ACCA AAA INT Syllabus B. Professional and Ethical Considerations - Professional Scepticism - Notes 8 / 9
A healthy scepticism is a fundamental part of any audit
We need to see more scepticism
Not a total distrust it requires an enquiring mind that is open to the possibility that something may be wrong
Is it supported by evidence
Is it consistent with what is known from elsewhere?Are assumptions reasonable? In today's world, impairment testing is commonplace and works on assumptions
The auditor needs to not only see a record of what the assumptions are, but also challenge them and understand how they affect the conclusions the client has come to.
Too often it seems that the auditor is looking for reasons why assumptions can be supported, without also considering facts that might suggest they are not appropriate - too optimistic, for example.
Is there sufficient evidence? If an auditing standard requires a certain presumption - for example, of a significant risk of
fraud in the case of revenue recognition - does the auditor too easily find reasons for overriding the presumption?