Globalizations Impact on Accounting Education
In higher education, a student will learn about all the changes that globalization is bringing about. Worldwide, globalization happens daily in every area of life. Globalization, according to Princeton, can be referred to as “growth to a global or worldwide scale.” The process of globalization can especially seen in the business setting, as the need to be connected with the entire world is more important than ever. With the develop of the Internet, companies are more easily connected now than ever. Globalization has a direct impact on the accounting standards and teaching around the world.
In the United Sates, there are two accounting standards primarily used: the Financial Accounting Standards Board (FASB) and the Generally Accepted Accounting Principles (GAAP). GAAP rules and procedures are established by the FASB. Both of these standards and concepts are primarily only used in the United States, while the rest of the world uses the standard called, International Financial Reporting Standards (IFRS). The IFRS are determined and administered by the International Accounting Standards Board. The goal of this standards board is for international comparisons simple. With globalization becoming a driving force in the business world, there is a greater need for one unified standard that all countries follow.
By having just one standard, all of the financial documents will be formatted the same and more easily understood. This will allow anyone interested in possibly investing in a company the ability to get any necessary information without any trouble. As R. Petkov states, it is necessary for one universal accounting standard. He argues that this need goes beyond just the obvious reasons, discussed above, but also so all economic events will be recorded and interpreted the same way (Petkov, 22). The Securities and Exchange Commission determined that the United States would change over to the International Financial Reporting Standards. This transition is scheduled to start and to be completed by 2015.
While there are clearly numerous benefits to having one accounting standard worldwide, the transition posses a few challenges for the United States. One of the most prominent changes need to be made is the increased emphasis that International Financial Reporting Standards will have in education. Currently, most college classes focus of the GAAP as the main standard for the class. This will no longer be current with what accounting majors are expected to know upon gradation. Therefore, professors and students alike will need to take the extra time to learn to the new IFRS policies and practices. While it may not be made a requirement for graduation until the transition is over, students need to look out for their future and learn as must as possible.
Professors who are not familiar with the regulations of the new standard system will need to be able to take seminars and containing education classes. Textbook companies will need to rework and reprint most of the accounting textbooks to be currently with all the changes. Instead of having one separate class and textbook dedicated to IFRS, it will be incorporated into every class. Until the adaption to IFRS is finalized, students, professors, and current accounts will continue to learn and follow to GAAP.
Besides just taking the time for colleges to make the necessary changes, companies all over the United States will have to give their accounts opportunities to learn the new standards and policies. This will become vital to each company so they are always current and never produce financial reports that are against the standard. The current accounts will need to learn all new laws and regulations so they can best advise their respective company. Once the transition is complete, companies will be expected to abide by the new standards without much question.
Globalization is a process that most countries recognize as an imperative part of moving forward. Specifically with accounting, most countries have accepted and embraced the IFRS. It is the United States that are the laggard in this change, siting that GAAP provides more situations and takes away personal judgment. However, the time has come where the United States begins to make the change to adapt IFRS. Once complete, each company will have a constant format of their financial statements. The positive impact that globalization will have on accounting and accounting education is far greater than the little bit of inconvenience imposed.