Being Skeptical: Is it Really a Bad Thing?

We have all met people who we would consider a “Debbie Downer” or a “Doubting Thomas.” These types of people are known for their skepticism and doubt about most or all things. Sometimes these skeptics can be considered hard to work with since forward progress is always met with doubt, but is being skeptical really a bad thing?

No, being skeptical is not a bad thing, and a healthy dose of professional skepticism is essential in fighting fraud, even if it seems unnatural or uncomfortable to be skeptical of those we have come to trust. In the words of Carl Sagan, an American astronomer and author, “Skeptical scrutiny is the means…by which deep thoughts can be winnowed from deep nonsense.”

The word skeptical is defined as not easily convinced; having doubts or reservations. Professional skepticism is the bedrock of the CPA profession; however, CPAs are not the only ones for whom professional skepticism is important. Board members, finance executives and organizational leaders would all be served well by increasing their professional skepticism. John Marks, author of a recent white paper titled Skepticism: A Primary Weapon in the Fight Against Fraud, summarized it well when he wrote, “one of the key drivers is that we get comfortable with people. We give people the benefit of the doubt instead of resetting the level of skepticism. Someone interested in committing fraud will prey on trust.”

Is there anything that we can do to increase our professional skepticism? In other words, can skepticism be taught? Based on academic research over the past 10 years, professional skepticism has been distilled down to six fundamental characteristics: a questioning mind, suspension of judgment, a search for knowledge, interpersonal understanding, self-confidence, and self-determination. What’s further is that recent studies indicate that professional skepticism can in fact be taught.

Here are a few steps that all business professionals can take to increase their professional skepticism:

1. Play the role of the independent reviewer of your own assumptions. A professional skeptic continually challenges beliefs and belief-based risk assessments. Critical self-assessment is necessary to demonstrate to others why and how beliefs and assessments are justified.
2. Resist complacency. Question whether you are placing undue weight on previous risk assessments or discounting evidence inconsistent with your expectations.
3. Be alert to pressure. Pay particular attention to pressure to truncate risk-assessment procedures or make unwarranted assumptions for the sake of meeting a deadline.
4. Understand the sources of evidence. Identify and assess audit risks from multiple perspectives, using multiple sources of evidence.
5. Be aware of the relative reliability of evidence types. In general, documentation from internally generated documents—particularly those generated manually or not linked to other reporting systems—is less reliable as evidence than documents generated by external sources such as banks or suppliers.

For help in identifying areas where your organization could increase its professional skepticism or to schedule a training on professional skepticism for your organization, please contact me at (805) 963-7811 or ldunne@bpw.com.