Business Commons^™

Rules-Based Vs. Principles-Based Accounting Standards: Analyzing The Impact Of Amending Apb No. 18 To A Principles-Based Standard, Jodi E. Ferring

Presidential Scholars Theses (1990 – 2006)

In the above analysis I considered the impact of amending APB No. 18 to a principles-based standard upon implementation, accounting objectives, and management manipulation. The analysis has uncovered both positive and negative aspects to a change in the accounting standards setting process. Implementation would be more costly and require more resources due to applying judgment instead of objective tests. Accounting objectives of comparability and reliability could arguably be improved assuming implementation is accurate. Principles-based accounting standards would not significantly improve consistency. Management structuring of transactions could be decreased assuming accurate implementation. The analysis has discovered that the potential success of …