A Consideration of Literature on Trust and Distrust as they Relate to Auditor Professional Scepticism

Abstract

With a view to expanding the discussion on professional scepticism, and motivating a broader perspective in research undertaken with the aim of helping auditors meet ongoing demands for an elevated level of professional scepticism, we consider the literature on trust and distrust as it relates to auditor professional scepticism. We draw on literature from a range of disciplines, and highlight new opportunities and previously unidentified challenges in helping auditors exercise an elevated level of professional scepticism. We distinguish between trust and distrust and note that the issue of professional scepticism is likely to be as much about auditors being insufficiently distrusting as it is about auditors being overly trusting. A number of potentially fruitful means by which professional scepticism might be enhanced are highlighted but we also encourage caution in that lower levels of trust in management, and increased distrust in management, may have unintended negative consequences.

The moderating effect of culture on the relationship between accountability and professional scepticism

“…It requires maintaining a balance between trust and suspicion, with Kee and Knox (1970, p. 358) stating that it was best to have “a slight amount of suspicion – a kind of alert but not distracting guardedness”. Both Deutsch (1958) and Harding et al (2016) agree that dysfunctional behaviour will occur if there is an extreme trust or extreme suspicion.…”

Adoption of artificial intelligence in auditing: An exploratory study

“…Audit practice has generally lagged behind business in technology adoption due to the complexity of audit tasks, multiple structures of source documents, client data availability, IT readiness and the requirement of professional auditor judgement (Cohen and Rozario, 2019; Salijeni et al, 2019). Auditors’ requirement to exercise professional judgement utilising their accounting, assurance, industry knowledge and experience, while simultaneously drawing on their integrity, objectivity and professional scepticism to evaluate audit evidence, and whether accounting treatment has been applied correctly by client management is integral to audit practice (Harding et al, 2016). Professional scepticism – the questioning mindset and attitude of the auditor – is essential to making sound judgements, particularly being alert to conditions indicative of financial errors/fraud (Trotman et al, 2011).…”

Meboya’s Meaning in Strengthening the Influence of the Peer Attitudes on Student’s Professional Skepticism

“…In an audit engagement, the role of the social environment (including peers) can be seen because each procedure requires the confirmation of each team member. Not a few auditors feel pressure to continuously confirm with peers regarding findings, evidence, and professional considerations that arise during the work [6], [10].…”

“…In other words, the meaning of the meboya culture tends to be more dynamic than the values in the culture itself. Research on auditors' professional skepticism is increasingly needed, considering the internal and external factors that influence auditors [6], [37], [38]. The auditor's professional skepticism will always be important to any quality audit engagement.…”

“…Research on the PS aspect of audit professionalism has increased, most related to issues or audit engagement quality [1], [6], [7]. In this case, the auditor is increasingly encouraged to be able to justify each stage of the audit procedure during the engagement.…”