FAR Research Project: Professional skepticism: a trending concept in need of understanding

Abstract

Regulators and standard setters emphasize professional skepticism as a key input to audit quality (e.g., AFM, 2014; PCAOB, 2015; IFIAR, 2015; IAASB, 2015). Indeed, a global recurring theme in audit inspection findings is instances in which auditors did not appropriately apply professional skepticism in their judgments and actions (IAASB, 2015). For example, IFIAR concluded from its 2014 Survey of Inspection Findings that: “A factor underlying many audit deficiencies is insufficient exercise of professional skepticism during performance of the audit” (IFIAR, 2015, p. 3). Hence, “IFIAR has suggested that enhanced professional skepticism by auditors will contribute significantly to improve the quality of the audit and that firms should prioritize efforts in this area” (IAASB, 2015, p. 12).