Wednesday, January 16, 2008

Top audit firms push to use their own judgment

Auditors and corporate finance departments must be able to use professional judgment without being second-guessed if countries continue to adopt principle-based accounting standards, the chief executives of the top six global accounting networks argued in a white paper on Tuesday.

The paper, presented at a Global Public Policy Symposium in New York, urged regulators and other stakeholders to create a system where reasonable auditor judgments are accepted.

"Investors are best served when financial reports are clear and easy to understand and use," the CEOs of Deloitte Touche Tohmatsu [DLTE.UL], Ernst & Young [ERNY.UL], PricewaterhouseCoopers [PWC.UL], KPMG [KPMG.UL], Grant Thornton, and BDO Seidman wrote.

"In order to deliver on that goal, preparers and auditors must be given the space to exercise professional judgment and to feel confident that their judgment, so long as it is fundamentally sound and documented, will not be subject to second-guessing."

More than 100 countries are currently using, or plan to use International Financial Reporting Standards (IFRS), which are seen as a more principle-based accounting system. In recent months many have called for the United States to set a national plan to move to IFRS from U.S. Generally Accepted Accounting Principles, which are often viewed as more rule-based.

Top audit firms push to use their own judgment

Labels: GAAP, IFRS, professional judgement

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