Is the principles not rules debate still valid
in today’s corporate reporting landscape? What are the challenges in
implementing principles-based standards? These were some of the questions for
debate at an ICAS event to mark the 10 year anniversary of the 2006 publication of 'Principles not Rules: A question of judgement'.
The Institute of Chartered Accountants of Scotland (ICAS) recently surveyed members with an interest in
corporate and financial reporting on their views on this debate. A similar
survey was undertaken in 2011.
Of the 199
respondents to the survey, the key findings were as follows:
- 90% of respondents had a preference for principles;
- 64% believe IFRS is very or mainly rules-based;
- 61% think that IFRS has become more rules-based in the last five years;
- There was very strong support for the idea that the profession is capable of operating within a principles-based environment;
- The main barriers to principles-based standards were considered to be: the influence of US GAAP; the role of regulators in challenging judgments; the threat of litigation; and the lack of trust in preparers and auditors..
For a summary of the full results of this survey, see ICAS survey: Principles not Rules. To
learn more, refer to previous postings about the principles
versus rules debate.
