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New ICAEW hub aims to provide clarity on good professional judgement

May 9, 2023

ICAEW’s professional judgement hub brings together resources to help members improve their application of professional judgement.

Professional judgement has been a cornerstone of discussions around audit and corporate governance reform over the past three years. In its feedback statement on restoring trust in audit and corporate governance, the UK government Department for Business and Trade encouraged the Financial Reporting Council (FRC) to develop an agreed framework for professional judgement.

Following this, the FRC published its Professional Judgement Framework in June 2022, providing guidance for exercising judgement and examples for its application.

However, there is much more nuance to effective professional judgement than a guidance document can provide. Factors such as company culture play a much greater role in the effectiveness of professional judgement than it would for other aspects of audit and assurance.

There are also relatively few sources of guidance to help professionals develop their skills. Through its professional judgement hub, ICAEW brings together a range of resources that aims to help you consider how to approach difficult judgements.

“Judgement is at the heart of what it means to be a professional,” says John Boulton, ICAEW’s Director, Policy. “It is both an attribute that chartered accountants are expected to demonstrate in a variety of situations and a skill that can be continuously improved on over a career.”

Several academics and senior figures in accounting have shared their views on how to deliver high-quality professional judgement. Sir Andrew Likierman, former Dean and now Professor of Management Practice in Accounting at the London Business School, consulted with Sir Donald Brydon’s inquiry into the quality and effectiveness of audit. He sets out six elements of professional judgement that he believes that auditors and accountants should follow, including: taking in; trust; relevant knowledge and experience; detachment; choice; and delivery.

Brydon, in his UK review the Quality and Effectiveness of Audit, sees professional judgement both as a foundation of a highly respected audit profession to which new recruits can aspire and as a way to refocus audits to be more proportionate.

Professor Atul K Shah, Visiting Lecturer on Finance and Accountancy in the School of Policy and Global Affairs at City, University of London, believes that more emphasis should be put on personal morals and ethics when it comes to professional judgement.

The ICAEW Code of Ethics (based on the IESBA international code) makes a number of references to situations where ICAEW members are expected or required to exercise professional judgement.

“Our professional judgement hub will bring together a range of resources on professional judgement to help identify in good time when crucial judgements may need to be made and to help develop judgement skills,” says Boulton.

[ICAEW Insights]

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