APB publishes paper on professional scepticism in audit

News types: Codes and Standards Announcements

Published: 30 March 2012

APB PN 160

The Auditing Practices Board (APB) of the Financial Reporting Council (FRC) today issues a paper that sets out its views on the nature of professional scepticism and its role in auditing.

The paper builds on the APB Discussion Paper published in 2010 Auditor Scepticism: Raising the Bar and the subsequent Feedback Paper, published in March 2011, which summarised the comments received and outlined the actions that the APB, and other parts of the FRC, intended to take. The paper is designed to provoke new thinking and broaden the understanding of the need for and meaning of scepticism in the context of auditing.
A copy of the paper may be downloaded free of charge from the publications section of the APB’s website 

Richard Fleck, Chairman of the APB and a director of the FRC said:

“The critical importance of professional scepticism to audit quality is widely recognised but, as we previously found, there is a lack of consensus as to its nature and its role in the audit. This paper addresses that lack of consensus and ensures that there is a consistent understanding of the nature of professional scepticism and its role in the conduct of an audit.

I hope that this paper will be an important point of reference for auditors, companies and those who use audited financial statements and that it will be considered carefully and contribute to confidence in financial reporting.”


The APB is also taking steps to promote the conclusions drawn in this paper by:

  • Encouraging the auditing profession and the audit firms to consider the implications of these conclusions for their business models and culture;

  • Encouraging Audit Committee members and management to recognise and act on the important contribution that they can make to support the appropriate exercise of professional scepticism in considering the key judgments involved in preparing the financial statements and in responding to the challenges raised in the audit; and

  • In due course, identifying ways in which the International Standards on Auditing (ISAs) might be further developed in response to these conclusions, as part of the post Clarity ISA implementation review being conducted by the International Auditing and Assurance Standards Board (IAASB).

Notes to editors
  1. The FRC is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.
  2. The APB is committed to leading the development of auditing practice in the United Kingdom and the Republic of Ireland so as to:
    • establish high standards of auditing;
    • meet the developing needs of users of financial information; and
    • ensure public confidence in auditing.
  3. The IAASB is undertaking a review of the implementation of the clarified ISAs, focusing on whether these standards are being consistently understood and implemented in a way that achieves the IAASB’s goals in revising and redrafting them and to determine whether any issues arise during the review that will require further consideration by the IAASB. Further information can be obtained from the IAASB website (www.ifac.org/auditing-assurance/projects/isa-implementation-monitoring).

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