Professional judgment in auditing

Author: Allison Sutercliffe [Canada] Written by: Roy Wang Fuli
Publisher:
Publish Date: 2005-09-01
Features: This report aims to discuss the nature and practice of professional judgment in auditing. The report considers professional judgment from the perspective of financial statement audits, but it should be noted that any engagement related to auditors requires professional judgment, so the conclusions of this report are equally applicable to other assurance engagements. The focus of this report is on the concepts and principles of professional judgment rather than mandatory rules, because rules, by their nature, can only state the basic requirements for auditors. Rules can only be considered a minimum acceptable level of professional guidance and cannot replace the professional judgment of auditors. In the 1988 research report of the Canadian Institute of Chartered Accountants titled "Professional Judgment in Financial Reporting," M. Gibbs and A.K. Mason stated: "The value of professional judgment is a function of its importance and quality, which are interdependent." Therefore, this report discusses the issue of materiality in auditing professional judgment and identifies the key considerations needed to improve the quality of auditors' judgments. This aligns with the current strategic plan objectives of the Canadian Institute of Chartered Accountants Auditing Standards Committee, which has been committed to continuously improving the quality of auditing practice, the value of auditing services, and the effectiveness of financial statement audits.