The Impact of Globalization on Accounting Education
The Impact of Globalization on Accounting Education
As cultures blend, technology advances, and companies continue to outsource over time, the connectivity and interdependence of different markets and businesses around the world are growing at an incredibly fast rate. Borders between countries continue to dissolve as time progresses, and information between countries is now freer than ever to effortlessly pass over boundaries that otherwise would not have been crossed in the past. Continuous advancement in technology has allowed this information to be carried around the globe with the utmost of ease. The easing of these borders is caused by the fact that countries are becoming more and more dependent on each other in order to thrive.
The constant flow of information through different countries factors into the continual development of various markets; therefore, businesses are coming together to form multinational corporations in order to gain easy access to these newly formed marketplaces. A businessperson now possesses the extraordinary ability to own a firm in one country, situate themselves in another country, and do business with two completely different countries positioned halfway across the world.
Historically, U.S. GAAP (generally accepted accounting principles) has been regarded as being the highest-quality set of financial accounting and reporting standards in the world. Nevertheless, its acceptance is far from universal, and its standards have been very slow to evolve as the business world has become increasingly globalized and complex. The world will only stop evolving when it ceases to spin. Continuous evolution requires continuous education, which in turn requires continuous learning. New business opportunities created by globalization mean that, in order to be successful, the average certified public accountant needs to possess the knowledge of the standards of each country that they could potentially be doing business with. Due to the ever-increasing number of multinational businesses popping up around the globe, one sole language of accounting is extremely crucial to the success of the accounting world as a whole.
Universal acceptance of a single set of high-quality standards would make the world's capital markets more efficient by enhancing the consistency and comparability of financial statements. Globalization tends to bring about increased competition, which causes agents of production to be more efficient. A higher efficiency rate in the capital markets would in turn lower the costs of capital for businesses, which would encourage economic growth on a globular scale. Globalization inevitably pushes very hard for a universal acceptance of one set of standards. With globalization comes unification; therefore, U.S. GAAP will be phased out and replaced by IFRS (international financial reporting standards), the new business language for the entire world.
Accounting is predominantly known as the profession that analyzes the past, but because of globalization it is important to look into the future. As we glance into the future, it is obvious that the students of today are the future of our profession. We need to educate them for the world they will live in, not the world we lived in. Their world is global. No single country can stand alone in such a world, not even the United States.
Educators will play a key role in global financial reporting. Teachers need to increase their focus on making sure that students know the underlying concepts and framework of financial reporting, and how to make judgments consistent with these concepts. Students who fully grasp the underlying concepts will possess knowledge that is more enduring because these change less frequently than the standards do. Therefore, students will not be surprised when different standards, which apply to the same concepts and principles, are set.
The transition in education from U.S. GAAP to IFRS will not be a simple one. Textbooks will inevitably need to be rewritten and college courses will need to be redesigned to be in step with the books. Current accountants will also need to be educated on the standards of IFRS. Online courses should be created for people currently in the realm of business, and individual companies will have to create programs in order to effectively educate their workers.
The accounting profession is in dire need of people who are well-grounded in economic concepts and who strive to make well-founded professional judgments. As long as educators keep pushing these types of motivated people through the curriculum, the future of accounting will be a positive one. The new universal accounting language of IFRS will also no doubt help to alter the business world for the better.
References
Barth, M. E. (2008, September). Global financial reporting: implications for u.s. academics. Accounting Review, 83 (5), Retrieved from http://web.ebscohost.com/ehost/detail?vid=3&hid=17&sid=c61dbf53-73ee-49fb-ac84-016d48863e0c@sessionmgr12&bdata=JnNpdGU9ZWhvc3QtbG12ZSZzY29wZT1zaXR1#db=buh&AN=34739505#db=buh&AN=34739505
Pounder, Bruce. (2006). How globalization is affecting u.s. accountants. NY, NY: Leveraged Logic.
Stief, Colin. (2010, May 5). An overview of globalization. Retrieved from http://geography.about.com/od/globalproblemsandissues/a/globalization.htm
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