1. Professional Skepticism
Richard Fleck, Working Group Chair
IESBA, New York
March 12-14, 2018

2. Agenda Our report to IESBA – September 2017
Longer Term PS Initiative
Where We Are and Where We Are Going
Release Consultation Paper
Roundtables
Next Steps

3. Views about Longer Term PS Initiative
No question asked, but some took opportunity to comment
Substantive majority of those who commented believed that PS should apply to all PAs
Exercise of PS is important for tax and consulting engagements; Code should explain role of PS for those NAS
Code should acknowledge that PS enables compliance with FPs
Coordination among IAASB, IESBA and IESBA
Approach taken by IAESB seems appropriate for the Code
Some cautioned against potential unintended consequences

4. Longer Term PS Initiative
June 2017 – IESBA considered Task Force proposals for progressing a longer term initiative which involve
Analysis of underlying concerns that lead to stakeholder calls for greater exercise of PS
Exploration of how to address issues at their root causes, mindful of need to avoid unintended consequence and meet public expectations
IESBA to consider draft PS consultation in March 2018
Task Force to further consider feedback about LT initiative

5. Professional Skepticism
Consultation paper anticipated Q2 2018
Will explore key questions:
Behavioral characteristics comprised in PS?
Should all PAs exercise these characteristics?
Should the Code be further developed?
Aim includes supporting and reinforcing effective exercise of PS in audit and assurance context
Close coordination with IAASB and IAESB

6. Meeting Public Expectations
Professional Skepticism
Meeting Public Expectations
Preliminary behavioral characteristics identified by WG
Obtaining and understanding information necessary for
reliable judgments
Making informed challenges of views developed by others
Being sensitive to the integrity of information
Withholding judgment pending thoughtful consideration of
all known and available information
Being alert to potential bias or other impediments to professional judgment
Ability and willingness to stand ground when facing pressure to do otherwise
Professional Skepticism
Understand information
Informed challenges
Information integrity
Withhold judgment
Potential bias
Stand your ground

7. Options to consider
All PAs to exercise PS as defined by the ISAs
Redefine PS that is appropriate for all types of professional activity
Develop another term and definition
Add application material to the Code
Add requirements and/or application material to address bias, preconception, pressure and other impediments

8. Roundtables
Three roundtables planned
June 11 Washington, DC
June 15 Paris
July 12 Tokyo

9. Views from CAG Meeting – March 5
Support the approach for the long-term initiative
Support for proposed outreach and round tables
Support for emphasis on behavior of all PAs
Outcome should not adversely affect audit and assurance context
Suggestions that CP should set out a preferred approach
Eventual approach should link to FPs
Need to consider unintended consequences
Importance of application material – “One size won’t fit all”
Collaborate with other SSBs, including re: educating the public

10. Comments from IAASB and IAESB PS chairs
Broad support for the approach we are taking
Appreciate the cooperation among the three boards
IAASB keen to participate in the roundtables
IAASB will consider a proposed additional paragraph(s) and question focused on IAASB definition of PS and whether it needs development
Also received some drafting comments from IAASB
Conference call among the three PS chairs scheduled in late March

11. Working Group meets again in early April
Way Forward
Anticipate additional feedback from IAASB after their meeting in Amsterdam this week
Working Group meets again in early April
If the Board is broadly supportive of the CP…
The WG will address comments at its April meeting
Send a revised draft to the Board in mid-late April
Ask for negative clearance
Release the paper in early May