Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

Which attitude should an auditor maintain due to the risk of material misstatement?

1. Independent integrity.

2. Professional skepticism.

3. Impartial conservatism.

4. Objective judgment.

The correct answer is: Professional skepticism.

Professional skepticism is an essential attitude that auditors must maintain in their work due to the inherent risk of material misstatement in financial statements. This mindset encourages auditors to critically assess audit evidence with an questioning mind, recognizing that circumstances may exist that contradict the information presented. By embracing professional skepticism, auditors are more likely to detect fraud and errors that might otherwise go unnoticed. This approach does not imply being cynical or distrustful but rather involves a careful, reasoned approach to gathering and evaluating evidence in order to make informed judgments about the reliability of financial statements. Having this mindset allows auditors to remain vigilant against potential misstatements arising from various factors, including management bias or oversight. Furthermore, this attitude aligns with the overall objectives of an audit, which are to provide reasonable assurance about whether the financial statements are free of material misstatements, thus enhancing the credibility of the financial reporting process. While independence, impartiality, and objectivity are also important traits for auditors, it is the quality of professional skepticism that is directly linked to the identification and assessment of the risks associated with material misstatement.