Professional Versus Persona judgement in accounting world - Essay Example

Professional versus Personal Judgment in the Accounting World al Affiliation) Professional versus Personal Judgment in the Accounting World The application of professional and personal judgment is evident in the accounting world. In addition, accounting involves handling financial information to generate financial statements that represent an honest state of an organization. However, numerous ethical issues inhibit professional and personal judgment and compromise the Code of Professional Conduct.

The American Institute of Certified Public Accountants (AICPA) is responsible for ensuring that all accountants in the United States comply with the code of ethical conduct. Professional and personal judgment differs from the body that governs its implementation. Personal judgment emanates from an individual based on personal views, values, and opinions. On the other hand, professional judgment emanates from a set of guidelines stipulated by relevant bodies in the respective profession. In the accounting world, the main accounting bodies that govern professional judgment are; The International Accounting Standards Board (IASB) and The International Federation of Accountants (IFAs).

Professional Judgment in Resolving Accounting Ethics Dilemmas Personal judgment may be biased due to subjective reasoning from the accountant. Cottone, (2001) states “accountants need to move from psychologically based ethical decision-making models to socially constructed decision-making models.” Ethical issues that arise in accounting ought to be handled in objective reasoning (professional judgment) as opposed to empathetic and irrational reasoning (personal judgment). There are numerous users of financial information (managers, investors, lenders, employees, and shareholders).

It is prudent that accountants apply the accounting guidelines in line with the Code of Professional Conduct stipulated by AICPA to put the interests of all users of financial information into consideration. In a situation whereby an accountant applies personal judgment to solve an ethical concern, he or she may end up favoring one party. Such acts may be considered discriminatory and may lead to legal action being taken against such accountants. All accountants should bear in mind that “professional judgment results in wisdom from experiences being applied in ethical decision-making processes” (Lehr and Sumarah 2004).

ReferencesCottone, R. R. (2001). A social construction model of ethical decision making. Journal of Counseling and Development, 79, 39–45.Lehr, R., & Sumarah, J. (2004). Professional Judgment in Ethical Decision-Making. Canadian Journal of Counselling, 38(1), 14-23.