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The 1990 SORP has a different version: it simply states that the prudence concept should be applied.
The 1987 SORP stated that the prudence concept has to be modified because 'proper accounting practice within the legal framework' includes accounting that 'best commercial practice'would find imprudent.
The UITF concluded that such benefits are liabilities that should be recognised in financial statements in accordance with the accruals and prudence concepts of SSAP 2,Disclosure of Accounting Policies, and the Companies Act.
Safeguards such as the prudence concept and the matching concept have been swept away and historical cost accounting that recorded actual transactions (and could therefore be audited) has been replaced by "fair value" accounting, where you can make it up as you go along.
In other words, there may be a direct clash between the accruals and conservatism principles.
Conservatism principle: when choosing between two solutions, the one which has the less favorable outcome is the solution which should be chosen (see convention of conservatism)
CPR recognized that the write-down should be based on the conservatism principle which rules that the least favourable accounting alternative be shown in the shareholders' equity.
