🎯Professional Skepticism and Professional Judgment: 13 TF

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Kristina Kravets 28 January 2024

could you provided more information on question 15 and 14 i don’t understand why it is both false. thank you

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1. Maroun, CPA 30 January 2024
  
  Hello Kristina,
  
  For question 14, the False answer reflects the idea that auditors may not naturally embrace the possibility of client incompetence or deception due to the presence of confirmation bias in human decision-making. Confirmation bias is a cognitive bias where individuals tend to search for, interpret, and remember information in a way that confirms their preexisting beliefs or hypotheses. The preexisting belief in this case is that management does not lack integrity. It’s important for auditors to be aware of confirmation bias and take steps to mitigate its effects. Professional skepticism is a key concept in auditing that encourages auditors to approach their work with an open mind, be alert to the possibility of bias, and actively seek out evidence that both supports and challenges their initial beliefs. This helps ensure a more objective and thorough audit process.
  
  For question 15, the statement “One of the elements of professional skepticism is a questioning mindset which refers to the withholding of judgment until appropriate evidence is obtained” is False. This is because the statement incorrectly combines two elements of professional skepticism, a “questioning mindset” and “withholding of judgment,” into a single concept. Let’s break down these two elements:
  
  – Questioning Mindset: A questioning mindset is indeed a crucial element of professional skepticism. It refers to an auditor’s disposition to inquire and seek understanding with a sense of doubt. Auditors with a questioning mindset are naturally curious and ask probing questions to gather information and assess the validity of evidence.
  
  – Withholding of Judgment: The withholding of judgment is another element of professional skepticism, but it is distinct from a questioning mindset. It refers to auditors’ ability to suspend judgment or conclusions until appropriate and sufficient evidence is obtained. Auditors should refrain from making premature assessments or assumptions about the client’s financial statements or internal controls.
  
  Thus, while both a questioning mindset and withholding of judgment are important aspects of professional skepticism, they are not the same concept. A questioning mindset relates to the attitude of inquiry and doubt, whereas withholding of judgment is about delaying conclusions until proper evidence is available.
  
  Hope this makes sense!
  
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priya sridhar 20 May 2025

Why QNO:6 is false ?
Because The first step in developing audit objectives is understanding management’s assertions about the financial statements. These assertions (e.g., completeness, accuracy, existence, rights and obligations) form the basis for what the auditor must test and verify.
Why It’s True:
Auditors design procedures to address management’s assertions. Without understanding these claims, audit objectives cannot be properly tailored.

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1. Maroun, CPA 21 May 2025
  
  Hi Priya,
  
  Thank you for your question. The reason why Question 6 is marked false is because, while understanding management’s assertions is a crucial step in developing audit objectives, it is not the very first step.
  
  The first step is actually to understand the overall objectives and responsibilities for the audit itself. This foundation guides the auditor in planning and performing the audit effectively.
  
  After this initial understanding, the auditor breaks down the financial statements into cycles and then focuses on management’s assertions, which help tailor specific audit objectives and procedures.
  
  Thus, management assertions are essential, but they come after the auditor understands their responsibilities and the audit’s overall objectives.
  
  I hope this clarifies it!
  
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Jayanthi Ramaswamy 16 November 2025

AI Provides a different explanation with 6 steps in Professional Judgement.
Correct Answer: 2. False

The CAQ Professional Judgment Resource identifies six—not five—key elements in a robust professional-judgment process. Remembering the full list is essential, because auditors are expected to demonstrate competence in each element when exercising professional skepticism.

Key elements (six total):
• Define the problem and identify fundamental issues.
• Identify and consider alternatives.
• Gather and evaluate relevant information.
• Reach a well-reasoned conclusion.
• Articulate and document the rationale.
• Reflect on lessons learned for continuous improvement.

Mini-illustration:
Suppose an auditor questions management’s allowance for doubtful accounts. She (1) defines the issue (valuation of A/R), (2) brainstorms alternative analytical procedures, (3) gathers historical collection data, (4) concludes an additional $200k allowance is needed, (5) documents the basis in the workpapers, and (6) later debriefs to refine the approach for next year. All six elements are evident.
Response above: The Center for Audit Quality’s Professional Judgment Resource outlines five key elements of a professional judgment process that auditors apply to make professional judgments rather than maintaining professional skepticism.
Both Responses seem correct, however is AI interpretation accurate according to CAQ guidelines?

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1. Maroun, CPA 17 November 2025
  
  Hi Jayanthi,
  
  According to the Center for Audit Quality’s Professional Judgment Resource, the framework is built around five essential actions:
  – Identify and define the issue.
  – Gather the facts and information and identify the relevant literature.
  – Perform the analysis and identify alternatives.
  – Make the decision.
  – Review and complete the documentation and rationale for the conclusion.
  
  Thus, from the CAQ’s standpoint, it is five, not six.
  
  The statement is False for two reasons:
  – The five actions are used to make professional judgments, and
  – Professional skepticism is the mindset you bring to that process, not the stated purpose of the five elements.
  
  We will look into why the AI did not provide an accurate interpretation.
  Thank you for bringing this to our attention!
  
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  1. Jayanthi Ramaswamy 17 November 2025
    
    Thank you for your clarification and response. Jai
    
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    1. Maroun, CPA 18 November 2025
      
      You’re very welcome, Jai! I’m glad the explanation helped.
      
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🎯Professional Skepticism and Professional Judgment: 13 TF

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