Accounting Standards   Term Paper ID:42663 Click to get this paper

Essay Subject: Discusses whether accounting standards should be rule-based or principle-based.... More...

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Paper Introduction: Rule-Based vs Principle-Based Accounting Standards At issue herein is the question of whether the accounting professionshould have rules-based or principle-based standards that function toprovide both normative guidance and regulatory oversight for members of thefield Nobes noted that in September the Financial AccountingStandards Board FASB sought input into this issue stating that theInternational Accounting Standards Board IASB required a principles-basedapproach whereas under the aegis of the Sarbanes-Oxley Act of rules-based accounting standards predominate Interestingly the question itselfmay be moot in that Benston Bromwich Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Heffes (2 4) stated that it is possible that there is no such thingas a pure rules-based or principle-based regulatory system and that thebest system would be mixed, context-sensitive, derived from principles, andcontaining rules of sufficient specificity to eliminate loopholes. Financial Executive, 2 (8), 18-19. Heffes (2 4) commented that the United States was virtually alone inusing rules-based accounting standards whereas the rest of the worldconforms to the IASB principle-based standards. Principle-Based Accounting Standards At issue herein is the question of whether the accounting professionshould have rules-based or principle-based standards that function toprovide both normative guidance and regulatory oversight for members of thefield. Principles-based or rules-based standards? (2 4). Interestingly, the question itselfmay be moot in that Benston, Bromwich, and Wagenhofer (2 6) state thatrules-based accounting standards are, for the most part, derived from a setof principles that are meant to guide practice in this important field.Rules do not develop, according to Benston, et al (2 6), in the absence ofprinciples that are derived from ethics, values, and norms that transcendselfish interests. ReferencesBenston, G.J., Bromwich, M., & Wagenhofer, A. Nobes, C.W. Abacus, 42(2), 165-188.Heffes, E. Rules-based standards and the lack of Principles in accounting. Nobes (2 5) noted that in September 2 2, the Financial AccountingStandards Board (FASB) sought input into this issue, stating that theInternational Accounting Standards Board (IASB) required a principles-basedapproach whereas under the aegis of the Sarbanes-Oxley Act of 2 2, rules-based accounting standards predominate. Accounting Horizons, 19(1), 25-34. (2 5). Rules-based standards by themselves have been rejected by groups such as the IASBbecause they may be overly specific to a particular country and may nottherefore be best practices in an increasingly globalized accountingenvironment (Nobes, 2 5). Heffes (2 4) reported ona survey in which 8 percent of respondents drawn from public and privatecompanies in the United States who rely on accountants called for theadoption of a principles-based approach to accounting standards. Rule-Based vs. Principles- versus rules-based accounting standards: The FASB's standard setting strategy. (2 6). Theprinciples-based approach is seen by many as increasing the likelihood thataccounting practices will conform to ethical codes and standards. Rules-based standards, though largely derived from principles may have thecapacity of increasing the accuracy by means of which standards setterscommunicate requirements, but they also may be written in such a way as toprovide multiple opportunities for dubious accounting practices such asthose in which companies like WorldCom and Enron engaged (Nobes, 2 5).Sarbanes-Oxley did call for the investigation of a principles-basedaccounting system to be undertaken by the Securities and ExchangeCommission's Office of the Chief Accountant and FASB agreed that it isnecessary to include an asset/liability approach, fair-value measurements,and a substantial number of principle-grounded rules in any normativesystem to ensure that accounting will be conducted in an ethical manner. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.