By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter and CCH Derivatives Regulation Law Reporter.
SEC accounting staff have proposed a new framework for the gradual implementation of IFRS into the US financial reporting system that blends the existing convergence and endorsement approaches into what the staff calls ``condorsement.’’ The transition to IFRS under the framework would occur on a staggered basis over a number of years and be coordinated with the ongoing standard-setting activities of the IASB. This approach would avoid the costs of a “big-bang” in which U.S. issuers would have to incorporate the entire body of IFRS all at once. It would also limit the occasions in which U.S. issuers would be required to make two accounting changes in relatively quick succession, potentially causing confusion for investors and possibly causing U.S. issuers to incur incremental costs in making major systems changes and retraining personnel twice instead of once. The framework envisions a new role for FASB under which FASB would participate in the process for developing IFRS, rather than serving as the principal body responsible for developing new accounting standards or modifying existing standards under U.S. GAAP.