Question

Explain the principles-based approach used by the IASB in setting accounting standard

Answer 1

There are basically two approached used by IASB in setting accounting standards: Rule based and principle based. Rule based approach focuses on the rules and conceptual frameworks for the purpsoe of setting standards. However, with the princile based approach also conceptual framework is used, but is broader in sense and include adoption on the lines of exceptions to the principles. Under this, there are fewer specifications and lessor rules because exceptions and interpretive and implementation guidance are largely demand-driven (https://www.fasb.org/project/principles-based_approach.shtml)