Professional Scepticism – Are we being sceptical enough?

Research commissioned by CPA Australia, suggests that the most productive means of increasing auditors’ distrust in management representations (ie. application of sufficient levels of scepticism) is to provide perceived rewards or positive consequences for the auditor in displaying professional scepticism. To promote more application of scepticism within the industry, experiences of forensic auditors and liquidators should be captured and learnings disseminated widely, to further promote effective ‘watch dog’ strategies. Maybe we need to be asking if applying professional scepticism is enough. Perhaps auditors should shift focus from only examining historical information to including an assessment of forward-looking information, such as judging the appropriateness of the business model, or rating the effectiveness of business risk management strategies. Is this what the regulators are currently thinking? If you’re an auditor, change is in your future – the only question is how quickly and how large will the changes be? Will you be ready? Click here to view the article on the CPA website.