This column is the third in our series on why we think the Financial Accounting Standards Board is mistaken in its exposure draft on the hierarchy of accounting principles. For those who may have missed it, the draft proposes doing away with the clause in Rule 203 of the American Institute of CPAs' Code of Conduct that is intended to force financial statement preparers and auditors to consider whether they're producing financial statements that are misleading, even though they comply with generally accepted accounting principles.

Our first column described the existing clause as an essential avenue for progress. Importantly, we challenged the board members' presumptuous premise that they, and they alone, have the insight to know the best accounting now and forever. We also questioned FASB's ability to produce innovative and timely standards in response to new situations.

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