According to globolization101.org, globalization is defined as a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. Globalization is a trend that has created a huge impact on accounting education today. Globalization has its positives and negatives, but when it comes to accounting education it brings some difficulties. Globalization has the ability for any company to expand and export to other countries all over the world. The problems that come with globalization regarding accounting students are the accounting principles which are learned in school, compared to the accounting principles that are used internationally.
One of the main concerns that globalization brings to the accounting students is that they are learning the Generally Accepted Accounting Principles, also known as GAAP, which is not used globally. This can make it even harder for some students to receive a job that deal with international finances because their main focus while in school was directed towards GAAP and in the United States only. On the other hand, IFRS, or International Financial Reporting Standards is also briefly covered in education in the United States. This would be more beneficial to students learning accounting because it deals with International principles, which involve most businesses.
Because there are two different accounting principles to learn, globalization has a big impact on the students’ needs to know both GAAP and IFRS to be more educated when they are entering corporations. Also, because these accounting principles are being updated and changed very frequently, it puts a lot of pressure on accounting students to stay up to date with the current principle. With that being said, it is way more beneficial for students to be learning IFRS while in school than to be focusing all of their time on GAAP because it is not the accounting principle worldwide.
IFRS is becoming a standard in accounting education because of globalization. The world’s economies are becoming increasingly interdependent, as illustrated by the 2008 financial crisis, and global standards allow financial performance to be better understood. These standards also strengthen accounting and auditing practices throughout the world, as accountants and auditors only have to familiarize themselves with one set of standards (Needles, 603).
One good thing about being an accounting major, or business major in general is that you have the opportunity now to study abroad. This would include learning IFRS more in detail than you would with regular college classes in the United States. Studying abroad would give these students a major advantage over students that do not chose to study abroad.
Globalization has made accounting firms find the need for employees with the ability in both of these accounting principles. Firms need employees who can do financial statements both using IFRS, and also GAAP. With globalization rising, it would be smart for university’s to start teaching the accounting students IFRS as well as GAAP.