FRC publishes what makes a good environment for auditor scepticism and challenge

November 23, 2022

The Financial Reporting Council (FRC) has today published a new report setting out examples of good practice to improve auditor scepticism and challenge.

A critical attribute of an auditor’s mindset and behaviour is exercising professional scepticism and challenge when performing audits. The most significant quality issues identified by the FRC over a number of years involve the inconsistent application of professional scepticism and challenge, resulting in the poor application of professional judgement.

As an improvement regulator, the report summarises what good looks like and provides examples of good practice from the FRC’s ongoing supervision work.

The report will be of particular interest to audit firms, audit committee chairs and those with an interest in audit quality.

The FRC has also published a report conducted by BritainThinks based on qualitative research to explore the drivers and barriers to auditors exercising professional scepticism and effective challenge.

[Financial Reporting Council]