Many believe without question that U.S. Generally Accepted Accounting Standards is rules-based while IFRS is principles-based. Let me bust that one right away. Both IFRS and U.S. GAAP are based on principles. Every piece of guidance in either set of standards is based on one or more principles. To suggest that significant pieces of U.S. GAAP are just rules with no underlying principles is an insult to the Financial Accounting Standards Board and the other groups that have contributed to U.S. GAAP over the years.
Along the same lines, I often hear that one of the difficulties in converging U.S. GAAP and IFRS is that Americans want rules while those outside the United States are willing and able to work with principles. The questions that various constituents have asked of IFRIC belie that thought. They have asked repeatedly for us to address very narrow topics, individual transactions, and unique circumstances. They have asked us to provide additional guidance where none should have been needed and to write specific guidance to root out bad practice.
In short, IFRS users request the same kind of detail and rules that U.S. GAAP users often request. Consider the myth about Americans wanting more rules than others busted as well.
Stopping there doesn’t give a complete picture, though, because while IASB and FASB constituents ask the same kinds of questions, responses have been quite different. U.S. standard setters have provided detailed guidance and rules frequently. While the intent of all those rules is to help ensure that the principles are followed, there are many examples where U.S. GAAP’s rules allow reporting that is inconsistent with the principles and many other areas where U.S. GAAP is so complicated that the principles are hard to follow for many accountants.
What is true is that IASB has resisted providing the level of detail that exists in the United States. Indeed, one of the most difficult tasks for IFRIC is to provide useful guidance without resorting to rules or overcomplicating the standards. IFRS is noticeably less complex than U.S. GAAP in part because of the direction IASB has taken (and directed IFRIC to take) on this point. So we’ll consider this part of the principles versus rules belief confirmed. Whether that makes IFRS better, worse, or simply different, is in the eye of the beholder.
Originally posted by SlayI liked it, content was great. Thought some of the actual prose was a bit shaky, and I found it hard to visualise some of the stuff he was describing. But it was good. Sadly, the copy I read was riddled with typos.
I'm reading Neuromancer. So far it's good. I can see why it's divisive though. Critics all seem to love it but I've read some negative opinions online and that.