US in fear of principles-based accounting

Link: Auditors get US boost in liability battle

Despite a call from the Securities and Exchange Commission for a more principles-based approach to work on accounts, Bob Herz, chairman of the Financial Accounting Standards Board, believes auditors and companies are frozen by fear of challenges from regulators, lawyers and the media.

‘There seems to be a reluctance to exercise more judgement,’ Herz told the Financial Times. ‘In fact, if anything people are requesting more rules because they want clarity and defences against being second guessed.’

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