Recording significant professional judgements
How to document a significant professional judgement so a reviewer or inspector can follow it, using the judgements register and consultations.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Inspection findings often say the same thing in different words: "the file did not evidence the auditor's consideration of...". Behind that phrase is usually a decision that was made, and made sensibly, in a conversation between a manager and a partner. It simply never reached the file.
A professional judgement that is not written down cannot be reviewed, defended or learned from. Writing it down well is not about length. It is about recording enough for someone who was not in the room to follow the reasoning from the facts to the conclusion. This article covers how to recognise the judgements that need that treatment, what a good record contains, and where Achekam keeps it.
What makes a judgement significant
Auditors make judgements all day. Most do not need a separate record: the choice of a sample item, the wording of a request. The ones that do are those where a reasonable professional could have reached a different answer and the difference would matter to the opinion or the statements.
Typical examples:
- whether a going concern uncertainty is material;
- whether an accounting estimate falls within a reasonable range;
- whether a revenue contract has one performance obligation or several;
- how materiality was set, and why a particular benchmark was chosen;
- whether an identified misstatement is material once qualitative factors are considered;
- whether a matter requires a modification of the auditor's report.
ISA 230 sets the test that matters: the documentation should allow an experienced auditor with no previous connection to the audit to understand the significant matters, the conclusions reached and the significant professional judgements made. ICAEW's article on the objectives of an ISA audit explains how the overall objectives in ISA 200 relate to professional judgement and scepticism, which is the frame every judgement sits in.
Facts, options considered and conclusion
A record that an inspector can follow has the same shape every time:
- The question. One sentence: what had to be decided?
- The facts. What was known, with references to the evidence in the file.
- The criteria. The standard, policy or framework requirement that applies.
- The options. The reasonable answers available, including the one rejected.
- The reasoning. Why the evidence points to one option over the others, including contrary evidence and why it did not change the answer.
- The conclusion and its effect. What was decided, and what it changes in the statements or the report.
- Who decided, and when.
Point five is where most records fall short. "We concluded the estimate is reasonable" is a conclusion without reasoning. "Management's estimate sits inside our independently developed range; the main sensitivity is the discount rate, which we tested against market rates at year end" lets a reader check the logic.
The professional judgements register
Achekam keeps the firm's quality registers on its server, and professional judgements is one of them, alongside quality incidents, complaints and inspection progress. Every version is kept, with who changed it.
That history is valuable. If a judgement was revised after new evidence arrived, the earlier version shows what the team thought before, and the change shows that scepticism was applied. Do not overwrite a judgement to make it look as if it was always right.
Link the register entry to the working papers where the evidence sits. Those papers move through preparation, manager and partner review to completion and lock; once a paper is locked it cannot be changed, so the reasoning in it is fixed as at sign-off.
AI can help with the writing but not with the judgement. On a working paper, staff can ask AI to draft a conclusion or a procedure's response, and the draft goes into the file only when a person saves it. Treat any such draft as a starting point to be rewritten in the team's own reasoning, never as the reasoning itself. AI on working papers sets out those limits.
Consulting when the answer is unclear
Some judgements should not be made by the engagement team alone. Staff can take a technical consultation on an engagement from question to conclusion and closure in Achekam, and record a difference of opinion with each party's position, escalation and resolution.
A consultation is only useful if the question is precise and the conclusion says how the team applied the advice. One gap to manage by hand: an open consultation or difference of opinion does not stop the audit report from being approved or signed. Make "all consultations closed" an item on your completion checklist. The registers and consultations are described further in quality registers, consultations and disagreements.
Sign-off on the register: a screen check, not a server rule
Here is the limit a quality partner must know. Sign-off roles on professional judgements are checked only by the screen, not by the server. The register will show who signed off, but the system does not enforce that the right role did.
So check it yourself. In monitoring, and before any inspection, look at the significant judgements on a sample of engagements and confirm that each was signed off by someone with the seniority your policy requires. Record that check in the same register.
One judgement at a time
Choose an engagement in progress and identify its two or three most significant judgements. Write each one up in the seven-part shape above, add it to the register, and ask a colleague who was not on the engagement to read it. If they can follow the reasoning without asking you a question, the record is good enough.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
