ICAS General News

Principles-Based Financial Reporting Standards - Time for the Next Step Says ICAS

The world’s six largest accounting firms meet today in New York , to agree that company accounts can only become clearer by using principles-based reporting standards. At the Global Public Policy Symposium (GPPS), the heads of PwC, Deloitte, Ernst & Young, KPMG, BDO International and Grant Thornton will endorse the position that principles-based standards encourage the use of professional judgement, as opposed to relying on compliance with an accounting rulebook.

The case for principles-based standards to be used globally was the subject of the influential ICAS research report, ‘Principles not Rules – A question of judgement’, published in 2006. The research has been discussed at ICAS conferences by leading members of the profession and standard setters in London , New York and Brussels.

In particular, ICAS welcomes the emphasis in the GPPS white paper that a principles-based system must result in financial reporting that reflects the economic reality of transactions and the business as a whole.

ICAS President, Isobel Sharp, said, “The GPPS paper is an excellent document – it reiterates the key issues which ICAS raised in its 2006 publication, and highlights the key changes which are now needed to move to a more principles based accounting framework.  It is right to focus on the faithful presentation of economic reality - the “true and fair view”, and on being responsive to users’ needs for clarity and transparency, in seeking to improve global financial reporting.”