Collaboration on Professional Judgment Matters for CAs – Part 3 of 3

As previously noted, a new research report has just been completed on Professional Judgment Matters: Assessing the Merits of Enhanced Communication and Collaboration.

The following discussion is Part 3 of a three-part excerpt from the executive summary in the report.


“Chapter 6 reviews recent developments and other matters that are pertinent to the evolution of professional judgment. The focus is on the following topics:

• Using a Professional Judgment Framework;
• The Art of Critical Decision Making; and
• The e-Professional Embracing Learning Technologies.

With regard to using a professional judgment framework, KPMG has observed that the mindset, skills and techniques behind good judgment begin to form at a young age and can be taught and improved with experience and practice. It is critical that accounting and auditing students receive a strong foundation in the fundamentals of professional judgment. Furthermore, research in the areas of judgment and decision making over the last few decades indicates that additional knowledge about common threats to good judgment, together with processes and tools for making good judgments, can improve the professional judgment abilities of both new and seasoned professionals.

According to the Harvard Business School course, “Art of Critical Decision Making,” bad decisions are usually made because of a poorly thought-out decision-making process. If decision makers put more emphasis on how to make a decision, ensure that they remove personal biases, collect information beforehand, glean the diverse perspectives of others and perform other constructive activities, they can vastly improve the strength and success of the process.

Finally, it is time to acknowledge that technology is now embedded in the workplace. Nearly all research and analysis has been transformed by technology and access to the Internet. As more and more activity goes online, accounting professionals are keeping up with regulation, filing reports, accessing data and so on, remotely in cyberspace. They are truly becoming e-professionals.

In summary, the seven-step approach to this initiative had a single purpose. The goal was to answer the research question posed in the project proposal: “With regard to professional judgment matters, is there a need for enhanced communication and collaboration by Chartered Accountants?”

Based on the results of the academic and professional literature review, the interest shown in the communications blog, and the collective views expressed by CAs in face-to-face meetings and by an online survey, the answer is clear. It’s time to collaborate! Accordingly, Chapter 7 completes the research report by setting out practical ways to move forward. It offers a number of suggestions regarding the nature and extent of the content that would be appropriate for an Internet-based resource centre. In addition, it suggests who would be appropriate to host this centre, both initially and ongoing.”

Additional excerpts from the executive summary are provided in Part 1 and Part 2 of this series of posts.

Collaboration on Professional Judgment Matters for CAs – Part 2 of 3

As previously noted, a new research report has just been completed on Professional Judgment Matters: Assessing the Merits of Enhanced Communication and Collaboration.

The following discussion is Part 2 of a three-part excerpt from the executive summary in the report.


“Chapter 2 reviews the current academic and professional research literature on professional judgment. A number of important observations can be drawn from that review, with respect to the CA profession, decision making in financial reporting and auditing (including the role of professional scepticism) and the exercise of professional judgment.

The most important finding is that CAs need to keep in mind, at all times, the Rules of Professional Conduct. The Rules state that: “It is a mark of a profession that there is a voluntary assumption, by those who comprise it – the professional community – of ethical principles which are aimed, first and foremost, at protection of the public and, second, at achieving orderly and courteous conduct within the profession.” Furthermore, according to IFAC, the fundamental principles of professional ethics include integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. All professional accountants must adhere to these principles regardless of the career path they may choose.

Chapter 3 is about creating a communications blog. It refers to two blogs, Migrating to IFRS and Corporate Reporting to Stakeholders, both of which emphasize Internet-based communications and the exercise of professional judgment. The number of postings to date and the significant number of pageviews for the recent period provide a measure of the success of Internet-based communications. This chapter concludes that it has been a very short time since the blog on Professional Judgment Matters: Guidance for Chartered Accountants was created on June 18, 2011. Considering the small number of posts to date (24), it is encouraging to see that the level of interest in the subject matter (research and guidance) is steadily increasing. It is also encouraging to see that the interest is becoming global in nature. This suggests that “If you build it, they will come!”

The project proposal for this research initiative calls for an open dialogue with selected CAs. The dialogue included seven face-to-face meetings on an ad hoc basis over a six-month period and an ongoing series of e-mails. In addition to a candid exchange of views, the participants provided several significant materials dealing with professional judgment matters. Those matters are discussed in Chapter 4 under four subtopics:

• Professional Judgment: A Pillar of Accounting Education;
• Teaching and Learning Professional Judgment;
• Outline for a Course on Professional Judgment; and
• Accountants’ Insecurity Relating to Work Diversity.

The dialogue also provided a strong incentive for engaging with CAs on a broader basis. This led directly to the development of an online survey to assess whether there is a need for enhanced communication and collaboration by CAs. Chapter 5 presents the results of an online survey called “Professional Judgment Matters for CAs.” The survey results reinforce the findings in the research literature and the key messages conveyed during the dialogue. Overall, there is considerable support (84%) for enhanced communication and collaboration by CAs, facilitated by an Internet-based resource centre.”

Additional excerpts from the executive summary are provided in Part 1 and Part 3 of this series of posts.

Collaboration on Professional Judgment Matters for CAs – Part 1 of 3

A new research report has just been completed on Professional Judgment Matters: Assessing the Merits of Enhanced Communication and Collaboration. The aim is to stimulate dicussion and debate on the exercise of professional judgment by Chartered Accountants.



The executive summary in the report states that: “Chartered Accountants (CAs) practice in a wide variety of fields including public accounting, industry, government, education, research, consulting, regulation and standard setting. In each of these areas, CAs are recognized for their expertise and for their ability to exercise sound “professional judgment” in a multitude of different contexts.

According to the academic research, the value of professional judgment is a function of both its importance and its quality, and each depends on the other. Together, these two attributes provide the foundation for this research initiative, which assesses whether there is a need for enhanced communication and collaboration by CAs on professional judgment matters. In other words, can an Internet-based professional judgment resource centre help to improve the quality of professional judgment? This is in the public interest, as well as the interests of policy developers and the business community. Clearly, it is also in the best interests of the profession. 

This research initiative takes a seven-step approach, as follows:

• Step 1 – Review the definitions of professional judgment (see Chapter 1);
• Step 2 – Review the current research literature (see Chapter 2);
• Step 3 – Create a communications blog (see Chapter 3);
• Step 4 – Open a dialogue with CAs (see Chapter 4);
• Step 5 – Undertake an Internet-based survey (see Chapter 5);
• Step 6 – Review recent developments and other matters (see Chapter 6);
• Step 7 – Suggest practical ways to move forward (see Chapter 7).

Chapter 1 explains the purpose, methodology and anticipated outcomes of this research initiative. It also provides several definitions proposed in the literature and professional standards with regard to professional judgment. In addition, it concludes that Chartered Accountancy meets the criteria for a “profession” because:

• there is mastery by the practitioners of a particular intellectual skill, acquired by lengthy training and education;
• there is a specialized code of ethical conduct, laid down and enforced by that society or institute, designed principally for the protection of the public; and
• there is a belief, on the part of those engaged in the calling, in the virtue of interchange of views, and in a duty to contribute to the development of their calling, adding to its knowledge and sharing advances in knowledge and technique with their fellow members.

In light of these criteria and others, it is apparent that sound “professional judgment” should be based on ethical behaviour together with an appropriate foundation of technical skills and critical thought processes, sustained and enhanced by professional development. In addition, it requires the application of relevant knowledge, expertise and practical experience in selecting a rational course of action.”

Additional excerpts from the executive summary are provided in Part 2 and Part 3 of this series of posts.

Accountants’ Insecurity Relating to Work Diversity

Chartered Accountants (CAs) practice in a wide variety of fields. This requires different competencies and implies the application of professional judgment in a multitude of different contexts. However, academic research provides evidence that, shortly before the collapse of Enron, experienced CAs were appreciably insecure about their professional identity and the appropriateness of the basic principles of their system of expertise. According to the research findings: “Interviewees were uncomfortable with the realities of auditor independence, were doubtful of the future of the profession, and had difficulties in describing the key features of a typical professional accountant in a context where accounting firms and individual accountants become involved in domains conceptually far removed from accountancy’s core domains.”

The research paper reported that: “...expert accountants did not trust to a high degree their system of expertise. Furthermore, our interviews suggest that through their reflexive abilities, accountants interpreted a number of their daily working experiences as being inconsistent with the routine and procedural application of accounting/auditing knowledge, thereby generating doubts about several of the key premises that underlie accounting expertise. As a result, interviewees had inconsistencies in the biographies of their professional lives; they saw the role of the firms and that of the professional institutes to be antagonistic. However, although doubts about the profession’s system of expertise regularly emerged from interviewees’ daily experiences, interviewees were not affected by these doubts to the point of being incapable of continuing their working lives as CAs or of engaging in radical reform initiatives.”

The research paper concludes that: “...All of this leads us to suggest that professional institutes establish channels for rank and file members to communicate concerns emerging from reflexive interpretations of daily experiences, and adopt mechanisms to examine these concerns and formulate, if necessary, proposals for institutional change. Like most modern institutions, professions seek to exclude from their members’ lives fundamental issues that cast doubt on the premises of their systems of expertise.”

The paper further concludes that: “Although suspicious and dissenting voices may be costly to deal with in the short term, it seems to us that providing conduits for members’ concerns and adopting a process to examine them might translate into professions having standards that better respond to the needs of society. These changes might also result in practitioners being better equipped to deal with situations in which they feel insecure, and perhaps avoid the occurrence of corporate scandals where auditors are blamed for not having issued qualified reports. Unfortunately, it seems that it takes a crisis of legitimacy on the scale of Enron to enact change.”

To learn more about this research, refer to the research paper “Professional Insecurity and the Erosion of Accountancy’s Jurisdictional Boundaries” by Yves Gendron, Ph.D, CA, University of Alberta  and Roy Suddaby, Ph.D, University of Iowa, Canadian Accounting Perspectives, Vol. 3 No. 1 (2004) pp. 85–115.