Published: 22 February 2019
Analyst(s): Finance Research Team
With new principles-based accounting standards replacing specific rules, judgments in technical accounting are growing in importance. But few accountants can reach an informed, objective conclusion and provide documentation to back up the decision. Two steps can help bridge this skill gap.
How to Protect Judgments Against Bias
Table 1: 4 Common Biases Manifest in Accounting
Action 1: Teach Accountants How to Overcome Bias
Step 1 – Conduct Preliminary Research
Step 2 – Determine Judgment Complexity
Step 3 – Assess Accounting Guidance
Step 4 – Make the Judgment
Step 5 – Include Relevant Disclosures
Table 2: Coast Capital’s Accounting Treatment Evaluation Framework
How to Bake Technical Judgments Into More Accounting Roles
Action 2: Increase Exposure to Technical Judgment Earlier in Accountants’ Careers
A New Reality That Won’t Go Away
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