Document ID: chunk:federal_register_of_legislation:F2022C01186:reg:14:p15
Version: federal_register_of_legislation:F2022C01186
Segment Type: reg
Provision Reference: reg 14 (pt 15/30)
Character Range: 54800–58020

or procedures in managing and achieving quality at the engagement level.[13]

Professional Scepticism (Ref: Para. 15)

A21.         Professional scepticism 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 enquiries 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 Australian Auditing Standards.

A22.         Maintaining professional scepticism throughout the audit is necessary if the auditor is, for example, to reduce the risks of:

           * Overlooking unusual circumstances.

           * Over generalising 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.

A23.         Professional scepticism is necessary to the critical assessment of audit evidence.  This includes questioning contradictory audit evidence and the reliability of documents and responses to enquiries 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 report amount.

A24.         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.[14]   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 Australian Auditing Standards require that the auditor investigate further and determine what modifications or additions to audit procedures are necessary to resolve the matter.[15]

A25.         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 scepticism or allow the auditor to be satisfied with less‑than‑persuasive audit evidence when obtaining reasonable assurance.

Professional Judgement (Ref: Para. 16)

A26.         Professional judgement is essential to the proper conduct of an audit.  This is because interpretation of relevant ethical requirements and the Australian Auditing Standards and the informed decisions required throughout the audit cannot be made without the application of relevant knowledge and experience to the facts and circumstances.  Professional judgement