IFRS tends to be more principles-based compared to GAAP which is viewed as more

Question

IFRS tends to be more principles-based compared to GAAP which is viewed as more rules-based. Which of the following is a true statement about a principles-based system?

A principles-based system depends heavily on control procedures to reduce the potential for fraud or misconduct. A principles-based system is a way to calculate interest receivable or payable. A principles-based system will eliminate all fraud. A principles-based system eliminates the need for internal controls. A principles-based system is significantly weaker than a rules-based system.

Explanation / Answer

A principles-based system depends heavily on control procedures to reduce the potential for fraud or misconduct.

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