Essay: The advantages of the rule based approach

Sample Essay

The advantages of the rule based approach are outlined below.

• The standard issued using rule based approach is straight forward and presents specific rules to be followed by accountants.
• The standards set using the rules based approach are more useful in controlling manipulation of financial statements using several judgment based issues such as overvaluation and undervaluation of values.

• Fraud and misrepresentation of values can be controlled more effectively as valuation and disclosures follow specific rules and any failure in compliance can be detected with much ease.
• The bookkeepers and accountants do not have to apply rigorous efforts in valuation of assets, liabilities as methods, rates and approaches can be applied.

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