Document ID: chunk:federal_register_of_legislation:F2023C01119:body:0:p21
Version: federal_register_of_legislation:F2023C01119
Segment Type: other
Provision Reference: 
Character Range: 59000–62215

locations.

Professional Scepticism (Ref: Para. 7)

A34.         The engagement partner is responsible for emphasising the importance of each engagement team member exercising professional scepticism throughout the audit engagement. Conditions inherent in some audit engagements can create pressures on the engagement team that may impede the appropriate exercise of professional scepticism when designing and performing audit procedures and evaluating audit evidence. Accordingly, when developing the overall audit strategy in accordance with ASA 300, the engagement team may need to consider whether such conditions exist in the audit engagement and, if so, what actions the firm or the engagement team may need to undertake to mitigate such impediments.

A35.         Impediments to the exercise of professional scepticism at the engagement level may include, but are not limited to:

           * Budget constraints, which may discourage the use of sufficiently experienced or technically qualified resources, including experts, necessary for audits of entities where technical expertise or specialised skills are needed for effective understanding, assessment of and responses to risks and informed questioning of management.

           * Tight deadlines, which may negatively affect the behaviour of those who perform the work as well as those who direct, supervise and review. For example, external time pressures may create restrictions to analysing complex information effectively.

           * Lack of cooperation or undue pressures imposed by management, which may negatively affect the engagement team's ability to resolve complex or contentious issues.

           * Insufficient understanding of the entity and its environment, its system of internal control and the applicable financial reporting framework, which may constrain the ability of the engagement team to make appropriate judgements and an informed questioning of management's assertions.

           * Difficulties in obtaining access to records, facilities, certain employees, customers, vendors or others, which may cause the engagement team to bias the selection of sources of audit evidence and seek audit evidence from sources that are more easily accessible.

           * Overreliance on automated tools and techniques, which may result in the engagement team not critically assessing audit evidence.

A36.         Unconscious or conscious auditor biases may affect the engagement team's professional judgements, including for example, in the design and performance of audit procedures, or the evaluation of audit evidence. Examples of unconscious auditor biases that may impede the exercise of professional scepticism, and therefore the reasonableness of the professional judgements made by the engagement team in complying with the requirements of this ASA, may include:

           * Availability bias, which is a tendency to place more weight on events or experiences that immediately come to mind or are readily available than on those that are not.

           * Confirmation bias, which is a tendency to place more weight on information that corroborates an existing belief than information that contradicts or casts doubt