Why Every Accountant Needs to Be a Skeptic
A healthy dose of skepticism is key to an accountant’s success. Do you have it?
By GEORGE A HEYMAN, CPA, CGMA |
Whether doing audit, tax, consulting, or industry work, due
professional care is needed for maintaining your accounting
independence, that state of mind where you can perform your
services without being impacted by influences that compromise
your professional judgement. A healthy dose of skepticism and
sound professional judgement are keystones in every successful
Skepticism is to doubt the truth. It’s a safeguard that helps us
ensure due professional care when deciding which auditing
procedures, accounting principles, tax positions, or consulting
advice would be best in any given situation. This all starts with
knowledge. As accountants, we have earned the respected title
of the “most trusted business advisor,” which means we have a
responsibility to maintain the greatest amounts of knowledge in
our respective fields as we can. In turn, when we look at
information, the first question should be, “Does it make sense
given what we know?” The idea is to always look for anomalies
and anything that doesn’t fit the situation.
That said, maintaining professional skepticism does not mean
implying nobody can be trusted, questioning others in ways that
says you do not believe them, or getting in someone’s face about
a situation. Skepticism is about asking the right questions — in
an open-ended way — to get the right answers. Here are six
principles that can help you develop and maintain your
1. Ask the right questions.
Voltaire said that we should judge a
man by his questions rather than by his answers. In that spirit,
avoid being confrontational by asking open-ended questions.
Once asked, give the person time to think before answering.
Remember to truly listen and, if needed, ask follow-up questions.
2. Encourage discussions of differing opinions.
important anytime there’s more than one possible answer or
outcome. For example, the question may be which tax
position to take or which auditing procedure would be most
effective and efficient. You could also face a situation in which
your client wants to account for something one way when
there’s a better alternative.
3. Question the status quo.
We are accountable to status quos
set by organizations like the IRS, FASB, and GASB, etc. But
many changes in guidelines from these organizations have
come from accountants rightly questioning and challenging
them on certain issues.
4. Maintain a veil of ignorance.
In the essence of John Rawls,
for us this means rendering our personal considerations
obsolete. So, even if you know or like a person, for example,
you must focus on the facts of the situation to make your
decision and maintain your independence. There are cases
where CFOs didn’t question certain journal entries made by
their CEOs because they blindly trusted them. Guess who
also went to jail when the CEO’s journal entries amounted to
fraud? The CFO.
5. Make sure you have everything.
People can influence you
by omission as well as commission. By leaving out a detail,
your decision can be changed. Always ask yourself if
you’ve received enough information and if anything else
needs to be addressed.
6. Notice surroundings and behaviors.
Always follow up
inquiry with observation. Watch for body language that could
give clues to the truth or a misrepresentation.
Despite the negative connotations surrounding skepticism, there’s
nothing bad about being a good skeptic — in fact, your career
depends on it. Putting the steps above into practice will help you
be a successful skeptic and, in turn, a successful accountant.