While auditors must work to improve professional scepticism in the accounting sector, the temptation to simply call for more scepticism “should be resisted”, according to a report by the Institute of Chartered Accountants in England and Wales (ICAEW).

Scepticism: The Practitioner’s Take, is based on a series of interviews with 15 practising auditors, training providers, and audit regulators.

The report looks at the current debate about the need for auditors to exercise more scepticism, arguing that whilst the debate is an important one, “to date the quality of the debate on scepticism has been somewhat superficial”.

ICAEW manager, auditing standards, Katharine Bagshaw said: “Scepticism is about quality, not quantity – asking the right questions, not just a lot of them. There comes a point where asking more questions ‘just in case’ becomes ineffective. There are deadlines to be met and auditors have to move on.”

The report considers the debate from the point of view of the practitioner, with emphasis on the practical limitations of audits: “simply telling auditors to be more sceptical… and ignoring the practical limitations of an audit will not, in itself, change behaviour.”

According to the ICAEW, all of those interviewed agreed that scepticism can and should be enhanced. There was also a good deal of agreement among those interviewed on what needs to be done to achieve this.

Auditors need experience and an intimate understanding of the business in order to mount an effective challenge to management. Structural changes to training and working practices are necessary to ensure that those who do not yet have experience – junior audit staff – are able to learn from those who do.

Other structural changes within the firms are also necessary. The report highlights the need for methodologies to be sufficiently robust to withstand the pressures that build towards the deadline of a complex audit.

Many respondents also believed that scepticism is not just for auditors. Other stakeholders in the wider financial reporting supply chain, particularly preparers, should also demonstrate how they have challenged systems, controls, and financial information.

Bagshaw said: “Preparers of accounts, in particular, need to exercise scepticism themselves before handing information over to external auditors… there is a shared responsibility for scepticism.”


By Eleanor Jerome