Monday, February 12, 2007

Accounting "Principles vs. Rules and Fair vs. Unfair Values"

Wonder of wonders -- I've heard a humorous presentation about accounting!

The topic was "Principles vs. Rules and Fair vs. Unfair Values," delivered by Professor G. Peter Wilson of Boston College to the Boston Security Analysts Society on Feb. 8, 2007.

I was struck by Wilson's conclusion that "we'll have more new [accounting] principles and five times as many new [accounting] rules five years from now."

Wilson believes that accounting requires both principles and rules in a well-arranged hierarchy from broad principles down to more specific rules. "You often need rules to help you follow principles," he said. However, "the most effective control is people wanting to do right."

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