ACCA Advanced Audit and Assurance (AAA) Practice Exam

What characterizes professional skepticism in auditing?

1. A fixed mindset about outcomes

2. An attitude of unquestioning acceptance of evidence

3. A questioning mindset and critical assessment of evidence

4. A passive approach to audit procedures

The correct answer is: A questioning mindset and critical assessment of evidence

Professional skepticism in auditing is characterized by a questioning mindset and a critical assessment of evidence. This approach requires auditors to maintain an attitude that does not automatically accept evidence at face value. Instead, auditors are expected to critically evaluate the information presented to them, remain alert to conditions that may indicate possible misstatements, and seek out corroborative evidence to support their findings. The essence of professional skepticism lies in the ability to recognize that while management may provide evidence to support their assertions, it is the auditor's responsibility to assess the validity and reliability of that evidence thoroughly. This critical approach is essential for detecting errors or fraud and for forming an unbiased assessment of the financial statements being audited. In contrast to this mindset, other options present qualities that would undermine the effectiveness of the audit process. A fixed mindset about outcomes may lead auditors to overlook important details or risks, while unquestioningly accepting evidence would result in a failure to scrutinize the information critically. Lastly, a passive approach to audit procedures would not align with the proactive and diligent nature of professional skepticism required during an audit, which demands active engagement with and analysis of the evidence available.