Download the Mini Guide to Learn More
PROFESSIONAL JUDGMENT
Specify
Objectives
Define
the Matter
Identify
Possibilities
Gather and Analyze Info
Reach
Conclusion
Reflect
coach
consult
avoid traps and biases
document
communicate
communicate
document
avoid traps and biases
consult
coach
Reflect
Reach
Conclusion
Gather and Analyze Info
Identify
Possibilities
Specify
Objectives
Define
the Matter
BUSINESS ACUMEN: A broad-based understanding of the audited entity’s business and the industry and macroeconomic climate in which it operates, as well as the emotional intelligence to navigate interpersonal interactions professionally and effectively.
APPROPRIATE MINDSET: Appropriate mindset implies an attitude of professional skepticism, which is a required component of our due professional care in accordance with applicable professional and legal requirements—an attitude that includes being thoughtful, questioning, and evaluative, and critically assessing the appropriateness and sufficiency of audit evidence and other information that is obtained to comply with the applicable auditing standard and rules; will lead naturally to “stepping back” throughout the process of making a judgment to evaluate progress and ensure we bring professionalism to our work.
TECHNICAL KNOWLEDGE: Relevant training, knowledge and experience, including a thorough understanding of the applicable professional and legal requirements, and our BDO audit methodology, as well as any other specialized skills or knowledge that are relevant to a particular judgment.
Baseline Attributes
COMMUNICATE: Comply with the applicable professional standards and satisfy the expectations of the firm, legal requirements, the client, the engagement team, the investors, and other stakeholders.
DOCUMENT: Creating a sufficient record of the approach to making a judgment, including important aspects of the baseline attributes brought to bear, the essential iterative actions taken, and the steps involved in a sound judgment process.
AVOID TRAPS AND BIASES: Proactively identifying where a judgment might be compromised by systematic judgment traps and biases and taking steps to mitigate their potential to undermine the quality of the judgment.
Refer to the Mini-Guide for Common Biases & Traps.
CONSULT: Making use of resources outside of the team to ensure adequate levels of the baseline attributes are present, provide alternative perspectives, and appropriately involve the firm in judgments that involve the management of significant risks.
COACH: Using the process of engaging in a significant judgment as an opportunity to develop and accelerate the judgment and business maturity of our professionals.
Iterative Actions
6. REFLECT: Step back and take a holistic view of the judgment process undertaken and the conclusion reached.
5. REACH CONCLUSION: Reach a judgment conclusion or decide on an action to be taken based on the information gathered and analyzed in Step 4.
4. GATHER AND ANALYZE INFO: Identify, gather, and analyze the information in terms of how each conclusion or action might lead to the achievement of objectives specified.
3. IDENTIFY POSSIBILITIES: Identify all the possible conclusions or actions that allow us to achieve the objective. The judgment is only as good as the possibilities considered.
Specify
Objectives
2. SPECIFY OBJECTIVES: Clearly specify what is to be achieved by making a judgment or coming to a conclusion.
Define
the Matter
Judgment Steps
1. DEFINE THE MATTER: Clearly and comprehensively articulate the matter to be addressed, the risks involved, and the judgment to be made.
Identify
Possibilities
Gather and Analyze Info
Reach
Conclusion
Reflect
coach
consult
avoid traps and biases
document
communicate
Judgment Steps
Judgment Steps
Judgment Steps
Judgment Steps
Judgment Steps
Iterative Actions
Iterative Actions
Iterative Actions
Iterative Actions
Baseline Attributes
Baseline Attributes
Iterative Actions
