Professional SkepticismPosted: May 21, 2018
What is professional skepticism; and is professional skepticism limited to those providing assurance services? These are two important questions at the center of a consultation paper released by the International Ethics Standards Board for Accountants (IESBA) last week. The full paper can be found on the International Federation of Accountants website here. The paper is relatively short with the main body totaling less than 10 pages, but it is a fascinating read on the expectations of professional accountants.
The IESBA believes that professional accountants are expected to (a) approach professional activities with an impartial and diligent mindset; and (b) apply that mindset, together with relevant professional expertise, to the evaluation of information with which they are associated. The paper then asks if such behavior should be expected of all professional accountants, or if such behavior only applies to certain roles filled by professional accountants. The paper also brings up the point that the term professional skepticism is already defined in auditing standards, so any defining in the code of ethics will need to address how the two definitions interact.
The IESBA outlines four possible avenues for dealing with professional skepticism in the code of ethics.
- Require all professional accountants to exercise professional skepticism as it is defined in the international auditing standards.
- Re-define professional skepticism that would be appropriate for all types of professional activity (and therefore change or deal with the different definition in the auditing standards).
- Develop a different term to use with the definition of behavior expected of all professional accountants (and leave professional skepticism defined in the auditing standards).
- Not define professional skepticism, or a different term, in the ethics code, but develop application material to expand upon the concepts underlying fundamental principles supporting the definition of professional skepticism in the auditing standards.
Some of you may think that international ethics standards don’t matter, but this is where change begins. First the IESBA updates the international standard, then those changes filter down to the AICPA ethics code, which is then incorporated into ethical expectations by most every state licensing Board. Once that train gets rolling it’s hard to stop, but this is your opportunity to steer the train down the track you think it belongs on; so take the opportunity and let the IESBA know what you think.