American accountants are increasingly being challenged by globalization due to the increase in companies operating around the world. This increase is the reason why it is necessary to introduce accounting students with international accounting standards before entering the workforce.
Accounting standards around the world are believed to be developed and maintained in a universal set of high-quality standards for accounting and financial reporting. Throughout history, the U.S. Generally Accepted Accounting Principles (GAAP) have led the way toward high-quality standards for accounting and financial reporting, but they are far from being universal and have slowly evolved and improved with increased globalization. International Financial Reporting Standards (IFRS) are becoming increasingly important. Although there are similarities between US GAAP and IFRS, there are still significant differences and US GAAP is not considered “better”. Resulting in changes to both sets of accounting standards.
US GAAP was developed and maintained primarily by the United States Financial Accounting Standards Board (FASB), and IFRS was developed and maintained primarily by the International Accounting Standards Board (IASB). In 2002, the two boards issued a memorandum of understanding called the “Norwalk Agreement.” This was a big step in the convergence of US and international accounting standards. In 2006, both the FASB and the IASB published the memorandum that confirmed their shared goal of converging many aspects of US GAAP and IFRS. The overall effect on US accountants is that international accounting standards are outpacing US standards and US accountants will find themselves at a disadvantage if they do not begin to learn and understand international accounting standards.
The many ways that educational institutions can adjust the curriculum is to keep students informed of the many changes that take place each year. Institutions should have more accounting courses that focus primarily on IFRS and show the differences from US GAAP. Students should also do some research on their own to find out if the company they seek to work for operates worldwide, so they can become familiar with aspects of IFRS that this company may be using. The last aspect is that institutions must update the books required for accounting courses so that students study the most up-to-date information.
An example of curriculum changes that could take place is for the tax course to not only teach aspects of US GAAP but also teach multiple taxes in other countries. This change could prepare many accountants for what to expect when entering the workforce. The downside of not teaching this example could make the accountant uncompetitive and affect his or her ability to perform the duties of that business.
The addition of globalized accounting courses would greatly provide students with the knowledge and ability to be competitive in the workforce. These additional courses would result in a higher cost of education, but the reward would greatly help accounting students compete for companies around the world. This would decrease the number of outsourced accounting jobs in the US. Although accounting outsourcing is a relatively new concept, it is becoming increasingly high with foreign accountants having the knowledge of IFRS and US GAAP.
Most accountants get their knowledge from the classroom and from teachers. This should not be the only way they should get the information, it is important to keep up with the changes in the world of accounting. Students can get information from the Internet, and as information about globalization is published, they should read and study it. 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 advancing their career and maintaining a competitive edge over other parts of the world is for institutions to update their books at least once a year. The field of accounting in a nutshell hasn’t had a significant amount of change under US GAAP, but with the increase in globalization, the only way to stay current is to use the most recently published accounting textbooks. This increased globalization is forcing US GAAP to become more accommodating of differences from IFRS. The differences between these two quickly become similar, making accountants adapt to the use of IFRS.
The key factors that accountants must take from this is to be aware of the rapid changes due to globalization. They should use their knowledge to their advantage by always getting up-to-date information and looking for additional courses that their institution may already be offering. Also if the institution does not offer the extras, look for this information from other institutions. The final opinion is that it is the sole responsibility of the accounting student to seek whatever information is available to stay competitive and position themselves to take on the world accounting field.
