James Schnurr, the recently appointed chief accountant at the Securities and Exchange Commission, had an intriguing suggestion recently: why not allow U.S. companies to use International Financial Reporting Standards on a voluntary basis as a supplement to their U.S. GAAP financial statements?

Speaking at the American Institute of CPAs' Conference on Current SEC and PCAOB Developments last month, Schnurr cited that approach as one possible way to move forward on the long-awaited decision by the SEC on what to do about IFRS (see SEC Considers Supplemental Use of IFRS by U.S. Companies). Back in 2008, then-SEC chairman Christopher Cox proposed a roadmap for incorporating IFRS into U.S. GAAP, as the Financial Accounting Standards Board in the U.S. and the International Accounting Standards Board appeared to be making progress on converging IFRS with U.S. GAAP to harmonize the two sets of standards. But in recent years, that effort appears to have run out of steam, even though the two boards are still working together on finalizing some of their remaining projects.

Schnurr's predecessor as head of the SEC's Office of Chief Accountant, Paul Beswick, had suggested another approach, which he called “condorsement,” a portmanteau word combining convergence and endorsement. Under that process, FASB and the SEC would endorse IFRS standards one at a time as a way of incorporating them into U.S. GAAP, giving U.S. standard-setters and regulators a way to accept or reject them without committing themselves to wholesale adoption of IFRS.

Schnurr succeeded Beswick last August, and at the conference last month, he acknowledged the endorsement model might still represent a viable approach. But he also floated the possibility of allowing U.S. public companies to make partial use of IFRS in addition to filing their financial statements with the SEC in U.S. GAAP.

“A U.S. or domestic issuer would voluntarily be allowed to supply IFRS financial information,” he said. “My thinking around this is we’re not suggesting that if they take this path they would be required to file a complete set of IFRS financial statements.”

He suggested that the information could range anywhere from a full set of IFRS statements to selected financial measures such as revenues or net margin. One of the SEC commissioners who spoke at the same conference, Daniel Gallagher, appeared to be open to the idea as a way to see if investors want access to some IFRS information. “If we allow for the issuers to put out this information, we can see if people want it,” he said.

The Financial Accounting Standards Board also appeared to be guardedly open to the possibility, issuing a statement saying, “We believe that voluntarily providing IFRS information on a supplemental basis, subject to audit, SEC review and other regulatory scrutiny, could be an important tool in fostering further convergence of Generally Accepted Accounting Principles and IFRS.”

The following day, the vice-chair of the IASB, Ian Mackintosh,  said he was impressed by the proposal, but would need more details on how it might work, how many companies might be involved and whether it would be a good test for the market (see IASB and FASB Look Beyond Convergence). FASB chairman Russell Golden would only say that he looked forward to following the input that the SEC receives on the proposal.

However, it has been nearly a month since Schnurr made his remarks, and his office has yet to spell out exactly what the proposal would involve. While it may be prudent to leave it to the discretion of companies to decide what information they want to provide in IFRS, as a way to overcome objections to the possible extra work and costs involved, there probably should be at least some basic benchmark that the SEC should lay down to allow investors to make meaningful comparisons.

At the very least, it's time for the SEC's Office of the Chief Accountant to provide details on this possible approach, and compare it to the alternatives they explored in the detailed reports they issued in 2012 on the work plan for incorporating IFRS. Those documents have not been updated since a new SEC chair, Mary Jo White, and chief accountant Schnurr respectively took over in 2013 and 2014. A fresh look at what to do about IFRS is long overdue.