Generally accepted accounting standards in the United States are changing and aligning with IFRS as part of planned convergence program. The Securities and Exchange Commission (SEC) issued their roadmap in 2008 to guide the transition to International Financial Reporting Standards (IFRS) for public companies. Recently, the SEC instructed their staff to evaluate a number of issues with the roadmap, including investor understanding and education, examining the U.S. regulatory environment, the impact on both large and small public companies, and human capital readiness (e.g., education, training and auditor capacity).“The future of financial reporting in the United States is evolving to include more judgment in accounting decisions and fewer rules, as in the fair value accounting standards,” says David Sherman, professor of Accounting at the College of Business Administration (CBA). “One set of standards will ultimately improve the comparability between US companies and foreign companies in the same industry. More importantly, it unifies the standards of reporting for multinational companies such as Microsoft and British Petroleum, allowing subsidiaries around the world to use the same accounting methods.” David believes the most important differences between US GAAP and IFRS are the implications for management, lenders and investors, an aspect that is not fully appreciated.
CBA is tackling the evolution towards IFRS by introducing the subject to juniors and seniors beginning in the intermediate accounting sequence. As adoption of IFRS gets closer, students will learn the details of IFRS in parallel with US GAAP. Professor Sherman pointed out that privately held companies can choose to stay with US GAAP or move to IFRS just as businesses in Europe can continue to use their local country GAAP (German, French, UK) instead of IFRS. “One of the interesting things about the need to understand IFRS is that many U.S. companies, private or public, are controlled by a foreign entities, such as Budweiser, and need to adopt IFRS. Students graduating from Northeastern will need to be experts in both US GAAP and IFRS.”One important difference between IFRS and US GAAP is the need for increased professional judgment. Auditing Professor Charlie Bame-Aldred suggested that some accounting students may need to take different electives. “I would recommend students think about Introduction to Social Psychology. Understanding how people make good and bad decisions is going to be as important as understanding basic accounting.
Northeastern is also making significant strides in Executive Education. The College of Business Administration recently formed a strategic partnership with Mike Walworth of GAAP Seminars to teach IFRS seminars to the greater Northeastern University community. “At GAAP Seminars, our goal is to bridge between US GAAP and IFRS. It is a dynamic course that really gets people familiar with all the intricacies of IFRS and how they relate to US GAAP.” Beth Cliff of CBA thinks this program will really take off. “We are getting some inquiries about this program. We are very excited to partner with GAAP Seminars and think this program will be at the forefront of IFRS training in the New England market.”As the U.S. moves towards IFRS, CBA’s focus on experiential learning will continue to be a strength in the future. For more information about Executive Education Programs at Northeastern, including IFRS, call Beth Cliff at (617) 373-7203.
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