Essential characteristics of a correct professional judgment process.

• Author: Popa, Irimie Emil

1. INTRODUCTION

   Professional judgment is a concept used in many fields. Even if specialists use to say that many decisions made by them are according to their professional judgment, they don't actually understand or cannot explain what really this concept involves. That's way, there are situations when unprofessional or incorrect decisions are accepted without the possibility to argue them. The consequences of an incorrect application of the professional judgment can lead to serious problems with negative economic, financial and social implications. A better understanding of the concept would be reached if we would analyze individually each term of the notion.

   The word judgment was first utilized in the 13th century, expressing the following meanings: "a) a formal utterance of authoritative opinion, an opinion so pronounced; b) the process of forming an opinion or evaluation by discerning and comparing; c) the capacity for judging, discernment." (The Webster dictionary).

   The word professional was used a bit later. It is derived from the word profession which first appeared in the 13th century and defines a calling requiring specialized knowledge and often long and intensive academic preparation; a principal calling, vocation, or employment. The whole body of persons engaged in a calling.

   As mentioned above, professional was first used later for the word judgment, around the 1606 year and it refers to the following meanings: a) relating to, or characteristic of a profession; engaged in one of the learned professions; b) characterized by or conforming to the technical or ethical standards of profession; c) exhibiting a courteous, conscientious, and generally businesslike manner in the workplace.

   Taken together, the concept of professional judgment represents the process of forming an opinion or evaluation (characterized by or conforming to the technical or ethical standards of a calling requiring specialized knowledge and often long and intensive academic preparation) by discerning and comparing.

   Professional judgment is involved in the decisions of the specialists from many fields. Davis (1992) notes that professionals offer, and are expected to deliver competent judgment. Moreover, "... an engineer without engineering judgment, a lawyer without a lawyer's judgment, or any other professional without the particular form of judgment distinguishing his or her profession from all others, would be an incompetent 'layman' who could not honestly practice the profession in question" (Davis, 1992, para. 1).

   Even if we are interested in defining and analyzing the area of auditing, in the following paragraphs, we are going to underline the commune characteristics of other different fields regarding the professional judgment. At the moment we identify the general requirements of a correct application, we will easily outline the essential characteristics of the professional judgment process.

2. METHODOLOGY

   A "liberal profession" is one where the practitioner is widely educated and, as such, is not just a technician but a wise person. A proper exercise of a profession involves besides technical knowledge both the application of the specialist's judgment.

   The aim of our research is to identify those general characteristic of a correct professional judgment (based on the activities of different liberal professions) and to expand them in auditing. To reach the object of our research first of all we selected certain liberal professions, such as:

   * "Healthcare professions: doctors, pharmacists etc;

   * Legal, tax and economic advice professions: chartered accountants;

   * Natural-scientific/technical professions: engineers;

   * Communicating professions/cultural professions: teachers/pedagogues." (Working in Germany-home page in the Bibliography section)

   The reason we choose these profession is that they are based on special professional qualification and they involve the development of services in the interest of the general public. Those who use liberal professional services have a right to expect assessment of circumstances to be carried out and decisions to be made impartially and objectively, without pressure from external sources and without conflicts of interest.

   The European Council of liberal professions issued a statement which describes the common values of the liberal profession in the European Union. In accordance to this statement, issued in 2007, the liberal professionals have the right to exercise personal judgment in the frame of their responsibilities after taking into account all relevant circumstances, without any application of external influence.

   Secondly, we analyzed these professions and the context in which judgment is required. The results showed that, no matter the domain, there are some common situations that can be identified in every profession which involve the exercise of professional judgment. By identifying these general aspects we were able to draw some conclusions regarding the characteristic of professional judgment. Once these essential characteristic were identified, we could explain the necessity and the role of professional judgment in auditing, which represents the main interest of our research.

3. LITERATURE REVIEW

   Over the years, there have been conducted many investigations regarding the professional judgment in auditing. There are some reviewing research on professional judgment and decision making process, such as: Libby and Lewis (1982), Libby and Luft (1993), Solomon and Shields (1995), Solomon and Trotman (2003), Nelson and Tan (2005).

   Libby and Luft (1993) organize the literature in terms of the effects of knowledge, ability, motivation and environment on performance. Later on, Solomon and Shields (1995) and Solomon and Trotman 2003 divide the literature into the following topics: multiperson judgment, heuristics and biases, knowledge and memory, probabilistic judgment, environment and motivation and policy capturing.

   One of the recent literature reviews on professional judgment is the one made by Nelson and Tan (2005). This study shows that the investigations on professional judgment and decision making process began around the 1970. The investigations conducted in the '70 focused on the analytical procedures and evidence evaluation, individual characteristics and cognitive limitations. In 1976 Joyce identified a lack of consensus in auditor's planning judgments and soon after a similar study was conducted by Mock and Turner (1981).

   Between the 1980 and the 1990, many psychological studies examined whether the auditors were cognitively limited and susceptible to heuristics and biases.(Nisbett et al. 1981, Ashton and Ashton 1988, McDaniel 1990 etc.)

   According to Nelson and Tan (2005), the studies conducted by researches over time cover three main important areas: the audit task, the auditor and his/her attributes and the interaction between auditor and other stakeholders in task performance.

   Regarding the audit task, there are some situations that require the professional judgment of the auditor, such as: the analytical procedures and the evidence evaluation (Biggs and Wild 1984, Bernanrdi 1994, McDaniel and Kinney 1995, Hirst and Koonce 1996, Blocher et al. 2002, Kotchetova 2004, Glover et al. 2005 etc.), the correction decision (Framer 1987, Haynes et al. 1998, Libby and Kinney, 2000; Gibbins et al., 2001; Braun, 2001; Hronsky and Houghton, 2001; Beeler and Hunton, 2002; Nelson et al., 2002, 2003; Kadous et al., 2003; Moore et al., 2003; Ng and Tan, 2003; Trotman et al., 2005, Nelson et al., 2005) and the going concern judgments and opinion modification (Biggs et al. 1983, Mutchler et al. 1997, Rosman et al. 1999).

   The auditors' professional judgment is influenced by their knowledge and expertise (Bonner and Lewis 1990, Tan and Libby 1997 etc.), individual characteristics (Choo's 1986, Pincus 1990, Hyatt and Prawitt 2001) and by their cognitive limitations (Tubbs et al. 1990, Asare 1992, Shelton 1999 etc.). According to certain researches...