U.S. accountants are being challenged more and more by globalization due to the increase in companies who operate worldwide. This increase is the reason why it is necessary to introduce studying accounting students with international standards of accounting before entering into the work force.
The accounting standards around the world are believed to be developed and maintained at a universal set of high-quality standards for financial accounting and reporting. Throughout history it has been the U.S. Generally Accepted Accounting Principles (GAAP) leading the way for high-quality standards for financial accounting and reporting, but it is becoming far from universal and they have been slow to evolve and improve with the increase in globalization. International Financial Reporting Standards (IFRS) are becoming more prominent. Though there are similarities between U.S. GAAP and IFRS there is still significant differences and U.S. GAAP is not considered “better.” Resulting in changes to both sets of accounting standards.
The U.S. GAAP was developed and maintained primarily by the U.S. Financial Accounting Standards Board (FASB), and the IFRS was developed and maintained primarily by the International Accounting Standards Board (IASB). In 2002 the two boards issued a memorandum of understanding which was called the “Norwalk Agreement”, this was a big step in converging U.S. and international accounting standards. In 2006 both FASB and IASB published the memorandum which confirmed the shared objective to converge many aspects of U.S. GAAP and IFRS. The overall effect on U.S. accountants is that international accounting standards are overtaking U.S. standards and U.S. accountants will find themselves at a disadvantage if they do not start to learn and understand international accounting standards.
The many ways educational institutions can adjust the curriculum is to keep the students informed with the many changes that take place each year. Institutions should have more accounting courses that focus primarily on IFRS and display the differences with U.S. GAAP. The students should also be doing research on their own to find out whether the company’s they are looking to work for operate worldwide, this way they can be familiar with what aspects of IFRS this company may be using. The last aspect is that institutions should be updating the required books for accounting courses in order for students to be studying the most up to date information.
An example of curriculum changes that could take place, is to have the taxation course not only teach the aspects of U.S. GAAP but also teach the multiple taxations in other countries. This change could prepare many accountants for what to expect when entering into the workforce. The downside to not teaching this one example could make the accountant uncompetitive and impact their ability to perform the tasks of that company.
The addition of globalized accounting courses would greatly provide students with the knowledge and capability to be competitive in the workforce. These additional courses would result in a higher cost of education but the reward would tremendously help the accountant students compete for worldwide companies. This would decrease the number of accounting jobs outsourced in the U.S. Though outsourcing of accountants is a fairly new concept, it is becoming increasingly higher with overseas accountants having the knowledge of IFRS and U.S. GAAP.
Most accountants get their knowledge from the classroom and professors. This should not be the only way they should be getting the information, it is important to stay up to date with changes in the accounting world. Students can gain information from the internet and as information on globalization becomes published they should be reading and studying them. It is up to the student to be aware of the complex changes that occur in accounting.
The final aspect that would benefit accounting students in furthering their career and maintaining a competitive advantage over other parts of the world is to have institutions update their books at least on a yearly bases. The accounting field in a nut shell has not had a significant amount of changes based on U.S. GAAP, but with the increase in globalization the only way to stay current is to be using the most recently published accounting text books. This increase in globalization is forcing U.S. GAAP to become more adapted to the differences with IFRS. Differences between these two is rapidly becoming similar, thus causing accountants to adapt to using IFRS.
The key factors accountants should take from this is to be aware of the rapid changes due to globalization. They should use their awareness to their advantage by always getting up to date information and looking for the extra courses their institution may already be providing. Also if the institution does not offer the extras, seek this information from other institutions. The final take is that it is the sole responsibility of the studying accounting student to look for any information available to stay competitive and position themselves to take on the worldwide accounting field.