Question

Why should we have professional skepticism when we prepare a tax return or when we set up an Accounting Information System ("AIS")? Simply put, do we only have professional skepticism when we perform attest services or for all services provided (attest and non-attest)?

Answer 1

Answer: Firstly, let us understand the meaning of Professional Skepticism.

Professional Skepticism: Generally in simple terms, skepticism means having doubt or disbelief on a particular information i.e. to rather say questioning the authenticity of something. Therefore, Professional Skepticism means having an attitude of alertness. This term is widely used and is of utmost importance in the field of audit and assurance as it demands being alert to conditions/information that may result in increasing the probability of misstatement or fraud.

As regards to the Professional Skepticism being used while preparing a tax return or while setting up an AIS, it can be of utmost importance to deliver the qualitative services as while preparing a tax return all the documentary evidences in regard to the income earned and expenses incurred can act as an evidence which establish the correctness of the income and expenses and also, while setting up an AIS professional skepticism helps in designing a process which not only helps in storage and process of financial data but also increases the security and reliabilty of the data maintained.

CONCLUSION: Thus, the attitude of having professional skepticism is to ensure that there is no area left unnoticed which can cause any significant misstatement and hence, it is of utmost importance for attestation services and non-attestation services as well.