In an article that appeared on the University of Michigan Ross School of Business website, associate professor of accounting Cathy Shakespeare thinks the U.S. is on course to adopt a hybrid way of endorsing international accounting standards. Shakespeare notes the two main accounting boards on each side let pass the summer 2011 deadline for convergence and it’s not clear what U.S. Securities and Exchange Commissioner Mary Shapiro thinks about the matter.

“Standard-setting moves at the pace of a glacier,” says Shakespeare. But that’s to be expected, she notes. One cannot expect quick resolution of complex issues by both the FASB and the IASB – which sets the system used in Europe and other countries. “It’s slow because you want to get it right the first time. The last thing you want to do to companies is make them keep changing.”

The ultimate decision has implications for both multinationals and companies who only file in the United States. A merger of standards could aid multinational companies who have to track items differently in the United States and Europe. But it also would add cost and could create resentment on the part of purely domestic firms that don’t file abroad.

U.S. multinationals are at a disadvantage right now, Shakespeare says. Foreign companies who issue stock in the U.S. and use IASB accounting standards can file a form and do not have to reconcile their accounting to the U.S. standard. U.S. firms, on the other hand, have to reconcile their numbers to the IASB standard if they want to issue stock in Europe.

“If you make it easier for multinationals to list in your country and they only have to use one language for their accounting systems, you run the risk, however small, of having companies move offshore,” Shakespeare says. “That way, they can still issue shares in the U.S. and Europe and not have to deal with two systems.”

Shakespeare posits that a likely way to resolve the situation was outlined by SEC chief deputy accountant Paul Beswick. She suggested a process where the IASB and FASB continue to work on their convergence projects. Once those are completed, the FASB can endorse IASB standards for use in the U.S., with or without changes. Some have termed this idea “condorsement.”

This approach wouldn’t require Congress to give up ultimate oversight of U.S. accounting standards and should create a better accounting system for everyone, Shakespeare says. “I suspect this ‘condorsement’ is the way we’re going to go,” she says. “It’s the only politically acceptable plan out there at the moment.”