Professional skepticism is at the heart of quality auditing — yet not every auditor who applies it gets recognition. The article Who Rewards Appropriate Levels of Professional Skepticism? by Brazel, Leiby, and Schaefer (2025) explores a critical but under-researched question: Who actually rewards auditors for being skeptical, even when their suspicions turn out to be false alarms? For internal auditors and audit leaders, the findings highlight structural and cultural factors that influence whether skepticism is promoted—or quietly discouraged.
At the core of the study is the idea of “costly skepticism”—when auditors pursue a fraud red flag, invest time and effort into investigating it, go over budget, and perhaps even strain client relationships, only to conclude that no misstatement occurred. While such behavior aligns with audit standards and ethical expectations, it often fails to bring a tangible “win” to justify the effort. The article shows that this kind of skepticism is not consistently rewarded in practice, even though it’s precisely the behavior auditors should exhibit in the presence of uncertainty.
In a survey experiment involving 127 practicing audit seniors and managers, the researchers found striking differences in how such costly but appropriate actions were evaluated. Some supervisors rewarded the staff member’s initiative; others penalized or merely rated it as “meeting expectations”—which in most firms equates to a subpar rating due to widespread evaluation inflation. The implication is clear: even when audit behavior is technically correct, the lack of a “positive outcome” may lead to negative reinforcement.
But what distinguishes the supervisors who reward skepticism from those who don’t? The study identifies two key predictors. First, trait skepticism—especially the ability to suspend judgment—correlates strongly with favorable evaluations of skeptical behavior. Second, supervisors who believe that their own performance will be positively viewed by their audit partner if they support skepticism are more likely to reward it in their staff. In other words, the tone at the top matters enormously, not just in setting policy but in shaping daily evaluation behavior.
Interestingly, knowledge factors like fraud detection experience or formal training didn’t significantly influence evaluations. This suggests that current training programs may not be sufficient to change evaluation practices or develop skeptical thinking in audit leaders. Instead, the findings emphasize the role of culture, mentorship, and personal traits in creating an environment where professional skepticism is truly encouraged.
For internal audit leaders and heads of audit functions, the practical implications are clear. If you want your teams to act skeptically when it matters—not just when it’s easy or politically safe—you need to ensure that your evaluation systems, training, and leadership modeling actively support such behavior. This includes recognizing skepticism even when it doesn’t lead to dramatic findings and fostering open communication that enables staff to raise red flags without fear of being penalized for doing so.
Ultimately, the article encourages internal audit professionals to look critically at their own evaluation processes and cultural norms. Rewarding skepticism is not just about fairness — it’s about creating audit teams capable of spotting problems early and thinking critically under uncertainty. As data analytics, false positives, and complex fraud risks become more central to audit work, a culture that supports appropriate skepticism may prove to be one of the most valuable controls an organization can have.
For more details, you can access the full article here.