One problem of a more principles-based system that was pointed out in an SEC study is that they:

Question

Quizplus · Accepted Answer

The SEC study points out that one problem of a more principles-based system is that it may present enforcement problems. This is because principles-based systems provide more flexibility and discretion to individuals or firms to interpret and apply the principles, which can make it difficult for regulators to enforce compliance consistently. While principles-based systems are generally objectives-oriented, they are not always rules-based and may use more flexible and subjective approaches such as professional judgment or expert opinion. Bright-line tests, on the other hand, are more specific and objective rules-based tests, which are not typically associated with principles-based systems.

One Problem of a More Principles-Based System That Was Pointed