The SEC has said it would like to make a decision on IFRS this year. Most people assume that it will embrace the international standard, but the questions are when and how.

The "how" aspects have been thrust back into the spotlight by the release of a new SEC paper that discusses a possible adoption path known as "condorsement." This option was discussed by a staffer back in December at an AICPA conference, which generated a lot of interest. It also generated many questions, which gave way to the paper. The idea is to incorporate IFRS into the U.S. GAAP by using the FASB to set standards that would essentially merge the two.

The framework would retain FASB as a standard setter, albeit in a slightly different sense, and would facilitate the transition process by incorporating IFRSs into GAAP over five to seven years. At the end of this period, compliance with U.S. GAAP would by default result in compliance with IFRS as issued by the IASB. This would achieve the stated goals of IFRS, preserve the role of the SEC and the FASB, provide flexibility and clarity for issuers during the transition and potentially achieve the ultimate goal--providing greater investor protection.

By issuing this paper, it does seem like the SEC is signaling that it is quite serious about this option. Should we now call it the most likely approach? It certainly makes a lot of sense, as long as companies that want to adopt IFRS earlier are able to somehow do so, which seems to be what they are essentially doing now.

For more:
- here's the paper

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