Auditors must apply professional scepticism, but regulators frequently criticise them for failing to provide necessary evidence. In the first of a two-part series, Michelle Roberts ACA, Croner-i, hones in on the priorities for the profession
An Audit Quality Review director at the Financial Reporting Council (FRC) has been quoted as saying: ‘There is a failure to challenge management at firms and an absence of scepticism about the information presented by management. We need to change the mindset of auditors – they need to think about challenging the companies and to understand that the real client is the investor.’
International Standards on Audit as applied in the UK (ISA (UK)) define professional scepticism as ‘an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence’.
Adopting an approach of professional scepticism will also involve a critical assessment of audit evidence and being alert for audit evidence which may contradict other audit evidence or may call into question the reliability of the information gathered from management and those charged with governance.
