I sometimes wonder where the 32nd chapter of Alma would rank in a list of most iconic scriptures in the entire Book of Mormon. It comes up frequently in discussions, so I have plenty of times to revisit it. I think the reason for this is that it introduces a powerful image that — in every sense of the word — is planted within the mind…and sprouts. And so we start…with a single small seed.

single seed

The seed is a versatile image and metaphor because it is the start of everything: the start of every life; the start of every endeavor; the start of every idea. The start of every being and the start of every becoming. The 32nd chapter of Alma talks about the Word being a seed, and from there we learn just what we can expect from a single seed.

[Story 1]

The Word is a seed that we must take the chance to plant first, and which, hopefully, if we do plant it, will germinate, sprout and grow, enlarging our souls and enlightening our minds.

In my last post, commenter st1305 wrote that there cannot be faith in a false idea, because faith is not simply belief. Faith, instead, is the application of a belief that enlarges the soul and enlightens the mind, as Alma 32: 34 and 35 also describe. A false idea, he argued, would not enlarge the soul and enlighten the mind. What st1305 wrote was interesting:

This is true for all of the other principles that I apply in my life – chastity, honesty, integrity, temple work, missionary work and a host of other principles in my faith. I know they are true as I have applied them and I see the fruits and they are good.

I saw a distinction between the ideas that st1305 was raising, however. Principles like honesty, integrity and service differ from ones like temple work or tithing in that the former are universal and general, but the latter are specific and particular implementations as found within the church. In some cases, they are rules that at best seek to capture a more general principle.

The LDS church does not have any sort of exclusive claim on a principle like chastity, even if they do have claims to particular stipulations of the law ofchastity. But from here is the first question…what is it that enlarges our soul and enlightens our mind? The rule…or the principle?

I believe it is the principle. When we lose sight of the principles for rules, then our faith becomes Pharisaical. Hollow.

A dangerous new thought sprouted forth: wouldn’t we do best to focus on principles without relying so much on rules?

[/Story 1]

Any day now, America will (if the adoption date ever stops pushing back) migrate away from the Generally Accepted Accounting Principles (GAAP) that we have historically used to International Financial Reporting Standards (IFRS).

Supporters of IFRS argue that the change will increase comparability of financial statements — instead of comparing apples to oranges, we’ll all be comparing oranges. In addition, since IFRS is more principles-based, IFRS will not encourage abuse of the brightline rules that US GAAP has.

Let me try to explain the difference using a non-accounting example.

Speed Limit 40

[Story 2]

When we drive, we operate under a basic principle: we want our driving experience to be safe. To satisfy this principle, we develop certain rules, such as the speed limit.

US GAAP sets clear and easy-to-understand (that is, “bright line”) speed limits with directly measurable values. A 40 mile per hour speed limit gives everyone a clear boundary — you can be ticketed for going over 40. Some cops may allow some higher speeds to slide, but if you get caught, the rules are clear.

Everyone is justified to go up to 40 mph, and can do so whenever possible with legal protection.

What could be bad about this? How could this possibly be abused? 40 miles per hour isn’t even that fast…

Let’s say that the speed limit is the ultimate rule for speed and you are driving in terrible weather. In this case, couldn’t you see how a simple, clear-cut rule could backfire and fail to establish our principle (and principal) goal of maintaining safety?

…Yet, creating exceptions for every occurrence would just create a tremendous driver’s manual (not to mention street signs!) In the case of accounting scandals, it wouldn’t even work to prevent frauds before they are perpetuated. New rules always are a step behind the crooks.

So what if instead we had no bright line speed limit numbers, but instead we were given the principle, “Drive safely given the environment”? This extreme case highlights the allure of IFRS.

Drivers wouldn’t have a rule to which they could hug close. However, rule enforcers also wouldn’t have a rule to which they could hug close. If a police officer disagreed with you on the optimally safe speed, you would have no bright line precedent of speed limit to back up your case.

In accounting, we have a bit of a different issue. Normally, in a court, you don’t easily win against a police officer. However, in a court, groups can win against the auditor. Additionally, auditors are hired by the firms they audit, so they have (at least) two incentives: 1) to make sure their clients stay in business and 2) to make decisions that are less likely to be challenged in courts. With clear-cut rules, the audit firm can at least defend its decisions both to clients and juries by saying, “We play according to the rules.” But without clear-cut rules, the courts do not have clear-cut rules with which to crucify (or protect), and auditors do not have the mechanism to challenge more fiscally aggressive clients.

So the big push against principles-based accounting is that it too does not prevent against fraud but instead gives ne’er-do-well executives even greaterflexibility to report financial information aggressively. Ne’er-do-well execs can argue that really, 80 miles per hour is always safe, no matter the road conditions. In addition, supporters of GAAP note that the P in GAAP already is “principles,” and a balance of clear rules and principles (like the balance of speed limits with principles of safety in less-ideal conditions) is best.

[/Story 2]


When I thought about the audit and accounting example, I began to realize that the rules are valuable for inculcating the principles. Sure, sometimes they can be abused (our rules-based accounting did not prevent Enron, and in the aftermath, some research has suggested that technically, no violations of GAAP or auditing standards took place. Enron simply worked creatively and aggressively within the legal boundaries), but in this case we need to balance re-tweak rules for the sake of the principles, not eliminate one or the other.


The next thing I thought about, as a result of thinking about accounting standards, is the fact that there are many sets of accounting standards seeking after the same principles. What comparison can we make with seeds and the Word? You’ll have to stay tuned for next week’s entry!