# Qualities of an Auditor and Professional Skepticism

## Personal Qualities of an Auditor

The auditor must possess attributes that make a strong professional and a sound businessman:

Tact, caution, firmness, good temper, integrity, discretion, industry, judgement, patience, clear-headedness, and reliability.
The highest degree of integrity combined with adequate independence.
A shine of culture — basic human qualities apart from technical training and education.
An auditor must be an expert in his own knowledge. He must know all accounting principles and techniques thoroughly because he constantly has to critically review FS.

## Professional Skepticism — SA 200 Definition

An attitude that includes:

1. A questioning mind;

2. Being alert to conditions which may indicate possible misstatement due to error or fraud; and

3. A critical assessment of audit evidence.

## Being Alert To… (What Professional Skepticism Means in Practice)

A skeptical auditor is alert to:

Audit evidence that contradicts other audit evidence obtained.
Information that brings into question the reliability of documents and responses to inquiries.
Conditions that may indicate possible fraud.
Circumstances suggesting the need for additional procedures beyond those required by the SAs.

## Why Maintain Professional Skepticism Throughout the Audit?

It reduces the risks of:

Overlooking unusual circumstances.
Over-generalising when drawing conclusions from audit observations.
Using inappropriate assumptions in determining the Nature, Timing, and Extent (NTE) of audit procedures.

## Past Honesty of Management

> The auditor shall not disregard past experience of honesty and integrity of the entity's Management and Those Charged With Governance (TCWG); however, he shall continue to maintain professional skepticism.

In other words — trust, but verify. Past good behaviour reduces predisposition of risk but does not eliminate the need for evidence.

Worked example

### Example 1

Example — Skepticism in Action

Mr D is auditing ABC Ltd for the 10th consecutive year. Management has always been cooperative and honest. This year, the CFO informally tells him that a major contract has been ‘sorted out' without providing documentation.

Although Mr D's prior experience with management is positive, SA 200 requires him to maintain professional skepticism.
He must obtain documentary audit evidence for the contract and not rely solely on oral assurance — past honesty does not eliminate the need for SAAE.

### Example 2

Example — Contradictory Evidence

While verifying receivables, an auditor receives external confirmations from 9 out of 10 debtors confirming balances. The 10th debtor confirms a much lower balance.

A skeptical auditor will not ignore the contradictory confirmation just because others agree. He must investigate the difference — possible reasons include unrecorded credit notes, disputes, or fraud.

⚠️ Common exam mistakes

Equating professional skepticism with suspicion of dishonesty — it is a questioning mind, not a presumption of fraud.
Believing that long-standing good relationship with management eliminates the need for professional skepticism — SA 200 expressly says it does not.
Listing personal qualities (tact, integrity, patience) without mentioning technical mastery of accounting principles — both are required.
Forgetting that professional skepticism must be maintained throughout the audit, not just at the planning stage.

Bare-Act text SA 200, Para 15 read with A18–A22 · SA 200 – Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing · click to expand

The auditor shall plan and perform an audit with professional skepticism recognizing that circumstances may exist that cause the financial statements to be materially misstated. Professional skepticism includes being alert to, for example: (a) audit evidence that contradicts other audit evidence obtained; (b) information that brings into question the reliability of documents and responses to inquiries to be used as audit evidence; (c) conditions that may indicate possible fraud; (d) circumstances that suggest the need for audit procedures in addition to those required by the SAs.

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Qualities of an Auditor & Professional Skepticism (SA 200)

Worked example

⚠️ Common exam mistakes