When planning and performing an audit, the auditor should adopt an attitude of professional scepticism
It is “An attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence”
In other words, they must not simply believe everything management tells them
The exercise professional judgement in planning and performing an audit
The auditor will need to exercise professional judgement on both the quantity and the quality of evidence.
So he has to judge..
When is there sufficient evidence?
What is the quality of this evidence
Is it consistent with what is known from elsewhere?
Are assumptions reasonable?
The auditor needs to not only see a record of what the assumptions are, but also challenge them and understand how they affect the conclusions the client has come to.
Factors to help with the judgement are...
The seriousness of the risk
The materiality of the item
The strength of internal controls
The sampling method used (see later)