Ethical guidance may follow principles / rules based approach.

The essence of principles based approach to ethics :

1. Compliance with spirit of ethics

2. Accountants to exercise professional judgment in every situation - based upon their professional knowledge,  skill & expertise

Rules based approach to ethics :

1. Strictly follows clearly established rules

2. Lead to narrow outlook & spirit of ethics may be overlooked

3. Rigid - may not be possible to deal with every practical situation relying upon rules