The staff of the Securities and Exchange Commission has published a 26-page idea for how the United States might think about adopting international accounting standards, giving preparers and auditors some light reading to fill the long holiday weekend.

The SEC published the promised white paper outlining a vision – not even a proposal, but a possible path to explore – for incorporation of International Financial Reporting Standards into the U.S. financial reporting system. The paper describes the “condorsement” concept that Deputy Chief Accountant Paul Beswick pondered aloud in a December speech to an accounting conference.

Beswick's “condorsement” idea would infuse IFRS into U.S. Generally Accepted Accounting Principles by endorsing international standards one at a time while also continuing to converge them to GAAP. The Financial Accounting Standards Board would follow some established endorsement protocol for folding newly issued or amended international standards into GAAP, while also having the authority to modify or supplement them as the boards deems necessary. That would lead to a more gradual transition to IFRS with differences between IFRS and GAAP eliminated over time through further U.S. standard-setting.

SEC staff emphasize it's one possible idea, but not the only idea, for how to cut over to IFRS. Publishing the paper doesn't mean the SEC is considering the “condorsement method” more favorably than others, or even that the SEC is committed yet to switching over to IFRS at all. Other ideas include a full adoption of IFRS on a specific date, a full adoption of IFRS following some transition over several years, or an optional adoption for U.S. companies that see benefit in applying IFRS.

The paper is not meant to sell the “condorsement” approach, the staff said, but to illustrate a possible method that's not as easily understood. It's also meant to demonstrate that the SEC has plenty of options for how a switch to IFRS could be achieved and that the SEC is trying to think through issues such as cost, effort, and other obstacles to a transition.

Along with a possible framework for how “condorsement” might work, the paper describes the methods of adoption that other countries have followed, the role FASB would have under such an approach, and possible benefits and risks. It also asks for feedback by July 31 to help the staff further develop its thinking on the approach.