Linking virtue to representational faithfulness in making judgments in a principles-based environment

This chapter explores the link between virtue and representational faithfulness in making judgments in a principles-based environment. The motivation for the chapter is the impending adoption of International Financial Reporting Standards (IFRS) in the United States and its principles-based approach to accounting. Even in a rules-based system, there are principles that provide a foundation for making decisions about the selection and implementation of accounting standards, financial statement presentation, estimates, and the sufficiency of evidence. A model is presented that reflects these judgments informed by virtue considerations that support substance over form decisions and a true and fair view. Implications for accounting education are discussed including the readiness of faculty to incorporate IFRS into the curriculum.