PCAOB Staff Reminds Auditors That Professional Competence and Skepticism Are Essential to Quality Audits

Today the Public Company Accounting Oversight Board (PCAOB) released a new staff Spotlight, "Professional Competence and Skepticism Are Essential to Quality Audits(PDF)."

The Spotlight reminds auditors of the importance of critically assessing the firm’s capabilities, obtaining proper understanding of the company they are auditing, and performing work with due professional care and professional skepticism. These matters are particularly important in circumstances where changes to economic conditions or other factors affect the company.

The application of professional skepticism – an attitude that includes a questioning mind – is critical to planning and performing high quality audits and ensuring investors are protected. To apply professional skepticism effectively, auditors should have the necessary industry expertise and knowledge of the companies they audit. Although an auditor’s specialist can assist an auditor in various aspects of an audit, the auditor is required to have sufficient knowledge of the subject matter being addressed to properly supervise the engagement. Without the necessary expertise, firms should not accept such engagements. 

Visit the PCAOB’s Staff Publications page to find this resource and others that can help auditors, audit committees, investors, and preparers understand the PCAOB's activities and observations.

***** 

About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers, including compliance reports filed pursuant to federal securities laws.