6. Is Professional Scepticism necessary in other Audit areas besides Fraud?
Updated: Dec 17, 2022
Throughout the auditing process, Professional Scepticism is vital.
Professional Scepticism is especially crucial when handling complicated, significant, or highly judgmental audit areas, such as:
Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures – For example, when:
Evaluating the reasonableness of the significant assumptions used by management for accounting estimates that give rise to risks to significant risks.
Determining whether changes in accounting estimates or in the method for making them from the prior period are appropriate in the circumstances.
Review the judgments and decisions made by management in the making of accounting estimates to identify whether there are indicators of possible management bias.