Gubaidullina A.R.

Kazan (Volga Region) Federal University

PROFESSIONAL JUDGMENT IN THE ACCOUNTING PRACTICE

In international accounting harmonization the development and adoption of International Financial Reporting Standards (IFRS) as national standards, exercise of accounts’ professional judgment has increasingly been recognized as an important topic. IFRS have often been charachterized as principle based standards require both companies and their auditors to exercise of professional judgment. The phrase “professional judgment” is not new to the accounting and auditing profession; however, there has been an increased emphasis on the importance of professional judgment as a result of regulation, standard setting, inspections, and a move toward more principles-based accounting and auditing standards.

Professional judgment is a process used to reach a well-reasoned conclusion that is based on the relevant facts and circumstances available at the time of the conclusion. A fundamental part of the process is the involvement of individuals with sufficient knowledge and experience. Professional judgment involves the identification, without bias, of reasonable alternatives; therefore, careful and objective consideration of information that may seem contradictory to a conclusion is key to its application. In addition, both professional skepticism and objectivity are essential to the process and to reaching an appropriate conclusion.

Because of the complexity of economic items and the particularity of enterprise, the current accounting system allows enterprise to adopt different accounting disposal methods to same one economic item in certain range, and the selection standard of various methods is not be regulated, which requires accountants should use their own professional judgments in practical works to select concrete accounting disposal method in many selectable accounting disposal methods according to the concrete instance of the enterprise.

So I consider, that professional judgment of accounter may affect the decisions of users. From among the spheres in which the estimates and the judgment of managers, or of accounting professionals play a significant role I mention the following:

− the recognition of certain elements in the balance sheet (assets or liabilities) or in the revenueand expense accounts (income or expenses);

− the determination and taking into consideration of the signification point in order to establishthe presentation manner in the financial statements of certain elements (assets or debts) in distinct classes ;

− the choice of the methods for assessing in the balance sheet for the various reported elements, respectively:

- the option for stock assessment methods: CMP, FIFO, etc..

− in the case of tangible and intangible assets which can be amortised:

- the determination (estimation) of the useful life of an asset to be depreciated;

- the determination (estimation) of residual value;

- the determination of the depreciation method;

− in the case of financial investments: classifying financial investments in “current” or “noncurrent” ones.

Judgment is based on the accounting profession and accounting standards on accounting theory, accounting practitioners on the operational capacity of the integrated higher layer of proposed standards is to ensure high-quality accounting and efficient operation of the important ways. In order to better service the market economy and effective conduct of economic activities to achieve maximum social benefit, all accounting and related accounting department employees should be judged in the accounting profession to give high priority to this important area, and continue to explore and effort.

Professional accounting practitioners should first determine capabilities from its deep understanding of accounting work, a thorough understanding of accounting theory and standards requirements, and pay attention to the changing economic environment, way of thinking constantly updated with the times. The integration of theoretical knowledge to the practical operation to, in the analysis to determine the continuous accumulation, improve professionalism and capacity to treat all kinds of issues.

The complex and changing the face of transactions and economic environment, the accounting staff to work through a lot of practical skills in their professional practice, through the different departments, reasonable changes in the work of different positions and norms, expanding the work of the contact surface to enhance the strain force.

For the same matter in the accounting methods and procedures that may exist on more than one choice, it requires professional accountants to determine the ability of the accounting policies and guidelines based on requirements of the specific conditions for economic activities, trade-offs to optimize selection, to improve work efficiency, and ensure true and reliable information.

Enterprises in order to avoid the use of accounting information to manipulate professional judgments, by fraud, forgery and other means to obtain the benefit or harm the interests of information users, the relevant departments should establish and improve monitoring and punishment mechanisms, for applications in the professional judgments beneath integrity, acts against the interests of society should be severely punished, the law of the seriousness and authority to ensure the effective operation of the mechanism.

So the accountant professional judgment means the process that accountants fully consider the actuality and future financing environment and management characteristics of enterprise, utilize the information materials, use their professional methods, logic analysis ability and professional experience, judge and select the principles, methods, and program when disposing daily accounting items and making financial reports, and facing uncertain accounting items, according to accounting law, standard, and traditions. The existence of the accountant professional judgment is because of the deficiency of the accounting theory and technology, the ambiguity of economic activity, and the uncertainty of future result.