FASB is doing just that, according to Herz. "We say no a lot," he says, noting that the board gets daily requests from companies and auditors asking for new rules or exceptions to existing ones. One strong example of FASB's new just-say-no policy is its refusal to give specific guidance on ownership percentages of variable-interest entities under FIN 46, which concerns the consolidation of off-balance-sheet transactions.
Overall, the shift to principles-based accounting is a behavioral issue, according to Bill Bosco, a member of the Equipment Leasing Association's financial accounting committee. Bosco contends that the mindset of professionals preparing and using financial statements has to change before such a system is adopted. The focus, he argues, has to be on economic substance, rather than on "how to get around the rules."
Reader CommentsDisplaying 2 of 2
Kevin Ness
Mar 13, 2006 11:27 AM ET
Disclosure
I am a fan of disclosure in either a rules or principles based environment. However, under a principle based regime, … more
Gerald Hunt
Mar 9, 2006 2:55 AM ET
Principles Based Accounting
I agree with many comments made in the article, but it stops short of a call for accountability. I have been a licensed … more
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