International Ethics Standard-Setter Clarifies Professional Skepticism & Judgment

MAY 12, 2017  RECENT DEVELOPMENTS

The International Ethics Standards Board for Accountants (IESBA) issued an Exposure Draft (ED) that clarifies guidance for professional skepticism and professional judgment in the context of performing audit and other attest/assurance services.   Specifically, the IESBA Code would --

  • Clarify how compliance with the fundamental principles of the IESBA Code supports and enhances professional skepticism via examples, and
  • Emphasize the importance of obtaining a sufficient understanding of a matter when exercising professional judgment and provide factors to consider.  

A future IESBA consideration is whether to provide similar guidance to professionals working in other disciplines (i.e. nonaudit and members in business). 

The profession has been debating ways to enhance professional skepticism and judgment as a result of regulatory findings that some audits and similar services appeared to have been performed without the requisite skepticism.  Other IFAC bodies, such as the IAASB (International Audit and Assurance Standards Board) and the IAESB (International Accounting Education Standards Board) have been working with the IESBA to address the issue, which resulted (in part) in this ED.  Other bodies, including the IESBA's Consultative Advisory Group, academic studies and feedback from the IAASB's Invitation to Comment: Enhancing Audit Quality in the Public Interest: A Focus on Professional Skepticism, Quality Control and Group Audits, also supported clarification of the ethics standards. 

Comments on the proposal are due July 25, 2017.