Which 6 characteristics are identified in the professional skepticism scale?

“Oftentimes, we view the activities of others through the lens of our own experiences and biases,” said IIA president and CEO Richard Chambers in a statement. “As a result, we may not recognize the potential these biases have in our ability to fully consider those activities and identify potential problems. That’s where skepticism comes in. It allows us to avoid being blindsided, and to not simply accept certain practices as appropriate. Importantly, skepticism helps us to root out fraud.”

The organizations that make up the Anti-Fraud Collaboration, the Center for Audit Quality (CAQ), Financial Executives International (FEI), the National Association of Corporate Directors (NACD), and the Institute of Internal Auditors (IIA), also surveyed their members to evaluate the balance of trust and skepticism in their companies. A majority believe there is an appropriate balance between the two, with 79 percent of NACD members and 46 percent of IIA members reporting a comfortable balance. Less than 10 percent of all the organizations’ members reported more skepticism than trust in their financial reporting systems. The largest proportion of respondents who said their organization had more trust than skepticism came from the IIA, at 42 percent, while one-in-three FEI members and one-in-five CAQ and NACD members reported more trust than skepticism.

The Center for Audit Quality described six characteristics of skepticism: a questioning mind, suspension of judgment until appropriate evidence is obtained, a desire to search for knowledge and corroborate information, an understanding that people’s motivation and perceptions may lead them to provide biased or misleading information, autonomy or independence of mind, and sufficient self-esteem to challenge assumptions and resist pressure.

NACD recommends empowering the audit committee to ask questions of management and auditors, to gain insights from auditors on understanding and mitigating fraud risks, to support the internal audit function, to encourage management to be vigilant, and to express positivity by demonstrating and supporting proper etiquette and good ethics.

Professional skepticism in auditing refers to “an attitude that includes a questioning mind and a critical assessment of audit evidence” and is at the foundation of the profession. Its importance has been underlined multiple times since auditing standards codification. Professional skepticism can be viewed as a lens through which auditors evaluate evidence and risk throughout the audit process (Ciołek, 2017, p. 34).

Examples from my experience, reflection on the scores obtained for the 6 characteristics of skepticism.

Questioning Mind

While shopping online a question always strikes in my mind, whether the information provided about the product is genuine i.e. based on the price of the Mobile I can analyze the features the mobile can have and what’s the best time to buy the mobile to get maximum discounts and offers like black Friday deals and end of financial year deals.

Suspension of Judgement

When I come across any mistakes made by my friends/family, I don’t directly quarrel with them until I have a shred of conclusive evidence that he or she is involved and is the person behind it. I am more than 80% of the times successful in making the right judgment by being patient in finding the evidence.

Search for Knowledge

While working on an individual or group assignment, I always find myself curious and interested in doing the work allocated to me by doing as much research as possible to attain the right knowledge of the topic.

Interpersonal Understanding

While working in a group, I always try to present the work with best of my interest but while doing that sometimes I tend to slightly misunderstand or disagree with other group members ideas and information. I also feel that having total trust in someone’s work is also not integral as anyone can make mistakes and no one’s 100% reliable in doing their work accurately in a group.

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Self-Confidence

While doing any activity/task which either I don’t want to or I find difficulty in doing it, then I just try to make my mind to believe I have the talent to do it. This helps me in gaining confidence in myself and often works out well for me. Example to show my self- confidence is the state of mind I have while entering an exam hall that no matter what the questions will be asked, I will give my best shot and will not give up until and unless I finish my exam.

Self-Determining

I am not very self-determining as I mostly require a second opinion or advice to decide. Like while pursuing my post-graduation study I was very much confused in deciding which university would be the best for me and had to take help from my uncle. So, by this experience, I know that I am not completely independent in making decisions for myself.

Although, I tend to learn from my experience that I need to make independent decisions rather than being managed and dependent on someone for my commitment.

The positive effects

A model is developed and tested that characterizes the client-acceptance decisions as a process of risk evaluation and risk adaptation. The model proposes that auditors will evaluate client- related risks and use that evaluation to determine if the audit firm will suffer a loss on theengagement via a lack of engagement profitability or future litigation. The model proposes that auditors will adapt to the client-acceptance risks by using 3 strategies: 1. screening clients based on their risk characteristics, 2. screening clients based on the audit firm’s risk of loss on the engagement, and 3. more proactively adapting using strategies including adjusting the audit fee, making plans about necessary audit evidence, making plans about personnel assignment, and/or adjusting the amount of data collected during the client-acceptance process (Johnstone, 2000).

My example is based on the above theory while conducting an audit there are various challenges faced by an auditor to comply with all the of audit procedures. There is also not enough time to emphasis on all the characteristics of professional skepticism. In my experience, while complying with all the characteristics might inversely affect clients acceptance because the over-application for risk assessment may increase the cost of the audit and reduce the profits of shareholders as the client has to pay more for the audit which is deducted from clients business profit. Another way of looking at this is if as an auditor I might exercise with all high- level skepticism but can only help the client in meeting societies expectations against the client and badly fail to benefit the client which will affect the continuance of future audit work with the client.

What are the six elements of professional skepticism?

What are the characteristics of professional skepticism?

What does it mean to approach an audit with the 6 characteristics of professional scepticism?

Which of the following does professional skepticism include?