Get rid of accounting rules, study says

Global convergence of accounting standards cannot be achieved through a
rules-driven approach, a new study has concluded.

Scottish institute ICAS undertook a series of interviews with key figures in
the accounting world and found that there was an overarching desire to move
towards unified global standards with a principles-based approach.

Based on the responses, ICAS is recommending that more emphasis needs to be
placed on explaining the key judgements made by preparers of financial
statements, and that preparers and auditors need to assume more responsibility
for their judgements, seeking less in the way of detailed guidance.

Rules-based accounting, the report argued ‘adds unnecessary complexity,
encourages financial engineering and does not necessarily lead to a true and
fair view or a fair presentation’.

The interviews were conducted with such figures as IASB chairman Sir David
Tweedie, chairman of the US standard setter, Bob Herz, EC internal market
commissioner Charlie McCreevy, AstraZeneca CFO Jon Symonds, HSBC finance
director Douglas Flint and General Electric vice-president Phil Ameen.