In a report this past April to the Financial Stability Board, the FASB makes this statement about accounting convergence:

The FASB believes that the ultimate goal of convergence is a single set of high-quality, international accounting standards that companies worldwide would use for both domestic and cross-border financial reporting.

The statement is explicit that the goal of convergence is not to adopt standards that get closer to each other, but to actually converge upon one set of standards that will be used worldwide.  There is enough evidence to conclude that this stated goal is not realistic, and I doubt that it is anything more than just words at this point.

In the past weeks, the FASB and IASB have made public comments admitting that they do not expect to have a converged standard for insurance, despite the fact that insurance is one of their priority joint projects (although not an MoU project) that they’ve been working on for nearly four years now.

In a post here, I reported that the Boards failed to converge on an apparent slam-dunk topic, that of netting derivative positions.  At the end, both Boards decided to retain their respective positions and merely increase disclosures so that users could understand the effects of the different models.  If we can’t converge on the netting of derivative positions, what can we realistically expect to accomplish going forward?

With respect to the eleven priority projects set forth in the 2008 MoU, only one has been completely converged: fair value measurement.  Significant convergence was accomplished for business combinations.  Some (i.e., very little) progress was made via increased disclosures for derecognition and consolidated financial statements.  That’s about it so far, and we’re way past the “goal” set forth in the MoU of completing these projects by June 2011.  With respect to post-employment benefits, financial statement presentation, financial instruments with characteristics of equity, and intangible assets, the projects were essentially dropped with nothing significant accomplished.  Finally, among the still active projects, revenue recognition looks promising.  The prospects of getting a converged lease standard have improved after the IASB agreed last week to accept a two-model approach.  But, there are significant doubts as to whether a converged statement on financial instruments will be accomplished.

Overall, the amount of convergence on “priority” projects is not good.  What does this say about the prospects of achieving the convergence goal as stated?

The SEC has said that they are a few months away from producing a final report that would position the commission to make a decision on IFRS (that announcement was made more than a couple of months ago).  How long it will take for the SEC to make a decision after the report is issued is impossible to tell.  I confess that my opinion about any form of IFRS support in the U.S. has shifted over the past year.  I used to have an open mind about the prospects of IFRS, although skeptical about the ultimate benefits.  But I no longer believe that it’s even practical to expect any form of IFRS adoption without significant modifications that would result in a very different “U.S. version of IFRS.”  How is this any different from what we currently have?  Some people might be OK with that result as it’s consistent with other national versions.  But, I would question why bother since the benefits of “one set of standards” would be mostly lost with potential reductions in information quality.  Competition among standard setters to produce the best set of standards is sounding more like the best idea to me.