Globalization is becoming more and more prevalent in today’s society. Not only are individual companies in the United States increasingly connected and developing similar forms of communication, it is happening all over the world. For accounting and education, this has a huge impact, especially in the United States. Accounting standards in the United States are different from those in the world. However, today’s students need to know both processes to be successful in international relations with accounting. Globalization has a tremendous impact on what students are taught and what they need to know.

Many accounting specialists in college will graduate and enter public accounting positions. The United States is the only country that uses generally accepted accounting principles as its method of accounting. This means that when students enter the workforce and deal with clients abroad, they are not using the same accounting practices. Students are not taught all the fundamentals of IFRS (International Financial Reporting Standards) as well as GAAP (Generally Accepted Accounting Principles). There is too much content and too little time for students to learn both methods, leaving them at a disadvantage when they enter the workforce.

The rules are constantly changing as the FASB is trying to converge to standards similar to IFRS. For example, GAAP recently removed extraordinary items, which is something that IFRS does not contain.

Changes to these standards make accounting education more complex, but also help students develop a better understanding of accounting as a whole around the world. Accounting education is evolving and adapting on a daily basis to take into account the globalization of accounting. Students are taught what it means to do accounting and learn why GAAP has a different treatment of elements than IFRS. The globalization of accounting is allowing students to think more deeply about financial statements and understand why items fall on certain lines and develop their own thoughts. As Belverd Needles, Jr. states, “By explaining a principle-based requirement, the educator can build from the objective of financial reporting through the concepts set out in the Framework to the beginning of a particular IFRS and explain how the rules ‘good’ (eg application guidance) gives effect at the beginning. When a requirement is not based on the Framework, the educator could provide reasons why the standard-setter deviated from the Framework. Educators could also teach students to make accounting judgments and discuss areas of judgment in each IFRS (Needles Jr.) “. Students are learning about the biggest differences and developing a real understanding of the accounting behind them. This will be significant when they enter the workforce and have to make accounting decisions without having a textbook telling them the correct way to go about it.

The topic of convergence has been very important in accounting education. If the United States finally makes the decision to converge from US GAAP to IFRS, this would change the entire curriculum that students are learning today. It is very important that students who are learning basic accounting principles today understand the main differences and the advantages or disadvantages of convergence. This is where globalization plays a key role because with the rise of technology today, we are becoming an extremely globalized world with companies having offices in almost every country in the world. A speaker from the SEC does an excellent job of explaining what convergence means and why it is beneficial: “In the long run, this definition of convergence is a laudable one that everyone should aspire to for a single set of high-quality accounting all preparers could use the standards.And more importantly for the SEC, whose duty it is to take the necessary steps to protect investors, a unique set of high-quality accounting standards applied impartially greatly reduces uncertainty about the comparability of the published accounts, thus greatly improving the transparency of the information to the market (Herdman) “. As Mr. Herdman explains earlier, convergence would allow investors around the world to compare financial statements and simply line items that would help them develop a better understanding of organizations around the world.

Lastly, what does this really mean for students majoring in accounting today? An assistant professor at the University of Arkansas posts on the AICPA website and gives insight into the changes ahead for accounting students:

… today, as I look 30 years into the future, there are some difficult issues facing higher education and we are on the list of all sectors that are expected to undergo some major changes over the next decade … Additional possible changes include:

• New curricular models that reflect the global big data environment.

• New ways of delivering education, such as massively open online courses that reach tens of thousands of students at a time and have help available 24/7.

• New forms of assessment with less emphasis on time spent on coursework and more emphasis on what was mastered. (Karen V. Pincus)

The changes mentioned above describe not only technology, which plays a huge role in globalization, but changes in accounting and how this will drastically change education. Globalization is a good thing for accounting education and will help students and future business leaders develop a broader understanding of accounting around the world.

Cited works
Herdman, Robert K. “SEC Staff Speech.” April 18, 2002. Securities and Exchange Commission. Print. March 1, 2015.
Karen V. Pincus, PhD, CPA, Doyle Z. and Maynette Derr Williams. “What does the future of accounting education hold for us?” August 14, 2013. AICPA Insights. Web. March 1, 2015.
Needles Jr., Belverd E. “Accounting Education: The Impact of Globalization.” Accounting Education: An International Journal (2010): 601-605. Web.