Question

4. Why is PS so important in relation to an auditor's fulfilling his/her responsibilities?

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

Answer 1

PS so important in relation to an auditor's fulfilling his/her responsibilities because of the following:-

• Professional scepticism is applied during the planning process to assess the risk of material misstatement in the different elements of the financial statements and that these risk assessments are fundamental in determining the actions to be taken by the auditor and the nature and extent of evidence to be obtained as the basis for the audit opinion
• many items in the financial statements are accounting estimates, which require management judgment and are susceptible to management bias.

• Without proper application of professional skepticism, the effectiveness of audit procedures is diminished. As a result, the sufficiency and appropriateness of audit evidence obtained is negatively impacted.

• Professional scepticism underpins the quality of each audit judgment and, through these judgments, the overall effectiveness of the audit in addressing the challenges it faces in meeting the needs of shareholders and other stakeholders (users) for whose benefit the audit is performed. Further, the appropriate application of professional scepticism in the audit therefore requires a mind-set which rigorously questions and challenges management’s assertions with an attitude that reflects the expression of an attitude of doubt that is consistent with the expectations of those users. Such an attitude would demand strong evidence to back each audit judgment – and ultimately to back management’s assertion that the financial statements give a true and fair view - that would be convincing and persuasive to users.