Question

7. In your opinion, can you increase or enhance an auditor's level of skepticism? How? What do you think the implications of your answer are to an audit firm?

please provide 2-4 paragaraphs, slighy less than one oage typed double, typed in responce to this question

Answer 1

The ISA 200 (ISA - International Standard on Auditing) has given the broad scope of professional skepticism other than just the questioning attitude. They define the professional skepticism as the critical assessment of the audit evidences. Like the professional judgment, professional skepticism is required when conducting the assurance engagement.

Whilst additional measures can and must be taken to improve an auditors professional skepticism, the current standards, quality control policies and procedures, and working practices have however, done enough to imbibe an appropriate level of professional skepticism.

Some of the illustrative measures that could be taken to enhance the application of professional skepticism at the Individual Auditor level are:

• Training: Learn to accelerate their ability to exercise sound judgment by following a good judgment process. Further, learn about how to avoid judgment traps and biases
  A common and formal judgment framework provides a consistent, logical approach to ensuring that judgments are well considered and provides an index of what certain instances may mean.
• Being Proactive: Proactively identifying and applying different judgment frameworks will improve auditors’ ability to have a questioning mindset.
  It requires the auditor to make an effort to understand what issues look like from different frames or perspectives and effectively challenge assumptions and explanations provided to them.
• Incentives: Align performance evaluation and incentives so that the appropriate application of professional skepticism is evaluated positively and rewarded.

Some of the illustrative measures that could be taken to enhance the application of professional skepticism at the Audit Firm level are:

• Create a Culture: Consistently encourage a culture and emphasize on the importance of a questioning, probing mindset. Publicly acknowledge and highlight instances where the appropriate application of professional skepticism made a positive difference.
• Create a master framework: Firms should develop and support a formal professional judgment framework and process.
• Training: Develop a training team specifically focused on enhancing the skill of professional judgment and skepticism.
• Tools, Templates, etc: Develop tools, templates, and technology to enhance and document the application of professional judgment and skepticism.