It may be helpful to start with a brief explanation of objectives-oriented standards, as was laid out in the 2003 Staff Report*:
[T]he optimal principles-based accounting standard involves a concise statement of substantive accounting principle where the accounting objective has been incorporated as an integral part of the standard and where few, if any, exceptions or internal inconsistencies are included in the standard. Further, such a standard should provide an appropriate amount of implementation guidance given the nature of the class of transactions or events and should be devoid of bright-line tests. Finally, such a standard should be consistent with, and derive from, a coherent conceptual framework of financial reporting.
In fact, this explanation may help shed some light on why many might assert that U.S. standards are not as principles-based as those of the IASB. Personally I do not necessarily agree that accounting standards in the U.S. lack underlying objectives or principles. Rather, in some instances, exceptions, bright-lines and a volume of application guidance may appear to obscure the objective or principle underpinning the standard (or to state it another way the reporting of the economic substance of the business transaction). Take Statement 133 dealing with derivatives and hedging transactions (used as an example by many to criticize that U.S. standards are not based upon principles) as an example. I believe that Statement 133 at its core is based upon sound principles. The objectives of the standard are laid out in a few paragraphs and seem fairly straight forward (derivatives represent assets or liabilities, such assets and liabilities should be recorded at fair value, changes in fair value should be recorded in income and special accounting for hedging should be provided only for qualifying items). However, the standard is accompanied by 800 plus pages of implementation type guidance providing a host of well meaning scope exceptions, bright-lines, and rules. It is the volume of guidance, that in many cases makes it more difficult, rather than easier, to apply the standard. Accordingly, it is not hard to understand why someone could lose sight of the bigger picture. As I will mention again later, the idea is for there to be an appropriate amount of implementation guidance to help in applying the objective, but not so much additional guidance that the objective gets lost.
*Study Pursuant to Section 108(d) of the Sarbanes-Oxley Act of 2002 on the Adoption by the United States Financial Reporting System of a Principles-Based Accounting System, released July 25, 2003.