Globalization, defined by dictionary.com as ‘worldwide integration and development,’ is a movement that has affected many industries worldwide. One of the main industries affected by globalization is the accounting industry, including college accounting acim bookstore. College accounting education has been affected by the 150 credit hour requirement to sit for the CPA, and the issue of Generally Accepted Accounting Principles (GAAP) vs. International Financial Reporting Standards (IFRS). The accounting industry has been affected by the changes in accounting education and the consequent learning gaps between students from different countries.
The United States has recently implemented a 150 credit hour requirement in order for students to be able to sit for the CPA exam. This requirement was put in place to improve the preparation of students for the profession and increase their chances of success on the CPA exam. Before this rule, students were only required to have 120 credits before they could take the exam. The additional 30 credits is beneficial to students because it allows them to become more well-rounded students by taking more accounting courses, learning more about the accounting profession, and pursuing an MBA.
While the 150 credit hour rule is beneficial to the students that it applies to, the rule does not apply to all accounting students worldwide, therefore creating a learning gap in accounting education. In some countries outside of the United States, an accounting degree is the only prerequisite required to sit for the CPA exam. This learning gap is magnified as a result of accounting firms following the trend of globalization and expanding their practice into multiple countries. The result will be accounting students from different countries having the same qualifications, but varying technical skills and knowledge.
Another way that accounting education has been affected by globalization is the conflict between GAAP and IFRS. GAAP is the set of accounting principles used in United States, and American companies are required to follow GAAP standards when reporting and analyzing financial information. Students in the United States will have to learn the GAAP principles, but these principles will not be enforced internationally.
The result of this would be American students learning two sets of accounting principles: GAAP and IFRS. IFRS is used internationally by over one hundred countries to report their financial statements. The use of IFRS is supported by the International Accounting Education Standards Board, which was established to “serve the public interest by the world-wide advancement of education and development for professional accountants leading to harmonized standards (Needles, S70).”
The goal of IFRS is to create a uniform set of standards for all countries so they can compare financial statements internationally. The immediate way to make this happen would be to withdrawal GAAP from use in the United States and switch to IFRS. Though this method would solve the issue of the conflicting sets of standards, it would cause a multitude of other problems within college accounting education. Professors would need to learn the new IFRS rules, and then re-work their class structures and learning objectives accordingly. Also, new textbooks would have to be produced with information on the updated IFRS rules, and less emphasis on the GAAP principles. While an immediate change to IFRS from GAAP in the United States would be problematic, a change over time is the goal that should be pursued. “The Securities Exchange Commission has announced that it will attempt to abandon the use of GAAP and move towards IFRS (Scanlan).” The production of new textbooks would have to begin almost immediately so the textbooks could be circulated to schools around the United States within the next few years. New courses addressing the change from the use of GAAP to the use of IFRS would then have to be implemented into school curriculums within the same time period of the textbooks being circulated.
