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Importance of professional skepticism in auditing.

Professional skepticism is an attitude of mind which involves being alert to situations which may lead to misstatement due to fraud or errors, questioning mind and critical analysis of audit evidence. It involve being aware of the fact that things may be different than they are actually are. Auditor when undertaking audit engagement  is required by ISA 200 and other ISAs to maintain professional skepticism attitude.

Professional skepticism is important in audit due to the following reasons:

  • Professional skepticism is very important when identifying circumstances which may require auditor to perform audit procedures other than those required by ISAs. Auditor should remain alert throughout the audit in order to assess sufficiency of audit evidence obtained through procedures required by ISAs and should perform further audit procedures if the evidence obtained is inadequate.
  • First it may enable auditors to uncover instances of of fraud and errors. fraud is very diffivult to uncover due to the fact that perpetrators of the fraud may go extra mile to make sure that the fraud is not detected. so ISA 240 require auditors to maintain attitude of proffessional skepticism throughout the audit in order to uncover the instances of fraud.

  • It is required during assessment of whether the client has complied with relevant laws and regulations. ISA 250 require auditor to maintain attitude of professional skepticism in order to uncover all material misstatement in financial statement caused by non compliance with laws and regulations.
  • It may lead to uncovering of information which question evidence reliability.
  • It is needed when assessing the going concern of the entity. 

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