Mathematical Analysis of Accounting Estimates Disclosure and Auditors Professional Judgment in Arab Saudi Stock Exchange

Purpose: The research aims to analyze the relationship between accounting estimates and professional judgment measures.To achieve the research objective, it is organized throughout literature review and background, then developing hypotheses to test them statistically in firms and its auditors in Saudi stock market exchange. Design/Methodology/Approach: The research methodology is based on applied study, Since accounting estimates disclosures is a flexible requirement based on the accounting standards and the auditors’ professional skepticism related to the prepared financial statements based on the accounting standards, the related data will not be in a time series form because of taking into consideration the final update of the accounting standards. In this regard, the population of this study consists of 248 firms and its auditors in the year ended in 2022 in Saudi stock market exchange. The most suitable sample for this study is the industrial firms in the year ended in 2022 in Saudi stock market exchange which are 96 firm year observations and its auditors in the following sectors (Basic Resources, Durable Goods, Foods industry, Pharmaceutical, Communications, and Real Estate). Research findings: It is obvious that the professional skepticism, auditors' industrial specialization, analytical procedures positively effect on the accounting estimates in the side of (fair values estimates, Impairment review and loss estimation, other estimations) in Saudi stock market exchange, where the coefficients of this variables is significant, moreover the control variables related to the trait of professional skepticism are significant except the self-determining &interpersonal understanding dimensions. Recommendations: The researchers recommends it as necessary issuing an international auditing standard that regulates the relationship between the professional judgments of auditors and accounting estimations; it is necessity of disclosing the essential matters of the audit because this achieves the quality of the auditor’s practice of the provisions of professional skepticism during the implementation of the audit process.