Auditing and Assurance Standards and Guidance

Auditing Standards (Ireland)

FRC ISAs (UK and Ireland) applicable for periods beginning on or after 15 December 2010 but before 17 June 2016

ISA (UK and Ireland) 200 Overall objectives of the independent auditor and the conduct of an audit in accordance with International Standards on Auditing (UK and Ireland)

Application and Other Explanatory Material

Professional Skepticism (Ref: Para. 15 )

A18.	Professional skepticism includes being alert to, for example:

Audit evidence that contradicts other audit evidence obtained.

Information that brings into question the reliability of documents and responses to inquiries to be used as audit evidence.

Conditions that may indicate possible fraud.

Circumstances that suggest the need for audit procedures in addition to those required by the ISAs (UK and Ireland).

A19.	Maintaining professional skepticism throughout the audit is necessary if the auditor is, for example, to reduce the risks of:

Overlooking unusual circumstances.

Over generalizing when drawing conclusions from audit observations.

Using inappropriate assumptions in determining the nature, timing, and extent of the audit procedures and evaluating the results thereof.

A20.

Professional skepticism is necessary to the critical assessment of audit evidence. This includes questioning contradictory audit evidence and the reliability of documents and responses to inquiries and other information obtained from management and those charged with governance. It also includes consideration of the sufficiency and appropriateness of audit evidence obtained in the light of the circumstances, for example in the case where fraud risk factors exist and a single document, of a nature that is susceptible to fraud, is the sole supporting evidence for a material financial statement amount.

A21.

The auditor may accept records and documents as genuine unless the auditor has reason to believe the contrary. Nevertheless, the auditor is required to consider the reliability of information to be used as audit evidence.¹³ In cases of doubt about the reliability of information or indications of possible fraud (for example, if conditions identified during the audit cause the auditor to believe that a document may not be authentic or that terms in a document may have been falsified), the ISAs (UK and Ireland) require that the auditor investigate further and determine what modifications or additions to audit procedures are necessary to resolve the matter.¹⁴

A22.

The auditor cannot be expected to disregard past experience of the honesty and integrity of the entity's management and those charged with governance. Nevertheless, a belief that management and those charged with governance are honest and have integrity does not relieve the auditor of the need to maintain professional skepticism or allow the auditor to be satisfied with less-than-persuasive audit evidence when obtaining reasonable assurance.

¹³ ISA (UK and Ireland) 500, "Audit Evidence," paragraphs 7-9.

¹⁴ ISA (UK and Ireland) 240, paragraph 13; ISA (UK and Ireland) 500, paragraph 11; ISA (UK and Ireland) 505, "External Confirmations," paragraphs 10-11, and 16.