Risk & Compliance

Principles vs. Practices

A new study says CFOs think financial statements are too complex for the average investor.
Scott LeibsJune 1, 2008

Rules seem onerous until you contemplate life without them. That seems to be one message uncovered in a survey of more than 200 CFOs and senior comptrollers recently conducted by accounting firm Grant Thornton. Asked whether today’s financial statements are too complex for the average investor, a solid majority said yes. A slim majority thought that principles-based standards that allow for professional judgment (that is, international financial reporting standards, or IFRS) would be superior to the current system of rules-based standards that offer plenty of detailed guidance (U.S. generally accepted accounting principles, or GAAP). But few companies have experience in preparing financial statements based on IFRS, and only a quarter agree with the Securities and Exchange Commission’s decision to allow foreign companies listed on U.S. exchanges to file statements in IFRS with no reconciliation to U.S. GAAP.

CFOs' thoughts on whether financial statements are too complex