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From Accounting to “Forecounting” *
Author(s) -
CORMIER DENIS,
MAGNAN MICHEL L.
Publication year - 2005
Publication title -
canadian accounting perspectives
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.238
H-Index - 17
eISSN - 1911-3838
pISSN - 1499-8653
DOI - 10.1506/4cdj-m98h-fh0q-kq1m
Subject(s) - accounting , context (archaeology) , face (sociological concept) , stewardship (theology) , financial accounting , management accounting , cash , meaning (existential) , accounting standard , business , accounting information system , economics , finance , sociology , political science , psychology , law , paleontology , social science , politics , psychotherapist , biology
Using Ross Skinner's 1995 CA Magazine article, “Judgment in Jeopardy", as a stepping stone, we revisit the meaning of professional judgment in accounting in light of developments in standard setting, financial markets, and business operations that have taken place over the past two decades. We argue that it is time to change the view that accountants' professional judgment is the application of accounting‐based knowledge and experience in the selection of an appropriate accounting method. Accountants now face a standard‐setting context that emphasizes the estimation of future cash flows as well as new business and financial realities. This context implies that, in exercising their professional judgment to choose between forecast alternatives, accountants must rely on knowledge and experience from other disciplines (even though this is not well integrated into accounting). Hence, accounting must evolve from its traditional stewardship role to the new role of “forecount‐ing” (the estimation of future cash flows). The implications as well as the challenges of that evolution are discussed.