Professional scepticism you can see on the file
What ISA 200 means by professional scepticism, where it matters most, and the marks a reviewer looks for in working papers to see it happened.
By Achekam · · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Every audit methodology says the team must be sceptical. Every inspection report finds files where it is hard to tell whether anyone was. The problem is rarely that the senior believed everything the financial director said. It is that the working paper records the answer and not the questioning, so a manager, a quality reviewer or a regulator has nothing to point to.
Scepticism is an attitude, and attitudes do not show up on paper by themselves. What does show up is the trail it leaves: the extra document requested, the explanation tested against the ledger, the estimate rebuilt from another angle, the note saying why the first answer was not good enough. This article is about making that trail visible, whether the file sits in Johannesburg, Lagos or Nairobi.
What ISA 200 actually asks for
ACCA explains that ISA 200 requires the auditor to plan and perform an audit with professional scepticism, an attitude that includes a questioning mind and a critical assessment of evidence. ICAEW's summary of the standard sets the definition out in three parts: a questioning mind, alertness to conditions that may indicate misstatement due to error or fraud, and a critical assessment of audit evidence. ICAEW adds that scepticism includes challenging the reliability of responses from management and those charged with governance.
Read those three parts as three questions a reviewer can put to any paper:
- Did the team question? Was anything asked beyond what the template prompted?
- Was the team alert? Did anyone notice the unusual: a round-sum journal, a late credit note, a supplier with no history?
- Did the team assess, not just collect? Is there a sentence weighing the evidence, or only a list of documents received?
ICAEW's guide on the importance of achieving audit objectives walks through these ISA 200 definitions, including professional judgement and what the documentation should show, and is worth reading before a staff training session.
Where scepticism earns its keep
Scepticism belongs on every line, but three places carry most of the risk.
Accounting estimates. Receivables impairment, inventory write-downs, provisions and useful lives all rest on management's view of the future. The IAASB says ISA 540 (Revised) fosters a more independent and challenging sceptical mindset when auditors deal with estimates. In practice that means forming the team's own expectation first, then comparing it with management's number, rather than starting from management's figure and asking whether it looks reasonable.
Management explanations. When a margin moves and the answer is "we changed suppliers", the sceptical response is to open the purchase ledger for the new supplier and look at the prices on its invoices. An explanation is a lead to follow, not a conclusion.
Unusual entries. Journals posted after the close, entries to suspense or seldom-used accounts, and year-end transactions with related parties all deserve a second look, whoever approved them.
Judgement cannot fill a gap in the evidence
ICAEW notes that ISA 200 defines professional judgement as applying relevant training, knowledge and experience, within the context of auditing, accounting and ethical standards, to make informed decisions about the right course of action. It also stresses that judgement cannot justify decisions unsupported by the facts or by sufficient appropriate evidence.
That is where scepticism and judgement meet. A paper that says "based on our knowledge of the client, the provision appears reasonable" is using judgement as a substitute for evidence. A paper that says "the provision equals the claims listed in the attorneys' letter at year end; one claim settled after year end for less, and the difference was adjusted" is using judgement to interpret evidence. Only the second survives review.
ICAEW also points to ISA 200's expectation that documentation should let an experienced auditor with no previous connection to the audit understand the significant professional judgements made. For scepticism, the test is plain: could that outsider tell what the team doubted, what it did about the doubt, and why it was then satisfied? For the wording of those judgements, see documenting professional judgements, and for the wider standard on the file, audit documentation under ISA 230.
Marks a reviewer looks for
When a manager or partner opens a paper, these are the signs that someone questioned rather than collected:
- Corroboration beside each explanation. Management's answer, and next to it the document or data that confirms or contradicts it.
- Conflicting evidence resolved. Where two sources disagree, the paper says which was preferred and why. Contradictory evidence on the file needs its own resolution, not silence.
- An independent expectation. For estimates and analytical work, the team's own figure appears before management's.
- The unusual followed up. Anything flagged during the work is closed with a result, not left as an open question.
- A conclusion that matches the work. The final sentence says what the evidence showed, not that the balance is "fairly stated" in general terms.
A paper with none of these may still be right. It simply cannot show that it is.
The record of challenge in Achekam
No software measures an attitude, and Achekam does not try to. What it keeps is a durable record of the challenge that happens between the people on the engagement.
Each working paper moves through preparation, manager review, partner review, an optional engagement quality review, completion and lock. The preparer cannot also review the same paper, and Achekam refuses any sign-off made by an AI, so every review stage is a person's decision. Sending a paper back, reopening it or locking it needs a written reason, which means the moments when a reviewer was not satisfied are captured in words.
Review notes carry the conversation. A reviewer raises a note on a paper, the preparer answers and the reviewer clears it, and each note's history is kept. AI can suggest notes, but a person raises each one. A file where the notes ask "how do we know this?" and the answers point to documents is a file where scepticism can be seen.
When a question goes beyond the team, staff can take a technical consultation on the engagement from question to conclusion and closure. If the team and a reviewer still disagree, Achekam records the difference of opinion with each party's position, the escalation and the resolution. Those records are often the clearest evidence that a hard judgement was challenged rather than waved through.
Challenging a management explanation: a checklist
Before a senior accepts an explanation and moves on:
- Write the explanation down in management's words, with who gave it and when.
- Ask what else would have to be true if the explanation is right, and look for it.
- Find one source outside management's control: a bank statement, a confirmation, a contract, a public record.
- Look for evidence that points the other way, not only evidence that agrees.
- Consider whether the person explaining has a reason to prefer one answer, such as a bonus or a loan covenant.
- Record the outcome as confirmed, contradicted or still open, and what happens next.
The habit worth building is small: no explanation sits on a paper without the evidence that tested it. On the next file you review, ask the preparer to show you where the doubt went.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
