Professional scepticism helps identify contradictory evidence, information that calls the reliability of documents into question and conditions that indicate fraud risk. Past experience of management's honesty does not remove the need for professional scepticism.
Management estimates, related party transactions and unusual transactions are the areas where professional scepticism is most needed.
Source: BDS 200
Related terms
FraudAn intentional act of deception by management, employees or third parties to obtain an unjust or illegal advantage.Auditor independenceThe auditor being free of relationships and interests that could affect their objectivity, and being perceived as such by third parties.Audit evidenceAny information and documents the auditor uses to reach the conclusions on which the opinion is based.Adverse opinionThe opinion in which the auditor states that the financial statements are not presented fairly, where misstatements are both material and pervasive.Agreed-upon proceduresAn engagement in which the practitioner performs procedures agreed with the entity and, where relevant, a third party, and reports only the findings without providing assurance.Analytical proceduresThe evaluation of financial information through analysis of plausible relationships among financial and non-financial data.
Last updated: October 22, 2026 · This definition is for general information only.