A Model and Literature Review of Professional Skepticism in Auditing
Mark W. Nelson
Cornell University - Samuel Curtis Johnson Graduate School of Management
November 1, 2009
Auditing: A Journal of Practice and Theory, Vol. 28, No. 2, pp. 1-34, November 2009
Johnson School Research Paper Series No. 02-2011
This paper reviews research that examines professional skepticism (hereafter, PS) in auditing. Consistent with much research and with recent regulatory concerns, the paper defines PS as ‘‘indicated by auditor judgments and decisions that reflect a heightened assessment of the risk that an assertion is incorrect, conditional on the information available to the auditor.’’ In many circumstances the assertion in question will be a client’s assertion that the financial statements are free of material misstatement, but the definition could apply to other assertions as well (e.g., attesting to the effectiveness of a client’s internal controls). This definition reflects more of a ‘‘presumptive doubt’’ than a ‘‘neutral’’ view of PS, implying that auditors who exhibit high PS are auditors who need relatively more persuasive evidence (in terms of quality and or quantity) to be convinced that an assertion is correct. Depending on how an auditor’s decisions are evaluated, it is possible under this definition for an auditor to exhibit too much PS, in that they could design overly inefficient and expensive audits.
Number of Pages in PDF File: 2Accepted Paper Series
Date posted: January 9, 2011 ; Last revised: January 11, 2011
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