The accountant must exercise their professional judgement in making relevant choices between alternatives.Discuss this statement and...

The accountant must exercise their professional judgement in making relevant choices between alternatives.Discuss this statement and consequences thereof. 20 marks

Expert Solution

Professional judgement is closely connected with the
reliability offered to the users of financial statements,
since their decisions are based on the values reported
by the preparers of financial statements. The objective is to present information as a result of an adequate
analysis, through the application of measurement and
classification methods and techniques suitable to each specific entity.

Professional judgement is a key skill for preparers, both auditors and accountants of financialstatements,
especially under a principles-based accountingregime.
However, making a judgement can be difficult and there is not necessarily one correct answer. Being able to make good judgements is the essence of each
profession, in general.

Therefore it is recommended to use professional judgement in order to reach a conclusion which is in accordance with the accounting principles and is not enforced by any accounting rules, since the exercise of individual professional judgement is preferred against the “pure” compliance with prescriptive legal requirements.

ekkarill92 answered 2 years ago

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