Deloitte Report Recommends Creating a Judgment Framework to Help Remove Biases in Financial Decision-Making Process

What:

"Judgment Sustained"

Who:

Shelley Barrows, partner, Deloitte & Touche LLP and Deloitte Idea Labs Fellow

When:

Available immediately

Where:

www.deloitte.com/us/idealabs

Details:

Shelley Barrows' "Judgment Sustained" research report focuses on the use of judgment frameworks for financial and accounting decisions.  The shift to International Financial Reporting Standards (IFRS) in the United States will move accounting in the U.S. from a rules-based approach to a principles-based approach that requires significant judgment.  As judgment can vary from individual to individual within an organization, long-term implications of the judgment and consistency are a concern.

In her research, Shelley Barrows defines a judgment framework as a set of principles, guidelines or good faith thought process that enable decision-makers to consider a situation holistically and drive more consistent decision-making.

When chief financial officers and financial managers acknowledge that biases exist in the financial decision-making process, a judgment framework can be developed for evaluating transactions and implemented as a key element of risk management and corporate governance.  

This report identifies the common judgment biases in the decision-making process and offers guidance about how companies can consider financial decisions more holistically in order to drive more consistent decision-making across their organization.