The authors support the rules based approach to standard setting as they facilitate the process of comparison of financial information across companies and sectors. They also extend the case that the use of principles based approach to financial reporting help to increase the relevance of the financial information that is reported. This is because managers are aware of the ground reality of the transaction and are better equipped to determine its accounting treatment than the set of standard rules. However, as was pointed put by Beechy (2005), managers may be biased in the application of judgment which may lead to mis-representation of the financial information. This stresses for the need of stricter rules that prevent the scope for manipulation and window dressing.
The authors also highlight that rules based standards help to increase the enforceability of financial reporting standards as there is less scope of ambiguity. They also increase the objectivity of financial reporting information as they reduce the scope for subjective analysis of the implementation of accounting standards. Thus the authors conclude that the accounting systems must be based on high level principles from which concrete accounting rules should be derived so as to benefit from the advantages of both the approaches.