Defining Professional Skepticism

This week, I’m attending the International Accounting Standards Board (the “IAASB” or the “Board”) meeting.  The Board has a challenging agenda covering several important topics  – non-compliance with with laws and regulations, auditing accounting estimates, professional skepticism, group audits and integrated reporting.

The topic that I’m most interested in is the proposed discussion paper about integrated reporting, which addresses providing “credibility” for various emerging forms of financial reporting such as integrated reporting, sustainability reporting, and other emerging reporting frameworks.

However, as a former auditor, I’m finding the discussion and debate about professional skepticism very interesting.

In addressing professional skepticism, the IAASB formed a working group called the Professional Skepticism Working Group (the “PSWG”).  Along with IAASB representatives/participants, the PSWG includes representatives from the IFAC Education Board (called the International Accounting Education Standards Board) and its Ethics Board (the International Ethics Standards Board for Accountants).

According to the agenda paper provided for the June meeting, the PSWG’s goal is to identify the conceptual issues related to professional skepticism across the various international standards that skepticism should influence, such as planning and risk analysis, including where further alignment between professional skepticism and the other standards may be needed or issues may exist, and make observations or recommendations for further action to be considered.

At this meeting (June 2016) the IAASB discussion is focusing on “how to emphasize in the IAASB International Standards…the application of professional skepticism in making professional judgments with respect to planning and obtaining sufficient appropriate evidence and in sufficiently documenting the application of professional skepticism.”  Additionally, the IAASB will establish its short, intermediate and longer term goals for the professional skepticism project.

It’s apparent from the discussion that professional skepticism is an overriding concept for the conduct of the audit. It influences all of the stages of audit conduct starting at the planning stage and continuing through the final meeting with client management and its audit committee.


About docjonz

I am an Associate Professor of accounting at Hofstra University in Hempstead, NY. Additionally, I have more than 30 years of professional accounting experience in various capacities including auditing, accounting standard setting and corporate accounting policy.
This entry was posted in Accountant, Auditing and Auditor Reporting, IAASB and tagged , , , , , , . Bookmark the permalink.

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