July 17, 2024

The Domestikated Life

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Globalization Impact on Accounting Education

Globalization Impact on Accounting Education

Globalization refers to the interaction and integration among the people, companies, and governments of different nations. This process is driven by international trade and investment and aided by information technology. Large companies now have to be aware of their own customs and environment and the rest of the worlds as well. With large corporations being stationed outside of the United States, those employees not only have to be educated with the American principles, but the international principles as well. Since globalization is pretty much impossible to prevent, and quickly becoming a norm in society, it is important that business leaders of the future are all taught on the same page with the rest of the world. With that being said, the impacts that globalization has on accounting education needs to be addressed so future scholars can succeed.

Accounting education policies and practices have been affected by globalization significantly. For example, many concepts are being taught differently, reevaluated and textbooks are being updated annually. Some of the policies and terms that are being reevaluated are GAAP (Generally Accepted Accounting Principals), IFRS (International Financial Reporting Standards), FASB (Financial Accounting Standards Board), culture, international trade and importing and exporting. Those are only a few out of the many that are being looked at throughout the world. Globalization has a negative and positive impact on the accounting education system.

If an American accounting firm comes into China and is asked to keep the books for a company located in China, they all have to be on the same page. The principals in the U.S probably are not the same. In the United States, FASB (Financial Accounting Standards Board) is used but anywhere else, the International Financial Reporting Standards is used. With globalization happening so quickly, it would not at all surprise me if there soon will be one international set of laws and standards to follow. In fact, according to George W. Russell in an interview with Sir David Tweedie (former chairmen of IASB), he has a new mission which is to “oversee the creation of a coherent global financial valuation framework.” He’s basically saying he wants the whole accounting world on the same page with the same set of laws and standards. Let us not forget how every accountant got to where they are now, and that is getting a degree through a university or college.

Since classes are constantly being added and dropped from the typical accounting degree requirements, this can place a delay on the development of accountants who already received their degree. As I said before, textbooks are being reevaluated and changed annually. Let’s say I graduated in 2005 with a BS in accounting and three years after, the textbook for financial accounting had a complete overhaul. The student in the classroom three years after me is already learning financial accounting differently than I did. This is only in the United States; imagine the different principals that students are studying outside of the U.S. That’s why there just needs to be one set of laws and standards. Let’s say for example that a guy working in the United States gets outsourced to an accounting firm in India. If he is not familiar with the customs, the accounting standards, and the overall feel of international accounting, then he simply won’t be prepared.

A positive effect that globalization has on accounting education is that it gives students who study in the U.S an opportunity to go out and travel the world looking for business opportunities. It gives an American born student a chance to place his “eggs” not all in one basket if you will. It gives the student a chance to experience the international business aspect of accounting. Globalizations impact on accounting education needs to be addressed throughout the whole accounting world not just in the United States. If there were one set of laws and standards it would be a lot easier for an American accountant to go out of the country and practice and vice versa. If a Chinese accountant came to the United States it would be just as easy with the same standards.