As the world becomes increasingly interdependent, the need of integrating ideas, culture, technology, and economy is inevitable. Globalization abolishes trade, communication, and cultural barriers to make the world unified. Undoubtedly, globalization is affecting every aspect of our everyday life. For instance, it provides us with the ability to connect and share important information with other people across the world. This process of interacting with one another could be accomplished through Internet, transportation, or through telecommunication. Since globalization is continuously going to affect our lives, one might ask this question: What is the impact of globalization on accounting education?
The constant growth in global markets imposes challenges to U.S corporations, specifically to accounting professionals. As the business world gets smaller, the need to recognize and adopt a unified set of accounting standard is crucial to the success and growth of accounting profession. Such unification also leads to a better economy in the United States. While most U.S corporations are currently following Generally Accepted Accounting Principles (GAAP) that is developed by the Financial Accounting Standards Boards (FASB), more than one hundred countries throughout the world are following International Financial Reporting Standards (IFRS) that is developed by the International Accounting Standards Boards (IASB). The differences in reporting financial information between these two sets of rules make it difficult to financial statement users to analyze and compare a U.S company with a foreign company in the same industry. As a result, transitioning to IFRS enhances consistency and comparability of financial statements and makes the world’s capital markets more efficient. The efficiency in global capital market translates into growth in the U.S economy since it helps lowering the costs of capital for businesses.
Students majoring in accounting, accounting professors, and accounting professionals should not be in denial about the integration of global accounting standards into accounting education. Accounting students and professionals will be directly impacted by the transitioning to IFRS, and promising future will be awaiting them if they are well prepared for the changes that globalization could impose. How to prepare students for the transitioning in education from U.S GAAP to IFRS is challenging. Educators play a key role in that process. Accounting professors will indeed be facing difficulties in locating all the relevant resources related to IFRS, developing a curriculum that is compatible with other accounting courses, and continuously educating themselves in all areas of changes of global financial reporting. What can accounting professors do to incorporate IFRS in the accounting curriculum?
One possible approach is to gradually introduce IFRS concepts and materials into accounting courses. This approach is advantageous to students since there is no need to take additional courses in accounting. Teachers can slowly introduce the differences related to IFRS by giving examples and problems that illustrate these differences, such as giving examples on how to value inventory and other assets under IFRS. Another option on how to teach the new material is to add additional courses to accounting curriculum in colleges and universities. These additional courses would focus on introducing IFRS’ concepts in depth. This option requires students to buy new textbooks as well as taking additional accounting courses. This approach seems unattractive to many students who would have to spend more time in college, which in turn leads to additional costs.
U.S accounting professionals should also be ready for the transition to IFRS in order to be competitive with other foreign accounting professionals who have already grasped global financial reporting. The U.S accountants need further education on the new accounting principle, and this could be accomplished by attending seminars and taking international accounting standards’ classes. As a result of integrating IFRS, accounting professionals will be focusing not only on insuring compliance with standards, but also on enhancing business performance in competitive environment.
The impact of transitioning to IFRS should not be seen as a threat. Accounting students and professionals should position themselves to take advantage of the new career opportunities that this transition is creating both in the U.S and abroad. Enhancing and developing accounting skills help both students and accountants to succeed in this competitive world. Certainly, the key to overcoming challenges imposed by integrating IFRS into accounting education is preparedness. Preparing accounting students for these changes is very important, otherwise when the transition of global reporting standard takes place, there won’t be well experienced accountants to perform the jobs, which could lead to loss of U.S jobs and outsource accounting jobs to foreign countries.