FASB response on principles-based accounting

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19 Jul 2004

The US Financial Accounting Standards Board has submitted a Response to July 2003 SEC Staff Report to Congress on a Principles-Based Accounting System (PDF 97k).

The 2003 SEC Report (PDF 495k) had been prepared pursuant to Section 108(d) of the Sarbanes-Oxley Act of 2002. The FASB response states that "the Board welcomes the SEC's study and agrees with the recommendations." A section of the FASB response (pages 10-11) relates to international convergence. The SEC staff report had made the following recommendations:
  • The FASB should issue objectives-oriented standards.
  • The FASB should address deficiencies in the conceptual framework.
  • The FASB should be the only organization setting authoritative accounting guidance in the United States.
  • The FASB should continue its convergence efforts.
  • The FASB should work to redefine the GAAP hierarchy.
  • The FASB should increase access to authoritative literature.
  • The FASB should perform a comprehensive review of its literature to identify standards that are more rules-based and adopt a transition plan to change those standards.

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