Professional Skepticism: AFC Guidance for External Auditors

Posted 08 December 2025 Written by Acts Online
Category Financial and Accounting

Brought to you by SA Accounting Academy: In terms of the International Standards of Auditing (ISAs) and Public Company Accounting Oversight Board (PCAOB) requirements, the Anti-Fraud Collaboration (AFC) has issued new guidance on the application of professional skepticism during external audits.

The publication, titled “The Role of the Auditor: Exercising and Maintaining Professional Skepticism,” provides a framework for external auditors to effectively apply skepticism throughout the financial reporting ecosystem. This release follows the International Auditing and Assurance Standards Board (IAASB) guide on professional skepticism in the Revised Fraud & Going Concern standards, issued on 25 July 2025.

The guidance addresses the following key areas for practitioners:

  • Practical insights into maintaining skepticism during the evidence-gathering phase.
  • Alignment with PCAOB standards regarding auditor responsibilities for fraud detection.
  • Considerations for the Center for Audit Quality (CAQ) and other founding partner organizations in advancing anti-fraud efforts.

For South African practitioners, these developments reinforce the importance of professional skepticism as required by the ISAs. This was previously addressed in the regulatory webinar of 27 May 2025, which focused on the practical application of these standards in the local context.

Click here to download the AFC Publication: The Role of the Auditor: Exercising and Maintaining Professional Skepticism.

What this means for you, your business, or your clients

  • For yourself: You must integrate the AFC’s specific skepticism practices into your audit file documentation to demonstrate compliance with ISA 240 (The Auditor’s Responsibilities Relating to Fraud).
  • For your business: Your firm should update its internal training modules and audit programs to reflect the latest IAASB and AFC guidance on fraud and going concern assessments.
  • For your clients: Clients should be prepared for increased auditor scrutiny and more extensive requests for corroborative evidence regarding management’s significant judgments and estimates.

Originally published at https://accountingacademy.co.za/news/read/afc-the-role-of-the-auditor-re-professional-skepticism

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