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| Enhanced Communication and Collaboration on Professional Judgment Matters |
In 2011, the Institute of Chartered Accountants of Scotland (ICAS) sponsored the research report Professional Judgment
Matters: Assessing the Need for Enhanced Communication and Collaboration. This guidance
blog is an integral part of that research report which is available on Google Docs and on the Social Science
Research Network (SSRN). The ICAS then published A Professional Judgement Framework for
Financial Reporting in 2012. It was primarily targeted at
accountants (both preparers and auditors) determining the appropriate
accounting treatment for particular transactions.
In 2016, the ICAS released a new, up-to-date publication A Professional
Judgement Framework for Financial Reporting Decision Making to replaces the 2012 edition. It offers practical guidance for
decision makers involved in narrative and financial reporting. The new
edition has been broadened to make it more universally applicable to decision
makers involved in financial reporting, whether accountants or nonaccountants,
in the private or not-for-profit sectors. It also includes a new section on
audit committees and further context on ethical decision making. Furthermore, the 2016 edition is shorter and more
interactive for online readers.
The ICAS firmly believes that a principles-based approach
to standard setting is a key driver of quality reporting. Therefore, the guidance
includes recommendations for standard setters to ensure that standards provide
the appropriate scope for professional judgment.
In this regard, it is entirely consistent with the 1995 Research Report Professional Judgment and the Auditor prepared by staff of the Canadian Institute
of Chartered Accountants (CICA), Research Studies Department (J. Paul-Emile
Roy, CA) under the direction of an 8-member Study Group of professionals. The
1995 Report identified many sources of information regarding the issues
surrounding professional judgment. It developed a framework for professional judgment and discussed key factors that
influence the judgment process. In addition, it
provided valuable guidance to practitioners regarding their professional
obligations when exercising professional judgment. Other blog postings regarding a “professional judgment framework” may also be useful
for improving decision-making.
