1. Professional Skepticism and Professional Judgment
Richard Fleck, Task Force Chair
IESBA Meeting
Livingstone, Zambia
December 4-8, 2017

2. Approach to Presentation
Introductory remarks
“Walk-through” revisions to proposed texts
Summarize input since last meeting
CAG meeting
IAASB representatives of PSWG
Thanks for advance input, including editorial refinements
TF meeting this evening to turnaround document

3. Revisions Made Since Sept 2017 IESBA Meeting
No changes of substance
Changes responsive to suggestions received
120.13: Examples developed – general introduction followed by examples and then conclusion
120.5: Broadened range of areas to be considered
Split final paragraph

4. 120.13 A1/2: Fatal flaw comments from IAASB PSWG
The drafted language in A1, in particular the use of “and” appears to imply that currently, the exercise of professional skepticism supports compliance with the fundamental principles, a matter to be addressed by the IESBA’s Long Term PS project commencing in 2018 as noted in Agenda Item 5A.
The manner in which the examples have been drafted in A2 related to Integrity, Objectivity, and Professional Competence and Due Care suggest that profession skepticism is exercised simply through compliance with the fundamental principles.

5. 120.5 - Application Material
 General Comment:
Concern that the application material has implications for non-assurance engagements (e.g. Agreed-Upon Procedures and Compilations) - in particular at the effect on the work effort that may be required to determine that the fundamental principle of due care has been complied with.

6. 120.5 A2: Fatal flaw comments from IAASB PSWG
The phrase “obtain an understanding” used within the ISAs is associated with considerable work effort in an audit context—to avoid confusion, suggest using the phrase “understand” in paragraph A2.
The drafted language within paragraph A3 appears to obligate the professional accountant to obtain additional information above and beyond the ‘known facts and circumstances,’ which is inconsistent with the drafting in A2.

7. Fatal Flaw Comments from PSWG IAASB Reps
Discussion