In Zoe-Vonna Palmrose's article "PCAOB Audit Regulation a Decade after SOX: Where it Stands and What...

Question

In Zoe-Vonna Palmrose's article "PCAOB Audit Regulation a Decade after SOX: Where it Stands and What the Future Holds," she discussed the importance of AuditorSkepticism and the emphasis of this concept on PCAOB initiatives. In fact, it would appear that in many of the cases that we read in this course, the auditors lacked exercising "Professional Skepticism." The attached articles, "A Model and Literature Review of Professional Skepticism in Auditing" by Mark W. Nelson from Auditing: A Journal of Practice & Theory, Volume 28 Number XXXXXXXXXX), pp XXXXXXXXXX, and "Development of a Scale to Measure Professional Skepticism" by R. Kathy Hurtt from Auditing: A Journal of Practice & Theory, Volume 29 Number XXXXXXXXXX), pp XXXXXXXXXXprovide an overview of and a model for auditor skepticism.

A Model and Literature Review of Professional Skepticism in Auditing.pdf

Development of a Scale to Measure Professional Skepticism.pdf

Required:

1. Define professional skepticism and discuss why it so important to the practice of auditing.

2. Summarize the Nelson article including the major literature, findings and conclusions. In addition, integrate how the work done by Hurtt utilized this research in the development of her model and evaluate this research as it may be applied in today's audit environment and in the work of the PCAOB in establishing audit standards.

3. Please see the following article by Ken Tyslac from the Journal of Accountancy and comment on the AICPA'sintent to test professional skepticism on the CPA exam.

David · Accepted Answer

Answer1. 
Professional Skepticism: 
It could be define that an attitude which consist a mind with a questioning sense and it would 
be concern for the conditions which would give indication of the probable mistype statement 
for the reason of the error or any thread or fraud which have a critical as estimation of proof. 
As per the Literature review of professional Skepticism , it is “indicated by auditor judgments 
and decisions that reflect a heightened assessment of the risk that an assertion is incorrect, 
conditional on the information available to the auditor.” 
In every condition it is important that to have a financial statement material are free of 
misstatement, to have it free of misstatement it is important that have a common questions and 
answers and auditor own judgement for the same. 
Importance of the skepticism in practice of auditing: 
 Optimizing the audit firm quality control systems.  
  A firm’s society is able to straight control plough deeper when somewhat doesn’t 
look right. 
 When auditors be familiar with their payment and promotions axis on maintaining 
input clients which they could be fewer likely to question management’s assertions. 
 Although auditors usually allocate the mass of the fieldwork to younger professional 
and senior staff should be presented to answer questions and review work in a timely 
manner. So that firms should teach their employees on apply suitable professional 
skepticism in an audit. 
 Especially in areas involving significant judgment.

In Zoe-Vonna Palmrose's article "PCAOB Audit Regulation a Decade after SOX: Where it Stands and What the Future Holds," she discussed the importance of AuditorSkepticism and the emphasis of this...

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