Which of the following is critical to principles-based standards?
A)May lose comparability because of management and auditor discretion in the application of the principles
B)Provide greater difficulty in seeking remedies against "bad actors" through either enforcement or litigation
C)Cause concerns to preparers and auditors that regulatory agencies might not accept good faith judgments
D)All of the above

Question

Quizplus · Accepted Answer

All three options are critical to principles-based standards. The flexibility of the principles-based approach allows for more management and auditor discretion, which may lead to a loss of comparability. Additionally, enforcing principles-based standards can be more challenging due to the subjective nature of the approach, and there may be concerns among preparers and auditors regarding whether regulatory agencies will accept their good faith judgments.

Which of the Following Is Critical to Principles-Based Standards