Modern auditors use a risk-based approach to certify financial statements. This means that before expressing an opinion that the audited financial statements are free from material Which may misstatement! auditors must identify and assess the risks of material misstatement! . To do this! auditors must think! analyze! and act professionally! especially when obtaining reasonable assurance that the financial statements are free from material misstatement due to fraud.
The failure of auditors to identify the risk of material misstatement
Due to error or fraud in financial statements negatively affects the auditing profession as a whole! especially when fraud is discovered Which may after the financial statements have been approved by the auditor. That is why the auditor is expected to exercise professional skepticism in order to minimize material misstatements in financial statements.
A skeptical auditor is suspicious by nature and ig data behavior. At the same time! time constraints usually negatively affect audit productivity. Time constraints occur when the amount of time allocated in the budget to complete an audit takes less time than the time actually required to complete the work. It is no secret that audit team members often feel time constraints because they must complete their work within a sales mistakes that cause companies to lose customers predetermined time frame.
As a result! in order to avoid additional audit costs! auditors may not be able to fully apply their professional skepticism! which worsens the outcome of the audit work. In particular! the pressure that arises from time constraints leads to the fact that auditors are unable to collect acceptable (relevant and reliable) audit evidence in sufficient quantity. Also! due to the time constraints! the assessment of the collected evidence is hastily performed. That is! time constraints can also have a negative impact on the process of auditors’ judgment regarding the reporting of audit results.
In 2017 several Malaysian researchers conducted a study that examin
the impact of time constraints on auditors’ professional skepticism and fraud risk assessment. The aim of this study was to answer the question: whether auditors with a ao lists amount of relevant audit experience are able to maintain professional skepticism under different levels of time constraints.
The results showed that:
Professional skepticism and experience have a positive impact on auditors’ assessment of the risk of material misstatement;
The positive impact of professional skepticism on auditors’ assessment of the risk of material misstatement is stronger among more experienced auditors than among less experienced ones.