The Importance of Professional Skepticism

Professional skepticism is a crucial attribute for all auditors. As auditors, we are obligated to question and verify every piece of information that is included in our audit reports.

The audit report requires conclusions that are well-supported by evidence. Every statement of fact within the report must be backed by reliable evidence. This aspect is what makes our profession unique and trustworthy, as we diligently test and verify all of our assertions. If you’re a performance auditor following Yellow Book standards, you have to say “We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.”

How does the GAO describe professional skepticism?

In the Yellow Book, professional skepticism is described as:

“A questioning mind, awareness of conditions that may indicate possible misstatement owing to error or fraud, and a critical assessment of evidence. Professional skepticism includes being alert to, for example, evidence that contradicts other evidence obtained or information that brings into question the reliability of documents or responses to inquiries to be used as evidence.”

Trust, but verify

The saying "Trust, but verify" was made famous by President Ronald Reagan. He used it as a key principle in his dealings with the Soviet Union. The phrase reflects the idea that it is essential to maintain trust and engagemnet, but at the same time, one must verify and confirm the compliance and actions of the other party through independent checks and monitoring.

As an auditor it is crucial to independently verify the information provided to you, especially from the auditee. You should seek evidence from multiple sources and verify information independently to corroborate findings and minimize reliance on a single source.

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