The ISAs do not set forth requirements for regulators and oversight bodies of the audit firms, nor for TCWG.
However, because of the critical role that those stakeholders serve in achieving audit quality, they are in a position to further challenge auditors to be skeptical through adequate two-way communication and effective oversight and inspection of audits.
Auditors and TCWG must communicate effectively during the audit. ISAs require the auditor to explain the audit scope, timing, significant findings, and difficulties.
Required communications include the auditor’s comments on accounting policies, estimates, and financial statement disclosures.
TCWG is in a position to influence and stimulate auditor skepticism by providing feedback on important matters pertaining to the audit. For example, in receiving communications about the planned scope and timing of the audit, TCWG may:-
Discuss issues of risk and the concept of materiality with the auditor;
Identify any areas in which they may request the auditor to undertake additional procedures; and
Assist the auditor in better understanding the entity and its environment.
Through monitoring and audit inspections, oversight bodies can foster productive communication that helps auditors understand the necessity of Professional Skepticism in financial statement audits. The auditor’s documentation is particularly important as it serves, among other purposes, to enable the conduct of external inspections in accordance with applicable legal, regulatory, or other requirements.
Auditors must also communicate directly with regulators or prudential supervisors and TCWG.
Even without a necessity, the auditor may determine it necessary to communicate with regulators or prudential supervisors. However, the auditor’s duty to protect client confidentiality may prevent such reporting. The auditor may seek legal counsel to identify the best course of action.
Throughout the auditing process, Professional Scepticism is vital.
在整个审计过程中，职业怀疑态度是至关重要的。
Professional Scepticism is especially crucial when handling complicated, significant, or highly judgmental audit areas, such as:
Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures – For example, when:
Evaluating the reasonableness of the significant assumptions used by management for accounting estimates that give rise to risks to significant risks.
Determining whether changes in accounting estimates or in the method for making them from the prior period are appropriate in the circumstances.
Review the judgments and decisions made by management in the making of accounting estimates to identify whether there are indicators of possible management bias.
在处理复杂、重大或高度判断性的审计领域时，职业怀疑态度尤为关键，例如：
会计估计，包括公允价值会计估计，以及相关的披露 — 例如，当
评估管理层对引起重大风险的会计估计所使用的重要假设的合理性。
确定会计估计的变化或与前期相比的方法的变化在当时情况下是否合适。
审查管理层在作出会计估计时所作的判断和决定，以确定是否有迹象表明管理层可能存在偏见。
Going Concern
For example, In examining management’s plans for future actions concerning its going concern assessment, consider if the plans are likely to improve the position and whether they are practicable.
The December 2011 IAASB release, Economic Conditions Continue to Challenge Preparers and Auditors Alike; Focus Must Include Going Concern Assumption and Adequacy of Disclosures, stresses the significance of Professional Skepticism and judgement in reviewing financial statement disclosures and the auditor’s report where a material uncertainty exists regarding events or conditions that may cast doubt on the entity’s ability to continue as a going concern.
It also references the 2009 IAASB Staff Audit Practice Alert, Audit Considerations in Respect of Going Concern in the Current Economic Environment, which highlights matters relevant to the consideration of the going concern assumption in the preparation of financial statements.
For example, when remaining alert during the audit for information that may indicate previously unidentified or undisclosed related party relationships or transactions; and in the context of identified significant transactions outside the entity’s normal course of business, when evaluating whether the business rationale (or lack thereof) of the transactions suggests that they may have been entered into to engage in fraudulent financial reporting or to conceal misappropriation of assets or the reliability of external confirmation requests.
For example, When doing other audit procedures, auditors should stay on the lookout for instances of non-compliance or suspected non-compliance with laws or regulations that could have a big effect on the financial statements or a major effect on the way the entity does business, which could cause it to shut down or make it hard for it to continue as a going concern.
This may also be relevant in the context of a group audit, for instance, due to business practices and cultures in different jurisdictions.
Another example where Professional Skepticism is particularly important is in relation to auditing significant unusual or highly complex transactions.
The 2010 IAASB Staff Q&A publication, Auditor Considerations Regarding Significant Unusual or Highly Complex Transactions, highlights considerations in the ISAs that are relevant to auditing such transactions, noting that their nature may give rise to risks of material misstatement of the financial statements and, accordingly, may merit heightened attention by auditors.
In addition, in relation to auditing financial instruments, firms’ and auditors’ attention is drawn to the IAASB’s recently released International Auditing Practice Note (IAPN) 1000.
Among other matters, the IAPN re-emphasizes the importance of Professional Skepticism, in particular in relation to the risks and consequences of management bias.
Auditors often show Professional Skepticism during audit conversations.
The auditor’s discussion with TCWG may explain why a substantial accounting practice permissible under the applicable financial reporting framework is not most suited for the entity.
Audit documentation is essential for demonstrating Professional Skepticism since it shows that the audit was planned and completed according to ISAs and other legal and regulatory requirements.
The ISAs require the auditor to prepare adequate audit documentation to allow an experienced auditor with no prior connection to the audit to understand, among other things, significant audit matters, conclusions, and judgments.
The ISAs also require auditors to document discussions with management, TCWG, and others, detailing the nature of the significant matters discussed, when, and with whom.
Such documentation helps the auditor show how significant judgments and key audit concerns were addressed and whether sufficient and relevant audit evidence was acquired.
When matters and judgments are important, it is important to prepare audit documentation, such as in the following situations:
The significant decisions made by the project team regarding the likelihood of fraud resulting in a material misstatement in the entity’s financial statements and their communications with management, the TCWG, regulators and others regarding fraud issues.
Known or suspected non-compliance with laws and rules, as well as the results of discussions with management, TCWG, and other parties outside the entity.
The basis for the auditor’s conclusions about the reasonableness of accounting estimates, their disclosures that give rise to significant risks, and any indicators of possible management bias.
Identified information that doesn’t fit with the auditor’s conclusion about a significant matter and how that inconsistency was handled.
The basis for the auditor’s conclusions on the reasonableness of areas of subjective judgments.
The auditor’s conclusion about a document’s authenticity when further investigation (such as using an expert or confirmation procedures) is done in response to audit conditions that led the auditor to assume the document may not be legitimate.
Since Professional Skepticism is a state of mind, it can be challenging to show how the auditor utilised it during the audit.
ISAs remark that no single mechanism exists to document an auditor’s Professional Skepticism.
However, Audit documentation may show the auditor’s ISA-compliant Professional Skepticism, such evidence may include measures performed to substantiate management’s responses to the auditor’s inquiries.
The auditing practice requires a high level of Professional Skepticism at all times.
在审计领域，职业怀疑论的概念无处不在。
In the same way that a Jedi from Star Wars is always working to improve his or her understanding of the “force,” an auditor is always working to improve his or her capacity to exercise Professional Skepticism.
When carrying out an assurance engagement, having a healthy dose of Professional Skepticism lays the groundwork for the decision-making process.
In the IAASB’s Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, the glossary of words includes the following definition of the term “Professional Skepticism”:
“an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence.”
职业怀疑的简要定义
在国际审计与鉴证准则理事会（The International Auditing and Assurance Standards Board — IAASB） 的《国际质量控制、审计、审阅、其他鉴证及相关服务公告》手册中，词汇表对 “职业怀疑”诠释如下:-
In line with the above definition, it is easy to see that Professional Skepticism is a skill that auditors should continually strive to build and improve, however, this skill is not easily assessable.
Moreover, it cannot be developed in a single day. Specifically, it is a skill that takes time to acquire with experience. Skepticism in the professional world is mostly seen as thinking rather than an attitude.
Auditors need to be Professionally Skeptical when performing their tasks, which drives their behaviour to adopt a questioning attitude when analyzing audit materials and drawing conclusions.
When viewed in this light, the core ethical principles of objectivity and auditor independence are inextricably tied to the Professional Skepticism that underpins them.
The Auditor’s Independence enhances their capacity to act with integrity, be objective, and maintain an attitude of Professional Skepticism.
Professional Skepticism also includes being alert to, for example, audit evidence that contradicts other audit evidence obtained, or information that brings into question the reliability of documents or responses to inquiries to be used as audit evidence.
In addition, it includes being alert to conditions that may indicate possible fraud and circumstances that suggest the need for audit procedures in addition to those required by the ISAs.
Professional Skepticism also includes a Critical Assessment of audit evidence, which comprises both information that supports and corroborates management’s assertions, and any information that contradicts such assertions.
In this context, applying Professional Skepticism means questioning and considering the sufficiency and appropriateness of audit evidence obtained in light of the circumstances.
For instance, this may be the case when fraud risk factors are present and a single document of a type that is susceptible to fraud is the only supporting evidence for a material financial statements amount. In this scenario, the auditor should apply Professional Skepticism.
When there is reason to suspect the authenticity of the findings being audited or when there are indications that fraud may have taken place, the ISAs mandate that the auditor conducts an additional investigation and determine what modifications or additions to the auditing procedures are required to resolve the issue.
At the same time, it is not acceptable for the auditor to omit an audit procedure for which there is no alternative or to be content with audit evidence that is less convincing simply because the auditing process is difficult, time-consuming, or costly.
Finally, it is essential to note that a subjective personal belief in the honesty and integrity of management and those charged with governance (TCWG) does not relieve the auditor from maintaining Professional Skepticism or accepting less than persuasive audit evidence when reasonable assurance is obtained.
