Prinicple-Based Accounting vs. Standards-Based Accounting

Position Paper: Principles vs. Standards Based Accounting The question posed was whether the recent scandals in corporate America would have occurred if GAAP for U.S. businesses were more principle based like IASB International Accounting Standards rather than Standards based like the FASB U.S. Standards. After much research and investigation, I have come to the conclusion that the presence of principle based accounting standards would not have prevented these scandals. The U.S. currently …

…statutory authority to ensure "that FASB's standards evolve to become general principle based instead of overly complex, rule-based standards." Enforcement of any accounting standards is also an obstacle in converging these two systems. In the U.S., we have the SEC, but there is not a SEC in the rest of the world. It can not be known what preparers are really doing when they apply standards unless there is some sort of enforcement applied.