We should support the FASB continually move towards the principle-based accounting.
In responding the accounting scandals in 2002, Congress put SOX into law and required all of the public companies have to comply. A set of rules provides a clear way to help the accounting management teams make accounting decisions without any ambiguity. However, the rules can cause unnecessary complexity in a business real world. Normally, companies have to pay big bucks for the compliance, such as pay half million of dollar for auditing the internal control depends on the size of the companies according to my recollection from the information professor Howard provided in the class.
Contrast with the rules-based Accounting, the Principle-based accounting system
In responding the accounting scandals in 2002, Congress put SOX into law and required all of the public companies have to comply. A set of rules provides a clear way to help the accounting management teams make accounting decisions without any ambiguity. However, the rules can cause unnecessary complexity in a business real world. Normally, companies have to pay big bucks for the compliance, such as pay half million of dollar for auditing the internal control depends on the size of the companies according to my recollection from the information professor Howard provided in the class.
Contrast with the rules-based Accounting, the Principle-based accounting system