ACCOUNTING

Global Audit, Ethics and Education Standards Boards Outline Need, Way Forward for Enhanced Professional Skepticism

The global standard-setting boards for auditing, accounting ethics and accounting education has released a new publication showcasing observations and potential ways to enhance professional skepticism.

The publication, "Toward Enhanced Professional Skepticism," was produced by a joint working group comprised of representatives from the International Auditing and Assurance Standards Board (IAASB), International Ethics Standards Board for Accountants (IESBA) and the International Accounting Education Standards Board (IAESB).

The publication outlines observations about the current environment and sets out actions the global standard-setting boards will take, as well as the role that other stakeholders can play, in enhancing professional skepticism.

The importance of professional skepticism is underscored by the increasing complexity of business and financial reporting, including the greater use of estimates and management judgment, business model changes due to technological developments, and the fundamental reliance of the public on dependable financial reporting. It lies at the heart of a quality audit.

“When this initiative began, the boards were looking for input on whether and how each of their standards could contribute to strengthening the understanding and application of professional skepticism as it applies to an audit,” said Prof. Annette Köhler, Joint Working Group Chair. “We have shared our observations and recommendations with the boards, and professional skepticism now features prominently in each of the boards’ strategic considerations.”

This publication is the first ever jointly commissioned by the three boards. Each of the boards has acted on the input received; the publication also includes a snapshot of their immediate actions and longer-term studies.

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