Two parts assignment: Read accounting resources and case then answer some question.(SEC, KPMG)
Professional judgment framework
Tool to track, organize and evaluate considerations
Overarching considerations | |
Manage any personal bias and consider the bias of others:
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Consider the risk of material misstatement:
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Consider the involvement of others:
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Maintain professional skepticism, including fraud awareness:
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Considerations to define the issue | |
What is the primary issue? | |
Considerations to gather the facts | |
What is the application guidance? | |
What information do you need to address the issue? | |
Is the information you have obtained relevant and reliable? | |
Considerations to perform the analysis | |
How does the applicable guidance apply to the issue? | |
Have you identified and evaluated the key assumptions? | |
What are the reasonable outcomes and possible alternatives? | |
Considerations to make the judgment | |
What is your conclusion based on the analysis performed? | |
Does your conclusion make sense in light of the business purpose and underlying economics of the issue? |
Tool to document the judgment
Document your judgment. A memorandum format to do so is suggested below. Upon completing your documentation, ensure that you are able to appropriately answer the following considerations:
Is the documentation sufficient to support your judgment?
Can another professional understand how you reached your conclusion (including why reasonable outcomes and possible alternatives identified were not selected)?
Overall memorandum
Issue:
Facts:
Analysis:
Judgment:
Professional judgment framework – application template 2
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SCORE No. MM4121R