What does professional skepticism mean to you? Give an example of applying it.
What the interviewer wants to hear
- A questioning mind and critical assessment of evidence
- Alert to contradictory evidence and possible fraud
- Does not assume dishonesty or honesty
- Seeks corroboration for explanations
- Gives a concrete example
Model answer
Professional skepticism means keeping a questioning mind and critically assessing evidence, instead of accepting things at face value. It does not mean assuming management is dishonest, but it does mean I do not let a good relationship with the client stop me from asking for proof. For example, in one audit, management explained a sharp rise in sales in March as a new distributor deal. Instead of accepting that, I asked for the distributor agreement and checked dispatch documents and cash received after year end. I found that part of the goods had been returned in April under a clause allowing returns, so revenue for those goods should not have been recognised in March. Skepticism is especially important in estimates, related party transactions and anything that looks unusual or comes from the person who benefits from the result.
Can you answer it under time pressure?
Take a timed easy round and get scored on every answer.
More easy Auditor questions
- What is a financial statement audit, and why do companies need one?
- What are financial statement assertions? Give examples for a balance and for a class of transactions.
- What are internal controls, and why do auditors care about them?
- How would you explain materiality to a client, and how do you set it?
- What types of audit opinion can an auditor give, and when is each used?
- What is the difference between tests of controls and substantive procedures? Give an example of each.
- What procedures can an auditor use to obtain audit evidence?
- What does an audit engagement letter contain, and why does it matter?
- What are the main threats to auditor independence, and how are they managed?