Auditing Cases 6th Edition by Mark Beasley,Frank Buckless,Steven Glover,Douglas Prawitt

Exercise 4

Explain how "rule-based" accounting standards differ from "principle-based" standards. How might fundamentally changing accounting standards from "bright-line" rules to principle-based standards help prevent another Enron-like fiasco in the future Some argue that the trend toward adoption of international accounting standards represents a move toward more "principle- based" standards. Are there dangers in removing "bright-line" rules What difficulties might be associated with such a change