There is a fundamental difficulty with accounting in general that is a particular problem in financial reporting. While the outside world's perception is that it is an exact science, anyone in accounting knows that this is far from the truth.

This mismatch in perception increasingly makes financial reporting fraught. Judgment is at the heart of accounting. And judgment can only thrive in a system based on principles. If you try to apply specific rules, all that happens is lawyers become even richer and the figures become less trustworthy.