FASB invites comments on principles-based standards

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21 Oct 2002

The US Financial Accounting Standards Board has invited comment on a proposal for a principles-based approach to accounting standard setting.

The proposal discusses how that approach might improve the quality and transparency of financial reporting and affect development of future standards. Comments are requested by 3 January 2003. FASB has scheduled a roundtable discussion on the topic for 16 December 2002. The proposal can be downloaded at www.fasb.org. Here's their Press Release (PDF 13k). Referring indirectly to International Accounting Standards, FASB Chairman Robert H. Herz stated:

The FASB is committed to improving US financial accounting standards. Many believe that moving to broader, more principles-based accounting standards such as those used in other parts of the world would facilitate better reporting in the United States. Others, however, are concerned that a principles-based approach could reduce the comparability of financial information and leave too much room for judgment by companies and auditors.

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