Auditor scepticism is an increasing concern for the profession and Essay

Auditor scepticism is an increasing concern for the profession and stakeholders of UK Companies - Essay Example Despite of that, some companies still comes up with unreal data and manages to evade tax. According to reports, the major reason behind this phenomenon is the reduced scepticism level among the auditors. In UK, due to reduced scepticism among the auditors, stakeholders are finding it difficult to make proper decision pertaining to investment. As before investing, it is essential for the stakeholders to have confidence in the companies where they are investing. Therefore to get deep insights about the issue, the report will emphasize on how auditor scepticism is becoming a cause of concern for the stakeholders of the companies based on UK. In addition the report will also cover the areas associated with auditor scepticism. Finally based on the findings of the study, a conclusion will be drawn and recommendations regarding how auditor’s scepticism can be improved will be made. Auditor scepticism can be defined as the level of cynicism that an auditor needs to employ while conducting an audit. The notion became prominent in recent times when issues such as banking crisis came in the limelight. The regulatory authorities have raised question on the auditing firms on whether they demonstrated the level of scepticism needed to carry out an audit (Kan, 2007). Similarly in UK, the stakeholders of the companies are getting increasingly concerned about the low level of scepticism among the auditors. In addition to this, the auditing profession is also getting negatively impacted. According to auditing standards (ISA 200) professional scepticism is defined as an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence (PCAOB, 2010). Based on this definition, it can be identified that scepticism has high influence on the scope of the work. In addit ion, it also help the auditor’s to analyse the findings of audit thereby concluding whether appropriate evidences has been acquired for proving whether accounts are depicting true and fair view. There is a belief about the fact that a sceptical mind set and attitude is essential for an audit to be rigorous and carried out with a professional care. Scepticism is also important as it plays a crucial role in enhancing the efficiency and effectiveness of an audit. On the other hand too much scepticism negatively impacts the audit process. Hence a right balance of scepticism is necessary for an audit. However there is no predefined or standard degree of scepticism required to put into practice (Financial Reporting Council, 2010). The principal objective an audit is to enable that the auditors provide an outlook on the financial statements. The purpose is also to provide reasonable declaration that the