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“The IASB has a clear objective to set standards that are based on principles and that do not seek to provide detailed answers for every accounting problem although some make well articulated and seasonal arguments for the standards being much too prescriptive producing a kind of hybrid of principles and detail”, he said. “If we stick with the notion of principles as the standards are intended for global application, it would be impossible for them to deal with that level of detail.”
“Principles based standards rely on the experience and judgement of preparers, auditors and users to be able to apply them to their circumstances, and the pace and scope of the move to IASs in Europe means that experience is very limited.
“There is a real danger that local markets, industries, and individual companies will develop application guidance or individual interpretations of standards that will not be consistent, and that will mean that we will lose the opportunity to have truly comparable accounting across the Union.
“Convergence of accounting between the three major capital markets of the world is clearly heading in the right direction. I would urge that the convergence agenda be premised on the basis of a principled-based approach.