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    Auditors’ Professional Skepticism: Neutrality versus P...
    research summary posted July 28, 2015 by Jennifer M Mueller-Phillips, tagged 08.0 Auditing Procedures – Nature, Timing and Extent, 08.04 Auditors’ Professional Skepticism 
    Auditors’ Professional Skepticism: Neutrality versus Presumptive Doubt.
    Practical Implications:

    Presumptive doubt has a greater effect on auditors’ skeptical judgments when client risks are higher than does neutrality. In particular, auditors with higher levels of presumptive doubt exhibit pronounced skeptical judgments and decisions in the higher control environment risk setting.

    Since the findings indicate inversed RIT is a better predictor of desired auditor skeptical judgments, this measure warrants further consideration in practice to develop adequate recruitment, staffing, and training guidance. Also a consideration for practice and future research is whether quality control processes, such as audit reviews, mitigate cases where auditors lack sufficient individual skepticism.


    Quadackers, L., Groot, T., & Wright, A. 2014. Auditors' Professional Skepticism: Neutrality versus Presumptive Doubt. Contemporary Accounting Research 31 (3): 639-657.

    auditor independence, professional ethics, neutrality, professional skepticism
    Purpose of the Study:

    Professional skepticism is considered to be an essential element of the financial statement audit, as reflected in professional auditing standards and the audit methodologies of international audit firms. Analyses of fraud-related U.S. Securities and Exchange Commission (SEC) cases conclude that a lack of sufficient professional skepticism is often cited as the reason that auditors fail to detect material misstatements. While there is no universally accepted definition of professional skepticism, two perspectives have emerged in the current literature and auditing standards: neutrality and presumptive doubt.

    • Neutrality refers to a perspective in which the auditor assumes no bias in management’s representations.
    • Presumptive doubt represents an auditor’s attitude in which some level of dishonesty or bias by management is assumed, unless evidence indicates otherwise.

    Importantly, there is a lack of consensus on which of these two perspectives of skepticism is most appropriate for audit practice. The purpose of this study is to examine the relationship between auditors’ skeptical perspective (neutrality and presumptive doubt) and auditor skeptical judgments and decisions across client risk settings (higher versus lower control environment risk). Neutrality is measured by the Hurtt Professional Skepticism Scale (HPSS; Hurtt 2010), and presumptive doubt is measured by the inverse of the Rotter Interpersonal Trust Scale.

    Design/Method/ Approach:

    All of the participants come from one Big 4 firm. There were 96 participants in the experiment: 25 partners, 41 managers, and 27 seniors (3 participants did not provide staff-level information). On average, the auditors had 15.36 years general auditing experience and 14.75 years of experience with conducting analytical procedures. The number of participants was relatively balanced across the two control environment risk conditions. The evidence was collected prior to September of 2014.


    The results of this study show that inversed RIT (Rotter’s Interpersonal Trust Scale), a trait measure of presumptive doubt, is more closely associated with auditors skeptical judgments than HPSS (Hurtt Professional Skepticism Scale), a trait measure of neutrality. This relationship particularly holds when control environment risks are higher and, thus, the risk of material misstatement is of particular concern. Since auditing standards direct greater skepticism in a higher-risk setting than in a lower-risk setting, this finding suggests that inversed RIT is more likely to reflect the desired skepticism than HPSS. This result suggests that the presumptive doubt perspective of professional skepticism is more predictive than neutrality of auditor skeptical judgments and decisions in higher-risk situations.

    There is no normative solution to the case, so it is not possible to determine which skepticism measure is more closely related to optimal judgments and decisions.

    Auditing Procedures - Nature - Timing and Extent
    Auditors’ Professional Skepticism