FASB response on principles-based accounting
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.