Professional skepticism
Financial Dictionary — Auditing Standards
Definition
An attitude that includes a questioning mind and a critical assessment of evidence.
Detailed Explanation
Professional skepticism is an auditor’s critical mindset that involves questioning evidence and remaining alert to conditions that may indicate misstatement.
Common Uses
- Used in audit planning to understand risks and design procedures.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
Practical Example
- Example: The auditor references **Professional skepticism** when designing procedures and documenting conclusions in the audit file.
Why This Term Matters
- Why it matters: Supports high-quality, defensible audit conclusions and helps detect material misstatements and control weaknesses.