CA Sulsa is conducting the statutory audit of SATI Ltd. While reviewing the purchase records, she noticed a large purchase transaction supported by…

In the given case, while reviewing the purchase records, CA Sulsa noticed a large purchase transaction that was supported by only one internal document. The management explained that this was the usual practice and assured her of the document's authenticity. Such a response could affect CA Sulsa's exercise of professional skepticism. Thus, the auditor CA Sulsa shall plan and perform an audit with professional skepticism recognising that circumstances may exist that cause the financial statements to be materially misstated. Professional skepticism includes being alert to, for example: Audit evidence that contradicts other audit evidence obtained.Information that brings into question the reliability of documents and responses to inquiries to be used as audit evidence.Conditions that may indicate possible fraud.Circumstances that suggest the need for audit procedures in addition to those required by the SAs. Maintaining professional skepticism throughout the audit is necessary if the auditor is to reduce the risks of: Overlooking unusual circumstances.Over generalising when drawing conclusions from audit observations.Using inappropriate assumptions in determining the nature, timing, and extent of the audit procedures and evaluating the results thereof.