ACCA Applied Knowledge · Business and Technology · Corporate codes of ethics
Which of the following is an advantage of a rules-based approach compared with a principles-based approach?
A rules-based approach gives clear, consistent standards that are easier to enforce and monitor, because breaches of specific requirements are easy to identify. Adaptability and the development of judgement are strengths of the principles-based approach, and rules can still contain loopholes.
- AIt adapts easily to new and unforeseen situations
- BIt develops employees' ethical judgement and sense of responsibility
- CIt gives clear, consistent standards that are easier to enforce and monitorCorrect
- DIt prevents any possibility of loopholes
Explanation
Specific rules are clear and consistent, making breaches easier to identify and discipline. Adaptability and developing judgement are advantages of principles-based approaches, and rules-based codes are in fact prone to loopholes.
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