The SEC hosted a Roundtable on IFRS July 7.   I turned on the archived webcast in the background as I worked through my email stack.  The discussions seemed similar to a roundtable the FASB held near the end of my term as Fellow.  But I did catch a few new words.

Condorsement – Jeremy posted about this word in February.  The SEC released a staff paper in May 2011 exploring one route to incorporating IFRS into US GAAP.  The route starts with “convergence” in which the FASB works with the IASB to resolve the big MOU issues plus one or two other big gaps in GAAP.  Once that work is substantially complete, the FASB starts going through IFRS 1 by 1 and “endorsing” them as US GAAP.  At the end of that process, hopefully US GAAP and IFRS are the same, and from that point on, FASB continues to endorse updates to IFRS.

My observations: condorsement alleviates one of the big problems mentioned by small business panelists – they allegedly do not have sufficient accounting talent for a “big bang” where their company would shift from US GAAP to the entire slate of IFRS at once, and they are concerned that if big and small companies jump at the same time, consulting services will be scarce and very expensive.  With condorsement, in any given year, the accounting staff only has to deal a few changes in standards.  The problem is these less extensive annual changes might go on for years.  Some of the panelists labeled this as death by a thousand cuts vs one clean deep cut from adopting the whole slate of IFRS all at once.

Another issue is what criteria would FASB use in deciding to endorse IFRS?  Leslie Seidman asked several times what basis the Board would have for saying yes (and especially for saying no) to a particular standard.  I did not hear any substantive answers to her question.  I am afraid that condorsement might be another way of saying “let’s put off the tough decisions until later.”  That really seems to work well with the debt ceiling…

Carve-in – I have heard of “carve out”.  The most famous one occurred when the EU made some paragraphs in the IASB’s standard on financial instruments optional for EU companies.  Many people are worried that other countries, including the US, might carve out parts of IFRS that a large vocal local constituency finds objectionable.  But “carve in”?

Later, one of the users explained by way of example.  Currently, US GAAP requires oil and gas companies to provide disclosure of a standardized measure of proven reserves.  My understanding is that IFRS does not.  The US financial statement users REALLY like those disclosures, and they want to make sure that such disclosures survive if we move to IFRS.  Thus, they asked the SEC to enhance IFRS by adding (or carving in) the oil and gas disclosures.