The paper was authored by Steven M. Glover, CPA, Ph.D., and Douglas F. Prawitt, CPA, Ph.D., as well as contributing authors from KPMG LLP including Sam Ranzilla, National Managing Partner, Audit Quality and Professional Practice; George Herrmann, National Office Partner; and Rob Chevalier, National Office Partner. It provides a five-step judgment process that board members and others can use to overcome common pitfalls and mitigate the effects of judgment bias. The judgment process is based on KPMG’s Professional Judgment Framework, which enables individuals to identify where and when the quality of judgments tends to be threatened by predictable, systematic judgment traps and biases.
The authors note that: “Consistently making high-quality professional judgments in a constantly changing environment has never been more important or challenging. The growing complexities of the global business environment and demands for effective corporate governance and oversight have placed a premium on sound judgment and decision making by all key players in the marketplace: management, boards of directors, auditors, and others. Our hope is that this collaboration—incorporating insights from academic research and reflecting KPMG’s commitment to consistent and incisive professional judgment in all aspects of its work—will be useful to board members in appropriately evaluating and challenging judgments and in encouraging sound decision making and solid performance.”
To learn more, view the COSO press release “COSO Releases Thought Paper on Enhancing Board Oversight by Avoiding and Challenging Traps and Biases in Professional Judgment” and read the paper Enhancing Board Oversight: Avoiding Judgment Traps and Biases.
