The rest of the world may be coming apart at the seams, but rest easy, U.S. and global accounting standards continue their march toward convergence.

That was the message earlier today at Financial Executives International's annual conference on financial reporting issues, where Leslie Seidman (chairman of the Financial Accounting Standards Board) and Ian Mackintosh (vice-chair of the International Accounting Standards Board) took to the stage to outline their latest thinking on various changes coming to financial reporting. Seidman and Mackintosh covered an impressive amount of territory in 75 minutes, from revenue recognition to leasing to a broad overhaul of financial statements.

Nowhere in that time, however, did either of them (nor any of the audience) question the more fundamental question of whether we should converge U.S. Generally Accepted Accounting Principles and International Financial Reporting Standards. That train has left the station, folks.

I've had my suspicions for several weeks, since Seidman announced that she favors the “condorsement” approach of FASB revising one standard at a time, moving all of U.S. GAAP towards IFRS in small increments. Rather than set some specific date for a single, sweeping adoption of IFRS in the United States—which would be A Big Deal, and require the blessing of the Securities and Exchange Commission—FASB would convert GAAP into IFRS over time.

Cynics say that condorsement neatly allows the SEC to adopt IFRS without actually adopting IFRS; the Commission simply farms out the job to FASB, which can slow-walk the U.S. financial reporting community away from U.S. GAAP and toward IFRS by 2016 or so. That spares the SEC a nasty political fight, since legions of U.S. companies without much international presence have no real need to migrate to IFRS. It also spares the SEC manpower and budget resources to handle its many other obligations, such as issuing rules to implement the Dodd-Frank Act and evading criticism from Congress. The SEC is woefully behind on both of these tasks as it is.

Indeed, astute observers of SEC evasion about IFRS will remember that Chairman Mary Schapiro has vowed numerous times to reach a final decision on IFRS adoption this year. Originally the SEC promised a decision by June 2011. Then Schapiro dropped the “June” detail and promised a decision in 2011. Now 2011 has six weeks left, and I see no upcoming meetings scheduled to discuss IFRS, and no recent speeches from any of the commissioners on the subject. At the FEI conference today, Mackintosh called the SEC decision “the elephant in the room ... that we're all waiting for with bated breath.”

Let's channel George Orwell here and just shoot the elephant: Sometime soon the SEC will hold a quick meeting to throw its support behind condorsement, and be done with it. Everyone knows that, so it would be mighty nice if the SEC simply admitted it.

For the record, I do support the condorsement approach. IFRS isn't as robust or proven as GAAP, and adopting it wholesale will (a) cost most companies a fortune; (b) help none but the largest of U.S. businesses with globalized operations; and (c) inject more uncertainty into financial statements for a prolonged period, which doesn't much help the investors who actually own companies and read financial statements. For all of GAAP's complexity, it does spell out details more clearly than IFRS.

That said, the world does need to adopt one global, uniform set of accounting standards. We need a solution that falls somewhere between GAAP and IFRS, and that's what condorsement aims to achieve. It also aims to achieve that by putting the process in the hands of accounting rulemakers and financial reporting executives, which is a mile better than putting it in the hands of an overburdened SEC or, worse, Congress. People pay much less attention to FASB than to the SEC or Congress, and in this particular instance, that's a good thing.

In Other News

True to their convergence words, Seidman and Mackintosh also announced the new exposure draft of a joint standard on revenue recognition, "and I'm happy to say it's completely converged," Seidman said. She did stress that only the standard itself is converged; some elements do refer to other standards in accounting literature (receivables, for example) that still are not converged. Mackintosh stressed that the exposure draft will be open to public comment for four months, and comments are welcome on any part of the entire proposal. FASB will host a webcast to cover the major elements of the exposure draft sometime within the next week.

Mackintosh warned that re-exposing drafts won't happen all the time. Revenue recognition is enormously important to businesses, so re-exposure makes sense there, he said. Likewise, the forthcoming new standard for leasing will see a full exposure draft arrive sometime in early spring. But don't expect re-invention of the wheel for every single standard out there as the boards march toward convergence.

Seidman also said that financial reporting executives can expect a decision on disclosure of loss contingencies (read: money you're saving to settle lawsuits) within the next few months. FASB has already been chatting with SEC staff about whether the problem is a poor accounting standard, or simply poor compliance with existing standards. I presume that means they are poring over financial statements from this year and comparing them to prior years' disclosures, and will reach a conclusion after that.

And the revised COSO framework for integrated controls? Should be out within a matter of weeks. One of my spies had previously told me that the exposure draft of the new framework would be published by now, but apparently getting all five member organizations of COSO to agree on every detail is taking longer than expected. Still, my spy says, "We'll definitely have this out before Christmas."