Question

A licensed CPA can face charges by regulatory agencies for failing to exercise professional skepticism or due care in a routine audit. Discuss accounting techniques that might be used to assure that you have exercised due care while maintaining professional skepticism

Answer 1

Professional skepticism is a part of a skill set an auditor should possess.

It is a type of possessing questioning mind. An auditor should have a mind of questioning each and every instance to consider the risk of misstatements.It is majorily used in professional judgement to express an opinion based on the information obtained.

1)In case of evaluation of debtors, external confirmation is a technique which is used to represent yourself to confirm their existence and their materiality.

2)In case of stocks physical verification is the technique used to assure that we have applied professional skepticism.

Thinking in a negative way and going through the investigation in an negative /opposite way is an essential condition for professional skepticism.

It is to be followed all through the audit and require to gather the information, and based on the information required to give professional judgement of the opinion on books of accounts.