Enhancing professional skepticism in audits

Concerns about the application of professional skepticism in audits continue. Will strengthening our ethical principles or demonstrating how professional judgment was applied help make the difference?

Professional skepticism is a fundamental concept and core to audit quality. Concerns about instances when auditors did not appear to apply professional skepticism in their audits is a globally recurring theme in audit inspection findings.


In its recent Invitation to Comment, the International Auditing and Assurance Standards Board (IAASB) identifies professional skepticism as key to its work in enhancing audit quality. It is exploring matters such as behavioural, training and other issues as a basis for determining how auditing standards may need to be changed.

The IAASB identifies a number of different factors that influence professional skepticism. Further, it notes that the documentation of professional judgments and related actions can provide evidence that professional skepticism was applied. This suggests that good documentation will help auditors demonstrate the application of professional skepticism. It is for this reason that the Auditing and Assurance Standards Board (AASB)—in collaboration with the Institute of Chartered Accountants Australia (ICAA)—issued non-authoritative guidance in 2013 providing a practical approach to improving the exercise and documentation of professional skepticism.


The IAASB notes that personal traits influence the application of professional skepticism. Personal traits include fortitude (i.e., the strength of mind that enables the auditor to deal courageously with matters arising during the course of the audit) and the auditor’s competence (e.g., knowledge, skills and experience).

On the same theme, the Institute of Chartered Accountants of Scotland (ICAS) is looking to the ethical requirements as the place where changes might be made that strengthen professional behaviour. It is proposing that ethical requirements be enhanced to recognize the need for moral courage, which ICAS defines as “to exhibit fortitude and determination to exert professional skepticism, to challenge others who are behaving inappropriately, and to resist the professional exploitation of professional opportunity for private benefit rather than the public interest.”

According to ICAS, the ethical principles “are the foundations of a professional accountant’s career — professional accountants need to lead and champion these fundamental ethical values.” All professional accountants should take the lead in influencing the culture of organizations in which they work to ensure that the organization interacts with all its stakeholders in an ethical manner.


In my mind, this sort of debate and discussion indicates that the profession is prepared to ask itself critical questions that go to the core of what our profession stands for. Will changing ethical principles along the lines of the ICAS proposals really have an impact on professional skepticism applied on an audit? I don’t know, but it could be a key piece of the puzzle.


Do you think today’s auditors have the moral courage to challenge management’s judgments? Will reinforcing ethical principles bring change to auditors’ professional skepticism? What else might help?

Post a comment below; or email me directly.

Conversations about Audit Quality is designed to create an exchange of ideas on global audit quality developments and issues and their impact in Canada.

About the Author

Eric Turner, CPA, CA

Director, Auditing and Assurance Standards, CPA Canada