Financial Statement's Standard Setting Strategy: Rules-Based or Principles Based?

Strategie tvorby světových standardů finančního výkaznictví: na bázi principů nebo pravidel?

Dana Kovanicová

Český finanční a účetní časopis, 2008, vol. 2008, issue 1, 7-19

Abstract: In response to the sharp criticism of rules-based financial accounting standards as is presented especially by Sarbanes-Oxley Act of 2002, the U.S. Securities and Exchange Commission require the setters of these standards to accept principles-based strategy or ´objectivesoriented' strategy. This paper analyzes this strategy and indicates some of her shortcomings. We argue that (only) principles-based standards are a pure fiction, as their application cannot work without detailed rules that alone are able to limit subjective judgments. This argument is enhanced by the fact that in present the standards setting strategy is grounded on asset/liability approach, which is continually connected with measurement on fair value base.

Keywords: Accounting standards; Rules-based; Principles-based; Revenue / expense approach; Asset/liability approach; Fair value; Účetní standardy; Báze pravidel; Báze principů; Výsledkový přístup; Rozvahový přístup (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2008
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://cfuc.vse.cz/doi/10.18267/j.cfuc.253.html (text/html)
http://cfuc.vse.cz/doi/10.18267/j.cfuc.253.pdf (application/pdf)
free of charge

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:prg:jnlcfu:v:2008:y:2008:i:1:id:253:p:7-19

Ordering information: This journal article can be ordered from
Český finanční a účetní časopis, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3
http://cfuc.vse.cz

DOI: 10.18267/j.cfuc.253

Access Statistics for this article

Český finanční a účetní časopis is currently edited by Karel Brůna

More articles in Český finanční a účetní časopis from Prague University of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Stanislav Vojir ().