Management Judgement Explained
Judgement is an important accounting principle.
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.
