Globalization’s Impact on Accounting Education
Globalization is a concept that refers to the interaction and integration among people, and in this case businesses, across the world. It shifts the idea of doing things from a national perspective to a global one. It affects the economy, society, and how companies conduct their business. Due to the increasing impact of globalization, students in the accounting field have become more expected to possess knowledge of not only domestic accounting rules and structures but also international standards. There is a greater need not only for students to learn this knowledge but also for educators to see the importance of incorporating topics such as GAAP (Generally Accepted Accounting Principles), IFRS (International Financial Reporting Standards), and the IASB (International Account Standards Board) into their curriculums as they are constantly changing as an effect of globalization.
The FASB (Financial Accounting Standards Board) is an organization whose purpose is to form and improve GAAP within the United States. GAAP refers to a set of rules, standards, and practices that are used in the accounting field to help companies prepare and analyze financial statements primarily for external users. Along with GAAP, IFRS is a second set of guidelines that help a company produce financial statements. IFRS provides common global standards so that companies statements are more understandable across the world. Over the last years globalization has increased, which has impacted the guidelines that countries follow when it comes to accounting, prompting more countries to adopt the IFRS (International Financial Reporting Standard).
With globalization growing, it is important to address the impact it has on education and how it should be taught. One of the most challenging things as an accounting student is to understand the ever changing policies and practices in the field concerning GAAP and IFRS. Along with keeping up with policies changing, now more than ever students must also understand not only how the policies are changing, but also the multiple approaches accountants use between IFRS and GAAP. This can become confusing to students because instead of just examining the systems of the countries they belong to, they have to possess complete knowledge of foreign accounting structures, and ones that are constantly changing at that. An additional downside to the effect of globalization for students is that knowledge gap that it creates. It is difficult for students across the world to all possess the same kind of knowledge, due to the culture they are exposed to while in school.
Globalization also impacts how students curriculums are taught in the classroom. For countries not operating under IFRS, such as the United States, it may be a costly transition to incorporate IFRS into the curriculum. Institutes would have to ensure the professors were qualified and informed on IFRS to be able to teach it. Textbooks that do not include details of IFRS would have to be rewritten.
It is clear to see that globalization has had a large impact on accounting education that some may argue is both positive and negative. Although short-term countries who would have to make the change to IFRS may face high costs and changing their traditional ways, long-term it would prove beneficial due to the increase of globalization. Global accounting education would also prove to be efficient for the field because it would create an integrated system throughout the world, creating a more consistent accounting system used by companies throughout countries.