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When Less Is More: The Effect Of Reducing Auditor Liability On Auditor Judgments In Principles-Based And Rules-Based Environments, Linda Quick
Theses and Dissertations
The purpose of this paper is to investigate the joint effects of accounting guidance type (principles-based versus rules-based) and legal liability regime (unlimited versus limited) on auditor decisions. Both the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) believe that moving to more principles-based standards in the United States will allow companies and auditors to more appropriately reflect the economic substance of transactions in the financial statements. However, very little attention has been paid to the possibility that principles-based standards will be applied differently in the United States than in other countries due to a different …