Abstract
A financial statement audit is required for Hong Kong-listed companies.
This process enables auditors to verify the accuracy of evidence, identify
issues in management’s accounting practices, review accounting estimates and
assess their reasonableness, and avoid rigid adherence to standardized
procedures. With many overseas and various businesses, there are numerous
complex items within the financial statements, such as foreign-currency
transactions, impairment losses, fair-value adjustments, revenue recognition,
and related-party transactions, all of which demand substantial professional
judgment in audit planning and evidence collection. This paper studies the
functions of professional audit judgment in the verification processes
described above, introduces the main applications, identifies existing
deficiencies, and proposes countermeasures addressing the risks of assessment,
evidence evaluation, expert participation, audit technology, professional
scepticism, and quality control. Professional judgment should be based on
facts, experience and documentation; it is not mere guesswork; otherwise, it would
lack the objectivity and reliability required for auditing.
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