In today's society, it is not uncommon for a company to move a portion or the entirety of its operations overseas. This action is known as globalization and has been increasing for many reasons. Cheaper labor, wider customer base and lower taxes are a few of those reasons. With the increase in globalization comes a change in the way students are educated about business. Accounting is the root of business and with the growth in globalization, accounting education has begun to change.
The two main set of standards being used are International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). Over one hundred countries throughout the world are using IFRS while the United States has been using GAAP for over seventy-five years. Companies that have begun to offshore and send business operations overseas have begun to find difficulty in analyzing and comparing financial reports while complying with both sets of rules. The Securities and Exchange Commission has stated that since the United States is the only country using GAAP, they will abandon it and switch to IFRS. The switch to IFRS is going to have a huge impact on educators, students and accountants currently using GAAP.
First off, the switch from GAAP to IFRS would prove to be very costly. All accounting textbooks would need to be rewritten to include IFRS and educators and professionals in the field would all need to be trained in IFRS. Despite the transition requiring a large amount of money, it would prove beneficial to students and possibly current accountants by providing additional opportunities to work for a wider variety of companies. Current accountants would have to take continuing education classes to fully learn the IFRS standards. The cost of those classes most likely would be paid for by companies, although not all would pay for the cost of these classes. Overall the cost of switching over to IFRS is vastly outweighed by the opportunities that will be available to students, current professors, educators and accountants.
A second major factor in the switch from GAAP to IFRS is timing. The quicker and more smooth the transition is, will also greatly impact the students, and business people involved. Companies that currently have operations overseas will most likely have a more smooth transition because they are most likely already using IFRS or have a better understanding of those Standards. Some accountants might not find that it is worthwhile to have to go back and learn new ways of doing their job especially if they have been using GAAP for many years. Current accountants might decide to take on another position or change companies all together. The students currently in school or soon to be in school for accounting could have a major advantage when entering the work force if they have been taught IFRS. These students would have a much better chance at obtaining entry level positions and working up the ladder to higher positions because of their updated knowledge.
Overall, the switch from GAAP to IFRS in the United States would bring about a huge cost. Textbooks would have to be redone, teachers, educators and current accountants would have to be educated and take time out of their business day to learn the new standards. Students currently in college for accounting will have to stay and take extra courses to be educated in the IFRS standards instead of the GAAP standards in which they are currently being taught.
Companies would be spending a lot of money to send their accounts to courses, seminars or workshops to update them in the International way of recording financial reports. Despite the enormous cost of switching standards, the benefit of switching as soon as possibly can create better job opportunities for the current and future accounting students. As the United States abandons GAAP and implements IFRS, companies that have portions of their operations in multiple countries will be able to fully compare financial statements without having to go through the difficult process of using two different sets of rules and standards when composing those statements.