The U.S. accounting profession follows Generally Accepted Accounting Practices, or GAAP, which is administered by the Financial Accounting Standards Board (FASB). Most of the rest of the world follows the International Financial Reporting System (IFRS). Although there is a lot of overlap in the two, the primary difference is that GAAP is rules based, while IFRS is principle based. So while it is easier to figure out how to apply GAAP, it is also easier to game the system. For example, some observers note that the Enron fraud was enabled under GAAP, but would not have passed muster under IFRS.
So the US has been considering and debating and generally moving in the direction of IFRS. A joint committee has been working for almost a decade on bringing the two systems together.
Now we can introduce another player - the Securities and Exchange Commission, which controls accounting for public companies in the US. Ten months ago, the SEC issued a "workplan" to guide its determination of "whether, when and how" US accounting should be transitioned from GAAP to IFRS. For how, the workplan is looking at convergence and different levels of endorsement. According to the SEC, the difference is whether it will require or permit IFRS for US public companies.
Now SEC Deputy Chief Accountant Paul Beswick has injected a new word into the discussion -- "condorsement". The word doesn't exist outside of Mr. Beswick's presentation, so what is "condorsement"?
Under condorsement, FASB continues to administer GAAP. GAAP is amended to include the joint projects already underway for GAAP and IFRS. When this is completed, GAAP is amended over a number of years for IFRS policies that were not included in the original amendments. Finally, FASB would consider newly created IFRS standards for inclusion in GAAP.
Under condorsement, the US keeps GAAP, which means the US keeps control of accounting standards in the US. But over time, the goal is to pick and choose parts of IFRS to be included in GAAP,either as originally written or in an amended form. In other words, U.S. accounting standards are changed from a rules based game to a cherry picked "mish mosh" of GAAP and IFRS.