PROFESSIONAL JUDGEMENT: A MUST IN THE AUDIT OF FINANCIAL STATEMENTS

Abstract

Professional judgement involves the application of auditor’s knowledge, skills and experience during all stages of the audit. Our article aims to study professional judgement in the audit of financial statements. It should be applied correctly and consistently in order to obtain a fair view of financial statements and to meet all financial users’ need for information. Being a mix of cognitive, technical, theoretical and cultural factors it was and is studied worldwide. The study highlights the fact that audit of financial statements needs professional judgement during all level at the audit. At the beginning the auditors must use it in order to select an audit client and judge the risks associated with it. During the planning stage the financial statements risks must be assessed and the proper level of procedures set for each financial statement line. Professional judgement must be used also during the testing phase when using techniques as sampling, when analysing complex transactions in which substance over form principle should be respected. Last, but not least a correct opinion should be given for the financial statements of each company. All in all, professional judgement becomes a must for auditors in the complex situations met.

Keywords

• professional judgement; audit; financial statements