US government official calls for principles-based accounting

US treasury secretary Henry Paulson has urged his
fellow US rule-makers to consider adopting
‘principles-based’ accounting regulations, and questioned
the sustainability of the accounting profession.

At a conference aimed to address slippage in the US capital markets, Paulson
said that there should be a focus on US issues of its regulatory structure, its
accounting industry and its legal and corporate governance environment.

His comments come on the back of a strategy document, published this week by
the US Chamber of Commerce, calling for public companies to stop issuing
earnings guidance and further recommendations for a move away from quarterly

‘Our regulatory system has served us very well over the course of our
history.’ said Paulson. ‘Yet the addition of new regulators over many years, and
the tendency of these regulators to adapt to the changing market by expanding,
as opposed to focusing on the broader objective of regulatory efficiency, is a
trend we should examine.’

He questioned whether the concentration
of the major accounting firms is a sustainable business model for the
profession, as well as whether or not the system is attracting talented auditors
capable of producing high-quality audits.

Further reading:

US ‘must revise Sarbox to stay competitive’

vows to keep US on top in global finance

Regulation Should Be ‘Principles-Based’

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