At issue herein is the question of whether the accounting profession should have rules-based or principle-based standards that function to provide both normative guidance and regulatory oversight for members of the field. Nobes (2005) noted that in September 2002, the Financial Accounting Standards Board (FASB) sought input into this issue, stating that the International Accounting Standards Board (IASB) required a principles-based approach whereas under the aegis of the Sarbanes-Oxley Act of 2002, rules-based accounting standards predominate. Interestingly, the question itself may be moot in that Benston, Bromwich, and Wagenhofer (2006) state that rules-based accounting standards are, for the most part, derived from a set of principles that are meant to guide practice in this important field. Rules do not develop, according to Benston, et al (2006), in the absence of principles that are derived from ethics, values, and norms that transcend selfish interests.
Heffes (2004) commented that the United States was virtually alone in using rules-based accounting standards whereas the rest of the world conforms to the IASB principle-based standards. Heffes (2004) reported on a survey in which 80 percent of respondents drawn from public and private companies in the United States who rely on accountants called for the adoption of a principles-based approach to accounting standards. The principles-based approach is seen by many as increasing the likelihood that accounting practices will conform to ethical codes and standards. Rules-based standards, though largely derived from principles may have the capacity of increasing the accuracy by means of which standards setters communicate requirements, but they also may be written in such a way as to provide multiple opportunities for dubious accounting practices such as those in which companies like WorldCom and Enron engaged (Nobes, 2005). Sarbanes-Oxley did call for the investigation...