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CA Intermediate · Auditing and Ethics · Nature, Objective and Scope of Audit

CA Nisha is auditing Bharat Pumps Ltd. At the start of the engagement she reflects that she must maintain an attitude of questioning the reliability of documents and explanations, remaining alert to conditions that may indicate misstatement due to fraud or error. Which term under SA 200 describes this attitude?

The attitude described is professional scepticism. SA 200 defines it as a questioning mind, alertness to conditions indicating possible misstatement due to error or fraud, and a critical assessment of audit evidence. The auditor must plan and perform the audit with this attitude throughout the engagement.

  1. AProfessional scepticismCorrect
  2. BMateriality
  3. CAudit risk
  4. DDue diligence of management

Explanation

SA 200 defines professional scepticism as an attitude that includes a questioning mind, being alert to conditions that may indicate possible misstatement, and a critical assessment of audit evidence. Materiality and audit risk are different concepts.

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