Rather than creating new rules, forming the new Public Company Oversight Board established by Sarbanes-Oxley may provide a better approach and help to refocus public accountants on core principles and away from more aggressive and misleading practices. Given human nature and the complexity of many accounting issues, we must expect that rules will sometimes be broken or misapplied.
But a new, authoritative oversight board--combined with more-rigorous reviews by corporate boards--should be able to discourage and address severe abuses. For its part, the Federal Reserve is also willing to challenge accounting interpretations that it sees as too aggressive.