Principles vs. rules

I finally finished my CPE course on IFRS, which wasn't nearly as painful as one might expect. As Joe Kristan put it: "We're tax! We don't need no stinkin' AA!" (For those new to public accounting, "AA" refers to Accounting & Auditing.)

As a tax practitioner, I could opt to renew my license under the non-attestation category. I take the AA courses because I want to keep the "full fledged" license as long as I can. I keep wrestling up 24 AA education hours every two years, since I figure the hard part's over, which was getting the field work hours for initial licensure.

Based on my limited AA education, I understand that IFRS is a principles-based framework, compared to the rules-based U.S. GAAP. This is an interesting experiment in human behavior, and I look forward to seeing how it unfolds. Can a system based on trust in people to use sound judgment and act ethically be successful? I hope so, though I admit to some skepticism.

I've said before that we cannot regulate human behavior, and so should not over-regulate society; and at the same time we still must have some semblance of law and order. The challenge, of course lies in finding where to land on the spectrum between trusting everyone do just do what's right and forcing them to.

Will we start to see a corresponding move in tax policy toward a system of principles rather than rules? I doubt it. And although I do like Joe Kristan's suggestion to simply pass a "happy fun times tax credit" for everything to be wonderful, I'm thinking the path to getting people to behave morally may be a little harder than that.

But maybe I'm just being difficult.