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Devil in the detail

In a perfect world, each and every audit would be conducted with the required degree of professional scepticism and based on sufficient audit evidence.

 These would be amply demonstrated (to the satisfaction of all stakeholders) in the audit file’s documentation. As Martyn Jones, vice president of ICAEW, observes: “Effective audits should enhance confidence in the financial reporting process, and for this process to work, stakeholders need to be satisfied that auditors are applying appropriate professional scepticism.”

But we live and work in an imperfect world. So although many auditors do maintain an attitude of professional scepticism throughout the audit process, some do not, and even those who do exercise appropriate levels of professional scepticism don’t always demonstrate this in their audit files. “Because scepticism is an attitude of mind, it’s a difficult thing to measure, and it can sometimes seem like a difficult thing to document,” says Jones— unlike some of the more specific processes or actions required by the ISAs.