The Canadian Institute of Chartered Accountants (CICA) published the research report Professional Judgment and the Auditor in 1995. The 100-page report was prepared by staff of the CICA Research Studies Department (J. Paul-Emile Roy, CA) under the direction of an 8-member study group. It establishes the importance of professional judgment to auditing standards through an examination of the prevalence of references to professional judgment in the CICA Handbook. On page 5, the report proposes a definition of professional judgment in auditing that is a more concise and condensed version of the definition proposed in the 1988 CICA research study Professional Judgment in Financial Reporting.
According to the report: “Professional judgment in auditing is the application of relevant knowledge and experience, within the context provided by auditing and accounting standards and Rules of Professional Conduct, in reaching decisions where a choice must be made between alternative possible courses of actions.” This definition is helpful in that it clarifies the situations where professional judgment is called for and emphasizes the role of professional standards in the process.
The report identifies many sources of information regarding the issues surrounding professional judgment. It develops a framework for professional judgment and identifies key factors that influence the judgment process. As well, it provides valuable guidance to practitioners regarding their professional obligations when exercising professional judgment.
