ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Globalization and its Effect on Accounting

Updated on April 11, 2018

Globalization refers to changes seen around the world. This refers to the interconnection of different countries and their people, governments, and other companies to make international trade and investment due to information technology. Globalization in trade refers to the transformation of business where a company of a country is connected with another country operating many firms in different countries. These have had a significant impact on accounting in quite a few ways.

In the past accounting students only had to learn the accounting system of their home country, but accounting has become more global. Due to this shift, students now have to understand international financial and tax structure.

While in the past students considered GAAP (General Accepted Accounting Principles) to be the overall general guidelines for accountants, now they are constantly changing which means students have to constantly relearn new rules and guidelines. Because of GAPP changing the international accounting system is required to make some changes as well.

Another way globalization has an impact on accounting is by the developments in international capital markets. Research and studies back up the fact that many different countries’ capital markets are dependent on each other. Domestic and foreign markets have to adapt to the interdependency which just means it’s one more issue accounting students have to keep up to date with.

Many notable changes have occurred in the international financial reporting infrastructure. This progression in financial reporting internationally is another issue accounting students have to stay updated on.

There had been a number of recent developments that support the fact these markets are interlinked. A change in one country may cause a shift in the world’s financial structure and even in different countries own individual markets. Naturally this effects accounting. (1)

There is also a single set of accounting and financial reporting standards developed by the International Accounting Standards Board called International Financial Reporting Standards (IFRS). The purpose of IFRS is to provide consistent financial statements from all parts of the world. “According to the IFRS Foundation, the standards are currently legally approved for use in over 100 countries, including the European Union countries and more than two-thirds of the nations comprising the Group of Twenty (also referred to as the G20). Further, 52 percent of Fortune Global 500 companies use IFRS.” (2)

In the United States, private entities may choose to use IFRS. The use of IFRS is becoming more popular because of globalization. Ford operates across 138 countries and made the switch to IFRS for international reporting which has saved them time and money even though they still have to file using U.S.GAPP for SEC.

IFRS is attractive to international investors, customers, and vendors. It also creates savings from standardized processes, systems and international controls across different jurisdictions. The downside to IFRS is that principles-based standards with a lack of industry-specific or transactional guidance may decrease the quality and consistency of reporting. There is also a lack of funding for IASB which creates and regulates the IFRS which allows it to potentially become influenced by political forces. (2)

As of right now, only foreign private issuers may prepare financial statements using IFRS for SEC filings. In recent years there has been the talk of the extent to which publically traded entities in the US may use IFRS instead of GAAP. The proposed rule is to allow US issuers to voluntarily provide IFRS information instead of GAAP financial statements in the foreseeable future.

Accounting is now getting outsourced more than ever before. Due to the increasing globalization of the world, certain portions of the accounting profession is getting outsources to parts of the world where labor is less expensive. Modern accounting roles are shifting some of the more tedious elements like the number crunching to overseas partners or even automated programs.

While often globalization is thought of in the macro sense and focused on manufacturing and outsourcing trends, it has effects on almost every part of everyday life. Accounting programs are known for being strict and very dry with rules, but over time things do change and the biggest contributor to the change is the broad strokes of globalization and how it affects the world's economic structure. (3)



    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)