Help the Success of the External Audit by Educating Your Professional Team on the Characteristics of Skepticism.

Expect your external auditors to
embrace a professional level of
skepticism in order to succeed.

Skepticism is integral to the conduct of external auditors. But the exercise of skepticism should not be limited to external auditors. Even if not codified in law or regulation, deterrence and detection of financial reporting fraud requires all participants in the financial reporting supply chain to exercise skepticism.

Skepticism is a questioning mindset, and it requires an understanding that even the best organizations can be susceptible to fraud. Management, audit committees, and internal auditors, at a minimum, should take a “trust but verify” approach with systems, methods, and communications rather than accept critical information at face value.

Skepticism is not an end in itself and is not meant to encourage a hostile atmosphere or micromanagement. The word skepticism, in fact, comes from the Greek word skeptikos, which means “inquiring” or “reflective.”

Is skepticism a set of personality traits, or is it a learned skill? The short answer is both. We will consider skepticism as an individual characteristic, albeit with multiple dimensions, listed as follows:

• Questioning mind—A disposition to inquiry, with some sense of doubt
• Suspension of judgment—Withholding judgment until appropriate evidence is obtained
• Search for knowledge—A desire to investigate beyond the obvious, with a desire to corroborate
• Interpersonal understanding— Recognition that people’s motivations and perceptions can lead them to provide biased or misleading information
• Autonomy—The self-direction, moral independence, and conviction to decide for oneself, rather than accepting the claims of others
• Self-esteem—The self-confidence to resist persuasion and to challenge assumptions or conclusions

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READ MORE>> www.thecaq.org: The Fraud-Resistant Organization

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