1.5 Arguments against accounting regulation

Question 1

How might rigid accounting regulation be detrimental in the long term?

Answer 1

One set of standards is not necessarily applicable to all countries, and cannot account for political/economic/cultural climates.

Question 2

Why is it problematic to apply cross-industry accounting standards?

Answer 2

Different industries often require a different approach. For example, during inventorying.

Question 3

Why do some professions feel that standards are too rigid?

Answer 3

Standards remove the need to exercise judgement.

Question 4

In what way might accounting standardisation give the “illusion of precision”?

Answer 4

By giving the impression that no subjective decisions need to be made, when in reality, this is often the case.

Question 5

What is the major criticism of accounting regulation with regards to the number of standards?

Answer 5

There are simply too many standards.