Accounting & Integrity
Conservative approach
The principle of choosing assumptions that avoid overstating credited results when evidence is uncertain.
Where a value cannot be established precisely, the conservative approach selects the option that understates the benefit. The intent is that uncertainty never inflates the claim.
Applied mechanically it becomes an excuse for poor measurement: a project that deliberately discounts everything without improving data is not being conservative, it is being imprecise in a way that hides weak methodology.
Frequently asked questions
Is conservativeness applied to the whole estimate or per parameter?
Ideally per parameter where uncertainty is unquantified, and to the aggregate where an overall deduction is used.
Can it be double counted?
Yes, and this is a common audit finding: discounts applied at several stages compound unintentionally.