The following the latest blog for ongoing current series of KCO Blogs. This particular Blog is written by Mr. Ahmed Yar Khan, Manager Audit and Assurance Services. Please read the following informative blog and provide your comments.


It is the state of mind which is ready for the situation that questions the financial events and other events while conducting an assurance engagement. It’s basically a skill just like the professional judgment which makes the auditor alert for any particular situation. They are alert for any sort of reactions which may occur in the financial events of the company. They are relevant questions to make sure the reports or the information is true.

Professional skepticism is actually an attitude of the questioning mind. In this attitude they ask the questions which will be helpful for knowing the future consequences. They measure every side effect of the information which they obtain by their questioning attitude or mind. They also ask the questions which will help them to make critical assessment of the financial events with a strong set of evidences.

Auditors tend to get a lot of eye rolls from client personnel. After all, no one likes to have their work questioned or their errors pointed out to their bosses. Yet that questioning is foundation block to the audit practice.

If auditors are not appropriately skeptical – seeking only to corroborate management’s assertions, perhaps, or rationalize evidence that doesn’t make sense – then their opinion loses its value to investors.

The ISA 200 has given the broad scope of professional skepticism other than just the questioning attitude. They define the professional skepticism as the critical assessment of the audit evidences. Like the professional judgment, professional skepticism is required when conducting the assurance engagement.

An auditor should have the skeptic mind which will make him alert for the situations to avoid material misstatement. He should be cautious of the chances of errors. To make the financial statements transparent, there should be some auditors with professional skepticism skills, in this way they will guard the statement from all type of misstatements. The professional skepticism is also the skill which is obtained by continuous training and experience.

The audit firms and auditors shall follow the following best practices to enhance the awareness of the importance of professional skepticism;

  • Establish policies and procedures to;
    • Promote internal culture based on quality/competence at all levels
    • Develop and implement internal training and education (professional development)
  • Discussion with engagement team on the susceptibility of the financial statements to material misstatements
  • Supervision audit engagement
  • Review work performed
  • Appropriate consultation on matters

Professional skepticism is an individual, team, and firm-wide responsibility. Applying these best practices and taking advantage of time-saving tools and technology will help encourage professional skepticism in audits – and improve compliance, efficiency, and effectiveness.

Ahmed Yar Khan