Definition
Due professional care is the level of diligence and competence expected of a member in public practice. The AICPA Code's general standards require professional competence, due professional care, planned and supervised work, and sufficient relevant data. In an audit, AU-C 200 requires the auditor to plan and perform with professional skepticism and exercise professional judgment.
Why it matters in an audit or review
It sets the bar against which the work is judged if something goes wrong. Failing to follow the standards, accepting an engagement outside the firm's competence, or using unreviewed junior work in a high-risk area can all be failures of due care. It does not require perfection; it requires reasonable care, and the working papers are the evidence of what was done.
Example
Illustrative: a firm accepts its first audit of a captive insurance company with no one on staff who has insurance accounting experience. To meet the competence part of due care, the firm engages a consultant with insurance experience, assigns a partner to review the actuarial work, and documents the consultant's qualifications before relying on the work.
Common mistakes
Assuming due care is satisfied by following the firm's template. The auditor still has to tailor the work to the facts.
Sources
- AICPA, Code of Professional Conduct, ET 1.300.001, General Standards Rule
- AICPA, AU-C Section 200, Overall Objectives of the Independent Auditor (professional skepticism and professional judgment)
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error