Educating Professionals: Ethics and Judgment in a Changing Learning Environment

According to Gordon Beal, Vice President of the Research, Guidance & Support Department at CPA Canada: “Ethics and professional judgment are key attributes that distinguish professionals from others.” With this in mind, “The profession continues to refine the framework for the new single, unified designation and business credential and define the criteria for the qualities required to be recognized as a Chartered Professional Accountant (CPA). The challenge is to effectively embed, in the fabric of every professional accountant’s decision-making process, the essential principles of ethics and foster their ability to apply professional judgment while balancing this with the task of acquiring the ever-increasing technical knowledge.”

As previously reported, CPA Canada partnered with the University of Toronto in March 2014 to create a forum for exploring best practices with respect to teaching the principles of ethics and professional judgment. As the need for these skills is common to all professions, a one-day Educating Professionals Symposium was organized which included participation of five professions: education, health care, engineering, law and accounting. Leading academics from the identified professions were asked to prepare thought papers prior to the symposium. The dialogue that ensued on the day highlighted similarities, differences and opportunities. It was the beginning of new conversations across the professions.

The Educating Professionals: Ethics and Judgment in a Changing Learning Environment project is a joint initiative between the Chartered Professional Accountants and University of Toronto. Its objective is to explore possible strategies to effectively refine the approaches to teaching ethics and professional judgment in a changing learning environment.

Educating Professionals: Ethics and Judgment in a Changing Learning Environment

There is a general consensus that it has never been more important for the accounting profession and accounting and business educators to work together to determine how best to prepare tomorrow’s accountants.

In November 2010, the Canadian Institute of Chartered Accountants (CICA) partnered with the University of Toronto to respond to this challenge. The result was Leveraging Change – The New Pillars of Accounting Education, a one-day symposium during which leading academics from Canada, the United States and the United Kingdom explored the new pillars of accounting education, along with 100 delegates from across the country.

The five new pillars were identified for the symposium as: (1) accounting principles and concepts; (2) ethical decision-making; (3) professional and personal attributes; (4) professional judgment; and (5) integration. The objective of that symposium was to begin the process of re-thinking accounting education by articulating the questions that accounting educators need to ask.

In March 2014, the University of Toronto  hosted a follow-up symposium which was jointly sponsored by the Chartered Professional Accountants of Canada (CPA Canada), the Institute for Management & Innovation (IMI) and the CPA/Rotman Centre for Innovation in Accounting Education. The symposium provided an opportunity to discuss the issues across several professions including Health Care, Engineering, Law, Education and Accounting.

Fundamental questions that were discussed at the symposium included: How do the various professions define professional judgment? How do the concepts of ethics and judgment pertain to different professions? How can educators help students develop these very important abilities? How does the changing educational environment offer new opportunities for enhanced learning in these areas?

The conference was chaired by Irene Wiecek and included speakers from across Canada. For each profession, at least two perspectives were presented – the academic perspective and the practitioner perspective. Those who attended the symposium worked in groups to encourage reflective discussion. From the perspective of the Accounting Profession, a presentation was given on “Educating Accounting Professionals About Ethics and Judgment.” For more information, contact Efrim Boritz (Professor; Assurance, Information Systems) and Krista Fiolleau (Assistant Professor; Assurance, Ethics) at the University of Waterloo in Ontario, Canada.

Principles-Based Reasoning about Accounting Estimates

Wally Smieliauskas, PhD

According to the abstract, this research article proposes a key principle and related concepts for reasoning about accounting estimates. The reasoning is consistent with a principles-based professional judgment framework proposed by Ross Skinner and the Institute of Chartered Accountants of Scotland. The principle deals with reasonable ranges and related risk assessments in the audit of accounting estimates. It does so by using concepts first introduced by Boritz and Skinner and updates them for the requirements of CAS/ISA No. 540 and International Financial Reporting Standards (IFRS).

The article identifies the conditions for the existence of the benchmark ranges proposed by Wally Smieliauskas in identifying fairly presented estimates. The need for a professional judgment framework and related guidance has been recognized recently by the International Federation of Accountants (IFAC), a 2010 EU Green Paper, and the Public Company Accounting Oversight Board (PCAOB) as a result of challenges auditors have been facing in the current reporting environment. This recognition echoes calls first made by Ross Skinner in his pioneering 1995 article, and reinforced by the FASB/IASB 2006 proposal for principles-based accounting standards.

The full article “Principles-Based Reasoning about Accounting Estimates” by Wally Smieliauskas is available from the Wiley Online Library (published in AccountingPerspectives, Volume 11, Issue 4, pages 259–296, Winter 2012).