A Professional Judgement Framework for the Measurement of Fair Value Especially at Level 3

Document Type : Research Paper

Authors

1 Department of Accounting, Faculty of Management and Accounting, Allameh Tabataba'i University, Tehran, Iran.

2 Department of Accounting, Faculty of Social Sciences, Imam Khomeini International University, Qazvin, Iran.

3 Department of Industrial Management, Faculty of Management and Accounting, Allameh Tabataba'i University, Tehran, Iran.

Abstract

Objective: This study aims to develop a professional judgment framework for measuring fair value, especially level three.
Method: In this paper, a mixed approach based on the positivism paradigm was conducted using a systematic review of documentary studies and a field method. Research data were analyzed using semi-structured interviews and a structured questionnaire based on fuzzy logic, the fuzzy Delphi method and the best and worst methods.
Results: The main finding is developing a professional judgment framework for measuring fair value, especially level three. The parts of this framework are: "The process of judgment in measurement", "The impact of the preparer of financial reports", "The influence of the organizational environment" and "The influence of the external environment" on judgment in measuring fair value, especially at level three. Also, the judgment process itself consists of the sections of "identifying the areas of judgment", "evaluating accounting guidelines", "collecting information and analyzing it", "concluding and making judgments" and "documenting judgments". On the other hand, "measurement characteristics" and "consequences of professional judgment" in measuring fair value, especially level three, were also extracted.
Conclusion: In order to control the adverse consequences of professional judgment and maintain the quality of financial reporting, it is recommended that the judgment process include identifying the area of judgment, evaluating accounting guidelines, collecting information, making judgments and documenting judgments by financial information providers.

Keywords

Main Subjects

References

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History

  • Receive Date: 22 November 2023
  • Revise Date: 27 February 2024
  • Accept Date: 11 March 2024

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