This update was first published in the April 2012 International edition of Accounting and Business magazine.
Following the financial crisis of 2008–09, audit inspection reports in a number of jurisdictions have highlighted the need for auditors to better demonstrate professional scepticism. The International Auditing and Assurance Standards Board (IAASB) has therefore decided that it would be in the public interest to remind auditors and others of its importance and has issued a staff Q&A publication.
This focuses on the considerations in International Standards on Auditing (ISAs) and the IAASB’s quality control standard (ISQC1) that are particularly relevant and address the following:
- What is professional scepticism?
- Why is it important in audits of financial statements?
- What can be done by audit firms and auditors to enhance awareness?
- At what stage in the audit process is it necessary?
- How does it relate to the auditor’s responsibilities with respect to fraud
- Are there other aspects of an audit where it may be important?
- How can its application be evidenced?
- Do regulators, oversight bodies and those charged with governance have a role to play?
Yvonne Lang, director, Smith & Williamson