It has been over ten months since the Securities and Exchange Commission (SEC) released its IFRS work plan. Since then, we received a progress report in October. The SEC is taking a well-advised, methodical approach to making its decision on IFRS in the U.S.
Generally speaking, the debate over IFRS in the U.S. has been whether or not the SEC should permit or require a switch to IFRS for U.S. public companies. At the AICPA’s National Conference on Current SEC and PCAOB Developments in December, SEC Deputy Chief Accountant Paul Beswick offered another approach – which he called “condorsement.”
Mr. Beswick explained that under this approach, U.S. Generally Accepted Accounting Principles (U.S. GAAP) would continue to exist. The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) would work to finish their joint converge projects. After completing their joint projects, FASB would work to converge U.S. GAAP to IFRS over a period of time for standards that are not on the IASB’s work plan.
At the same time, FASB would have a process to consider new standards issued by the IASB for incorporation into U.S. GAAP. The new standards could be incorporated into U.S. GAAP with or without U.S. modifications.
The condorsement approach would allow FASB to retain control over U.S. GAAP. It would also mitigate the effort associated with a full scale, mandated switch to IFRS.
The SEC in its October progress report stated that most jurisdictions follow either a convergence or endorsement approach to incorporating IFRS. The report noted that only a small minority of the largest jurisdictions use IFRS as issued by the IASB with no mechanism for making changes to the standards. Condorsement is a new term injected into the IFRS debate. It will be interesting to see how much traction it gains over the coming months.
What do you think you think about the “condorsement” idea?