of
applying
Professional
Skepticism

Auditor Auditor Auditor

attributes mindset actions
 Lack of application of Professional
Skepticism

% of Fraud cases detected by auditors

14%

12%

10%

8% % of Fraud cases
detected by auditors
6%

4%

2%

0%
2006 2014
Source: Bi annual 2014 report to Nations on Occupational fraud and abuse
Documenting Professional Skepicism

Document how the auditor

challenged the management
views and assumptions.
Document the thought
process.
Document how the auditor
assessed reliability of source
of documents specifically
those prepared by the entity.
etc
 To Professional
Skepticism

There is potential for auditors not to be skeptical

because they are engaged and paid by the client
in way that is relatively detached from
shareholders.
Auditors can become predisposed to their clients
in a manner that can inhibit sensitivity to red
flags, which highlights why familiarity is threat
to independence.