Globalization's Impact on Accounting Education
Globalization's Impact on Accounting Education
In recent years, many American companies have opened multiple offices in other countries as well as their home-based offices in the United States. This growing global network has made it increasingly necessary for all the countries to adopt one standard and consistent way of reporting financial records of companies. There are already over one hundred countries throughout the world that are following one standard set of rules, called International Financial Reporting Standards, or IFRS for short. The United States has been following its own set of rules for over 75 years; these rules are called the Generally Accepted Accounting Principles or GAAP. The different sets of accounting standards make it difficult to analyze and compare a United States company with a foreign company in the same industry.
It is important for the United States to convert to the accounting standards that the rest of the world has already adopted, so that all countries' financial statements can be consistent with one another. The Securities and Exchange Commission, SEC, has officially announced that the United States will in fact eventually abandon the practice of using the Generally Accepted Accounting Principles and move toward using the IFRS standards, like so many countries before them have done. This mandate for conversion to IFRS has not been finalized as to a deadline date, but colleges and businesses are already planning their implementation strategies.
Globalization of the corporate world has helped to recognize the need for just one accounting standard, IFRS, and this change will have a huge impact on accounting education in the United States over the next decade or two. It will also have a direct impact on current students majoring in Accounting, as well as existing accountants who are currently working in businesses today. It is a large debate these days about how exactly the United States will teach the new material to students and current accountants. Teachers are having a hard time deciding how to blend the IFRS teachings into their courses. There have been a few options proposed on how to teach the material.
One of the options discussed is to add additional courses, with new textbooks, to the Accounting curriculum in colleges and universities. The additional courses would focus on detailing the differences between the IFRS standards, compared to the GAAP standards; this would be necessary in order to teach the Accounting students the new material. This option may be unattractive, because it would require the students to take additional classes and spend a longer amount of time in school before they get their Accounting degree. A longer amount of time in school would translate into additional costs. For those individuals who have already graduated with Bachelor's degrees in Accounting, and are already working in the Accounting field, they will also need to be educated on the new principles. These existing accountants will need to take additional seminars or classes in order to learn the new material. These seminars should be made available by the companies these individuals work for, because the company has a responsibility to ensure that their employees have the training necessary to perform their jobs. The companies also have to comply with the SEC mandate. If individuals work as a free-lance accountant for a temporary accounting agency, or work independently as Certified Public Accountants (CPA), then they would have to take their own initiative and find IFRS training classes on their own.
The second possibility that has been discussed concerning how to teach the new IFRS material in college classrooms is to gradually start incorporating the material into current courses. This approach would be convenient because unlike the last option, there would be no additional classes added to the college curriculum. Teachers could give examples in classes and explain to the students the different ways the problems would be solved based on the two different principles, GAAP and IFRS. If teachers gradually introduce the new material to current students, they will at least have an idea of what the differences are between the international and the national standards. In order to begin this process a couple of changes would be necessary first. The textbooks and learning materials would need to be updated for the students before this transformation could even begin. Professors would also need to be extensively trained so that they can effectively teach Accounting students these new accounting principles. They would most likely have to attend a series of seminars to learn the material themselves and then, substantially change their lesson plans for their students.
There are a couple of options for handling and introducing the new IFRS change to current and soon-to-be accountants. Whichever way that the United States decides to handle the situation, they should start implementing the process sooner, rather than later. Joining other countries and changing to the international standards is inevitable at this point, and it will most likely happen within the decade. Starting to prepare students for the effects of globalization is crucial, otherwise when the transformation takes place there will be a lot of accountants not properly trained and capable of performing their accounting jobs. If people are not properly trained by the time U.S. companies begin their conversion and implementation to IFRS accounting they may lose their jobs. The jobs may even be outsourced to countries where the accountants are experienced and know how to perform accounting functions using the IFRS principles.
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