FAR Literature Review: 'Professional Skepticism and Audit Committee Support'

23 March 2020

FAR Literature Review: 'Professional Skepticism and Audit Committee Support'

Professional skepticism is essential to audit quality, and enhancing auditor skepticism is of great concern to regulators, practitioners, and scholars. However, despite the acknowledged importance of professional skepticism, auditors’ failure to exercise a sufficient level of skepticism continues to be a globally recognized issue. Prior research has shown that exercising skepticism may come at a cost (e.g., budget overruns and potential conflicts with management), which can form a substantial barrier to the appropriate application of skepticism. In this literature review, the researchers examine whether audit committee involvement and support can reduce this barrier, and in turn, increase the professional skepticism exercised on the audit. This paper provides an overview of the literature on (1) auditor professional skepticism, divided into a general overview followed by a focus on the aforementioned barrier to skepticism, and (2) audit committee interactions with the audit team, and how these can potentially improve professional skepticism.

To read the literature review, click here.

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