Impact of Globalization on Accounting Education
Globalization’s Impact on Accounting Education
Accounting is the process of recording a company’s financial information and relaying relevant information to managers and shareholders. There are two guidelines for relaying this information: the FASB (Financial Accounting Standards Board) and the IFRS (Internal Financial Reporting Standards). The FASB is mainly used in the United States while the IFRS is used globally. Globalization is the process of integrating different cultures and their respective economies through communication and trade. The difficult with globalization is the fact that each culture is different. Each culture has a unique way of doing things and both cultures will have to adapt in order to successfully integrate. From an accounting standpoint, the main difference here is the way accounting is taught through the FASB and the IFRS. With globalization constantly growing, it is imperative that the impact of globalization on accounting education should be addressed.
The most apparent changes from globalization in accounting education are the changes in policies. This means that the accounting concepts would have to be taught differently because of the differences in cultures. Some main accounting concepts that would have to change would be: the FASB, the IFRS, GAAP (Generally Accepted Accounting Principles). This also includes accounting for importing/exporting, exchange rates, and ethics. The convergence of the FASB and the IFRS is slowly occurring. This convergence is important because it creates a unity among the cultures interacting, which requires students to be aware and knowledgeable of other cultures and their economies. This merging is scheduled to be completed and initiated by 2015. Kathleen Casey, the President of the Securities and Exchange Commission from 2006-2011, is quoted as saying “It [a formed plan to merge the FASB and IFRS] would serve to help ease the transition to IFRS and minimize the impact of any obstacles along the way.” This plan to merge will ideally be beneficial to the global economy, but it will not come without positive and negative effects on global education.
A positive effect on global education is increased option of travel for jobs. American students will have more opportunities to travel to other countries to work, while students from other countries can come to America for work. Negative effects may include a large increase of foreign workers coming to America, and a smaller increase of Americans going to foreign countries. An example of this being a negative would be in a comparison of the populations of China to America. Statistically speaking; the ratio of more people coming into America to Americans leaving for other jobs can cause an imbalance in the job market. This could further increase unemployment in the United States. While there are both positives and negatives, from the perspective of education there will be major changes in the way accounting is taught.
As students and workers of today become familiarized with the US GAAP accounting standards, a change to the IFRS will cause the way these topics are taught greatly. Extra language classes will be required for students. In addition to this, text books will have to be rewritten and purchased by students. For the professors, they will have to learn how to account for the IFRS through seminars in order to teach it. This can also be a problem for accountants that have been in their profession for a long time. They would have to adapt to the change which would temporarily hinder their working abilities. A way to deter this would be to extend the date of the IFRS merge by a specific amount of time. This would allow current students, teachers, and accountants to prepare for the shift.
Globalization of Accounting Education is something that will ultimately benefit the global market and the respective cultures within it. The main goal of the change is to have a method of accounting that is used globally. While this concept is ideal, the process of adapting to the change will not be as easy. Some of the problems with changing include a re-evaluation of the GAAP, FASB, and IFRS rules. The benefit of this would be creating a unified method of accounting that could be used worldwide. The effects on global education would ultimately be positive because of the creation of opportunities for American students to travel to other countries for educational and work experience. The downside to this would be the possibility of more people entering America for work than leaving. The effects on global education include the re-writing of text-books and creation of new ones along with additional language course requirements. This will also force professors and working accountants to attend lectures so they may be updated on the current method of accounting. The adaption process may be difficult in the short-run, but in the long-run it creates a medium through which all cultures can communicate.