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'Big-6' joint paper on principles-based accounting standards

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15 Jan 2008

The six largest global accounting networks, including Deloitte Touche Tohmatsu, have jointly published a paper on Principles-Based Accounting Standards.

The paper was launched to coincide with a global public policy symposium in New York, hosted by the firms. The paper, which sets out six key criteria for principles based standards, was debated in a panel that included IASB Chairman Sir David Tweedie and FASB Chairman Robert Herz at the symposium. The six attributes proposed for principles based standards are:
  1. Faithful presentation of economic reality
  2. Responsive to users' needs for clarity and transparency
  3. Consistency with a clear Conceptual Framework
  4. Based on an appropriately defined scope that addresses a broad area of accounting
  5. Written in clear, concise, and plain language
  6. Allows for the use of reasonable judgment
Click to Download the Paper (PDF 607k). In releasing the paper, the CEOs of the six global accounting networks said:

Over the past several years, a growing dialogue has developed about the future of financial reporting and the public company audit profession. In order to advance that dialogue, during the past year, we have engaged in discussions with stakeholders around the world on a number of issues critical to the longterm strength and stability of global capital markets.

In these talks, we have been struck by the breadth of support for International Financial Reporting Standards (IFRSs) as a single set of high-quality, accounting standards that ultimately can be used around the world. Stakeholders indicated their support for IFRS in part because it is more principles-based than US GAAP. There was, however, a lack of consensus on the key characteristics of principles-based standards.

 

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