Globalization and the impact on educating accountants
Globalization is the movement towards economic, financial and communication integration. It has dramatically progressed over the past two decades due to the increase in technological advances that make international travel, communication and overall business affairs easier. The impact globalization has had on accounting and education has only started within in the past few years. For the last seventy-five years, the United States has been following and teaching the Generally Accepted Accounting Principles (GAAP), while other developed nations of the world have been following the International Financial Standards (IFRS). As technology continues to advance, institutions are slowly beginning to provide proper exposure of these new accounting standards as a result of globalization.
The switch from GAAP to IFRS may be difficult for some because the currently accepted accounting principles are considered to be more rule based, whereas the international financial reporting standards are considered to be more principle based providing less overall detail. By being more principle based, IFRS perhaps represents the finances of a transaction better than our current GAAP standards. There will be changes that accountants and future accountants will have to relearn regarding areas such as revenue recognition, when an expense should be recognized and the amount that has to be recognized, the arena of financial liabilities and equity, and companies using LIFO will have to transition to other costing procedures.
The change from GAAP to IFRS would prove to be very expensive both for students and companies. Students currently in college for accounting will have take extra courses to be educated in the IFRS, because until IFRS is implemented, around 2016, students will still be taught the GAAP standards with only a hint of the new IFRS standards. Companies would be spending a great deal of money to send their accounts to seminars or workshops to update them in the International way of recording financial reports. Textbooks would have to be recreated for students and teachers, while current accountants would have to be educated on the new standards. Notwithstanding the immense cost of switching standards, sooner rather than later, in doing so can create better job opportunities for the future accounting students. As the US expires the GAAP and implements IFRS, multinational companies will be able to fully compare financial statements without having to go through the difficult process of using two different sets of rules and standards when composing those statements.
Colleges should have already started to prepare students for the effects of globalization, for when the conversion takes place there will be a great deal of future accountants not suitably trained and incapable of performing their accounting responsibilities. If our future students are not suitably trained, U.S. companies beginning their conversion to IFRS standards, may start outsourcing to countries where the accountants are experienced and know how to perform accounting tasks using the IFRS principles. This would bring our current economy even further down, having both manufacturing and service jobs outsourced to other countries.
In conclusion, globalization's impact on accounting can be both positive and negative. I believe that it is in the best interest of United States colleges and businesses to begin their transition from teaching GAAP to IFRS sooner rather than later, in doing so it can create better job opportunities for the future accounting students. This change would also result in a more consistent reporting standard worldwide and ultimately make it easier for businesses to globalize in the future and still keep jobs in the United States.
The switch from GAAP to IFRS may be difficult for some because the currently accepted accounting principles are considered to be more rule based, whereas the international financial reporting standards are considered to be more principle based providing less overall detail. By being more principle based, IFRS perhaps represents the finances of a transaction better than our current GAAP standards. There will be changes that accountants and future accountants will have to relearn regarding areas such as revenue recognition, when an expense should be recognized and the amount that has to be recognized, the arena of financial liabilities and equity, and companies using LIFO will have to transition to other costing procedures.
The change from GAAP to IFRS would prove to be very expensive both for students and companies. Students currently in college for accounting will have take extra courses to be educated in the IFRS, because until IFRS is implemented, around 2016, students will still be taught the GAAP standards with only a hint of the new IFRS standards. Companies would be spending a great deal of money to send their accounts to seminars or workshops to update them in the International way of recording financial reports. Textbooks would have to be recreated for students and teachers, while current accountants would have to be educated on the new standards. Notwithstanding the immense cost of switching standards, sooner rather than later, in doing so can create better job opportunities for the future accounting students. As the US expires the GAAP and implements IFRS, multinational companies will be able to fully compare financial statements without having to go through the difficult process of using two different sets of rules and standards when composing those statements.
Colleges should have already started to prepare students for the effects of globalization, for when the conversion takes place there will be a great deal of future accountants not suitably trained and incapable of performing their accounting responsibilities. If our future students are not suitably trained, U.S. companies beginning their conversion to IFRS standards, may start outsourcing to countries where the accountants are experienced and know how to perform accounting tasks using the IFRS principles. This would bring our current economy even further down, having both manufacturing and service jobs outsourced to other countries.
In conclusion, globalization's impact on accounting can be both positive and negative. I believe that it is in the best interest of United States colleges and businesses to begin their transition from teaching GAAP to IFRS sooner rather than later, in doing so it can create better job opportunities for the future accounting students. This change would also result in a more consistent reporting standard worldwide and ultimately make it easier for businesses to globalize in the future and still keep jobs in the United States.
