Executives who use accounting-motivated transactions to prop up financial results are among the obstacles to a principles-based approach, says Robert Herz, the board's chairman.
The Financial Accounting Standards Board is conceding that its push for a principles-based accounting system could run smack into some powerfully entrenched interests.
FASB laid out the challenges it faces in a February 16 reply to a Securities and Exchange Commission report on improving the transparency of off-balance-sheet arrangements, which was issued eight months ago. Largely agreeing with the SEC, the board threw down the gauntlet against complexity, essentially calling for the U.S. accounting industry to move away from its traditional rules-based model to a more principles-based system.
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