What questions should we be asking ourselves during an audit

by Heather Dandridge  28-Sep-2015 at 11:09

What questions should we be asking ourselves during an audit?

With the use of judgement in financial reporting increasing it is becoming crucial for accountants and auditors to develop necessary skills in professional scepticism. But what is professional scepticism? And more importantly, how do we implement it successfully in our audits?

ICAEW defines professional scepticism as, "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." So it is time for audits to not be based solely on factual evidence and it is the job of the auditor to ask questions and make decisions based on management and their own opinion.

Unfortunately it is difficult to document that an appropriate attitude has been applied, but audit firms must develop methods for demonstrating that they are sceptical in their audit processes. ICAEW suggests we must step back and look at the overall picture and consider the following questions:

  • Does the reporting reflect the substance of what has happened?
  • Does it make sense?
  • Is the evidence too thin?
  • Are we focussing on the things that are there but missing the things that are not there – but should be?
  • Are there limitations on the scope of our procedures?
  • Are management’s assumptions and forecasts appropriate?
  • Are the assumptions still appropriate given the changing economy?
  • What evidence is there besides what management has provided to us?
  • Is the evidence contradictory?
  • Do we really understand enough about potentially complex group structures or potentially sensitive related party relationships and transactions?
  • Do we need more time to complete our audit?
  • Is the reporting biased?

Lisa Weaver, who spent 4 years in audit practice, with clients ranging from major charities, multi-national organisations and listed companies to football clubs, has authored a new course for accountingpd.net, Professional Scepticism. Click on the link to find out more about the course.

 

Did you like this blog? Let us know in the comments or share on Twitter
Like Like[Hits: 8624]
Add your contribution
[You need to sign in or register in before you can add a contribution.]
[There are no help topics specific to this page.]
Properties
X
  • Page 0 compiled at: 21/01/2017 13:15:33 (128 ms)