Weekly Article

Unconscious Human Nature Affecting “Professional Skepticism”

This speech by Kayla J. Gillan, a former PCAOB board member, mainly talked about the characteristics of human behavior that affect “professional skepticism”, such as implicit prejudice, in-group favoritism, bias favoring those who can benefit you, and bounded awareness.

In my opinion, there are two ways to minimize risks of unconscious attitudes impairing audit quality. One way to avoid cognitive errors is to keep critical thinking and critical reasoning. More scenarios and specific details should also be considered to ensure the accuracy of the judgment. We should learn to “jump” out of our bodies and perform as a third party of our body and mind to avoid unconscious biases. Another way to be mindful of unconscious biases that may affect the way in which we interact with clients is to establish a high-quality control system by analyzing how these biases may exist in the offices or professional relationships. Under PCAOB staff audit practice alert no. 10, firms' quality control systems can help engagement teams improve the application of professional skepticism in a number of ways, including setting a proper tone at the top that emphasizes the need for professional skepticism; implementing and maintaining appraisal, promotion, and compensation processes that enhance rather than discourage the application of professional skepticism; assigning personnel with the necessary competencies to engagement teams; establishing policies and procedures to assure appropriate audit documentation, especially in areas involving significant judgments; and appropriately monitoring the quality control system and taking necessary corrective actions to address deficiencies, such as, instances in which engagement teams do not apply professional skepticism.

Reference:

PCAOB Staff audit practice alert no. 10 Maintaining and applying professional skepticism in audits, December 4, 2012...