Auditors’ Professional Scepticism and Moral Reasoning

Professional scepticism is central to the audit process not least because it is fundamental to assisting auditors in the application of their professional judgement. In recent years, high profile audit failures have resulted in regulators, governments, professional bodies and other stakeholders debating whether auditors have been too unquestioning when performing audits and, hence, whether they have demonstrated insufficient professional scepticism. This thesis empirically tests whether there is an association between moral reasoning and professional scepticism. The research measures and analyses levels of professional scepticism and moral reasoning within a UK context using the same sample of participants. Researchers have previously studied professional scepticism and moral reasoning primarily in the USA and, importantly, as separate concepts. This study differs from previous research in that it investigates whether a relationship exists between the two concepts. Further, it investigates the two concepts within the under-examined UK context. Whilst the HPSS and AEDI results independently confirm prior research, the results of testing for a relationship between HPSS and AEDI indicate the relationship between professional scepticism and moral reasoning is weak. Interviews were conducted with audit practitioners and standard setters to add further depth to the analysis. These interviews emphasise the complexity of the concepts. In turn, this suggests any potential relationship between the two concepts will be equally complex and very challenging to determine. This research has implications for the development and training of auditors.