Management Judgement Explained

Management Judgement Explained.

⚖️ The financial statements of infamous Wirecard contain the term judgement exactly once.*

A warning sign overseen? 🧐

Judgement is not just a word.

Judgement is an important accounting principle, worth refreshing, since it profoundly influences decision making inside and outside the financial statements.

Entities often interpret judgement (management judgement) as:

FREEDOM

CREATIVITY

a MAGIC POTION (to cure numbers)

a CRYSTALL BALL (to predict future)

a MIRROR (remember the vile stepmother in the Snow White tale?)

Judgement is none of those. And yet to some extent it might reflect all of the above.

📍 The goal of this post is to provide you with an overview on where judgement is reqiured by the IFRS.

➕ It might also prevent you from overusing judgement or using it in a wrong place (eg in Notes).

⏩ Included: IFRS1-IFRS 12.

*and the instance is not related to accounting. Wirecard Annual Report 2018, Annual Report H1/2019.