Should Accounting Standards Be Rule-Based Or Principle Based

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The standards for financial reporting are designed for corporation with global business matters in order to understand and compare the global business needs. These are the rules to be followed by worldwide accountants to maintain books of financial records. In the world of business it is called international financial reporting standards. The debate has been going throughout the last fifty years on whether accounting standards should be rules –based or principle based (Zeff, 2003). The question is whether historical cost accounting or fair value must be used is questioned and for the instant, as Zeff (2007) opinion, fair value is becoming more prominent in the standards of the International Accounting Standards Board (IASB) as well as in the standards of its U.S. counterpart, the Financial Accounting Standards Board (FASB). This shows that the universal financial reporting comparability is developing, as Zeff (2007) further argues.
After the IAS regulation of 2002 went into influence, approximately 800 registered companies in the European Union are started to get ready their consolidated financial statements with the help of using
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Since Benston et al, (2006) emphasized that we are experienced the failure of fair value accounting and rules based standards from significant point of interpretation. I will agree with this sentence that fair value of accounting perhaps provide a more precise reflection the true value of an enterprise. However, one should think that a financial statement is not might to display to its users the certainty, only a picture of reality (Benston et al., 2006). On the other hand principals-based standards particularly they impair comparability that’s why needs of too many rules. Moreover the practical differences b/w principles-based and rule-based standards do not look to be as big as the differences might be

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