The move to international accounting standards will pick up more steam this week. As mentioned last week, the SEC will vote on Thursday as to whether foreign registrants will be permitted to ditch the IFRS-to-GAAP reconciliation in their SEC filings. The guess here is that they'll go for for it: gone for good, effective with 2007 filings.

As I said in my comment letter , convergence is not a bad idea at all. It's just a question of execution. There are many, many differences to be worked out, and not just in the standards. There are differences in the way the standards are developed, the independence of the standard setters, and the auditing and enforcement mechanisms. Getting to convergence is a monolithic task, and the reconciliation has been a good lever for keeping pressure on the standard setters on both sides of the Atlantic.

On Thursday, I believe the lever will be shattered. From there, it gets worse: on to the SEC's Concept Release proposal for US firms to be allowed to have a choice of reporting in IFRS or US GAAP. The FASB's Investors Technical Advisory Committee drafted a letter that pretty much captures my concerns about the idea. (I didn't write a separate one.)

The Financial Accounting Foundation and the FASB jointly responded to the concept release, and they pretty much threw their weight behind the SEC's proposal. The sharpest point they made related to the dropping of the reconciliation; they recognize that this is the only push needed to get the IFRS snowball rolling down the hill:

"... The removal of the requirement that foreign private issuers reconcile their reported results to U.S. GAAP is a difficult and sensitive issue that could have important implications for the continued development of a truly international financial reporting system. We suggest the timing of any removal of this requirement should coincide with the following:

• Development of and commitment to the blueprint by key parties in the U.S.; and

• Commitment by key international parties to undertake the steps necessary to strengthen and sustain the IASB as the independent body responsible for establishing high-quality international standards.

We strongly agree with the SEC that the reconciliation requirement would be removed only for companies applying IFRS as adopted by the IASB.

Good point, but one made too gently. Development of that blueprint can't be done overnight; it's an enormous task in itself, with plenty of buy-in needed from all parties and plenty of political elbow grease. It's doubtful that the SEC will want to wait long to waive the reconciliation.

The FAF/FASB letter outlined the steps needed to make the transition work, and their letter does a great job of making you realize just how big a task it will be - and how much confidence is at stake if it doesn't work. While they call for a detailed blueprint, containing real dates for milestone achievements, the existing standard setters seem vaguely unconcerned about their future involvement.

Indeed, they view their future role this way:

We believe that the blueprint should identify the future role(s) of the FASB after U.S. public companies transition to IFRS. Some of the alternatives are listed here.

• Like other jurisdictions, the U.S. might retain its standard-setting body to develop standards for private companies, not-for-profit entities, or other organizations that use U.S. GAAP but do not participate in the global capital market.

• The FASB might have a role in educating U.S. constituents in the application of IFRS or in identifying U.S. issues as candidates for IASB action.

• The IASB may see value in establishing regional affiliations to improve liaison with constituents outside Europe. The FASB might be able to fulfill that type of role.

That's a view pretty far down the food chain for the world's once-premier accounting standard setter to imagine itself. It's not a stretch to compare it to what happened to the AICPA once the FASB was designated as the sole standard-setting authority by the SEC, as authorized by the Sarbanes-Oxley Act. The AICPA, no longer able to set standards for US publicly-traded companies, flirted with setting standards for private companies. Looks like FASB is thinking about the same thing. And again, it's driven by the SEC's choices.