According to a survey conducted by the American Accounting Association (AAA) and KPMG LLP, accounting faculty at universities throughout the United States believe their students and the U.S. economy will be at a disadvantage if U.S. regulators do not adopt a set of globally accepted accounting standards, and if universities do not take immediate steps to incorporate International Financial Reporting Standards (IFRS) into U.S. accounting curricula.
The second annual KPMG-AAA Faculty Survey, conducted during July and August 2009, showed that nearly half of the 500 professors who responded believe the United States should transition to IFRS to remain competitive, and three-quarters think IFRS needs to be immediately incorporated into their school’s curricula.
Half of the professors responding to the survey said they thought a low sense of urgency exists among U.S. regulators to adopt IFRS by a “date certain,” while only 16 percent thought regulators had a high sense of urgency.
Seventy-four percent of respondents said that U.S. adoption of IFRS will occur through convergence of U.S. GAAP (Generally Accepted Accounting Principles) with IFRS by 2015 or later. Meanwhile, 17 percent think U.S. public companies will be required to adopt IFRS outright by 2015 or earlier; while nine percent think IFRS will not be adopted by U.S. companies.
Most Significant Challenges
The KPMG-AAA Faculty Survey found that seven in ten professors said their most significant challenge to teaching IFRS is making room for it in the curriculum (This is in contrast to last year’s survey where respondents cited developing curriculum materials as the top challenge). Despite this challenge, 70 percent said they have taken significant steps to incorporate IFRS into the curriculum. Further, 83 percent believe IFRS needs to be incorporated into their curricula by 2011.
“University professors throughout the United States recognize that teaching IFRS is critical in preparing our accounting students to excel in the global marketplace and finding space to fit IFRS in the curriculum is the challenge,” said Manny Fernandez, KPMG’s National Managing Partner, University Relations and Recruiting. “Not surprisingly, nine out of ten professors surveyed by KPMG and the AAA believe it is very important to teach IFRS to U.S. students.”
When asked to assess their university’s preparedness to teach IFRS, only a small fraction (eight percent) thought at least half of their school’s accounting faculty were qualified to teach it. Slightly more than half of the professors (55 percent) were also concerned that administrators do not understand the magnitude of the curriculum change required to respond to IFRS adoption in the United States.
“The findings of the KPMG-AAA survey suggest that we have made progress, but there is still much work to be done in optimizing how IFRS is taught in our university classrooms,” said Philip M. J. Reckers, Ph.D., recent Chair of the American Accounting Association’s Education Committee and Professor of Accountancy at Arizona State University’s W. P. Carey School of Business. “Professors, university administrators, regulators and thought leaders in the accounting profession need to work together to make sure the curricula is timely and relevant.”
Other Key Findings
Given the dynamics of the current regulatory environment, 79 percent of faculty believe that U.S. GAAP should continue to be taught over the next 3 to 5 years, while progressively incorporating more IFRS concepts on a compare and contrast approach as the conversion date approaches.
The first graduating class of accounting students to enter the workforce with a substantial knowledge of IFRS education will be the class of 2015, according to 40 percent of professors – three years later than the date most often cited in the prior survey.
Fifty-nine percent of faculty believe that the CPA examination will include significant IFRS content by 2012/2013 and 54 percent expect comprehensive coverage of IFRS in intermediate accounting textbooks by 2011/ 2012.
Market: Slow to Recover, Slow To Adopt
But given current economic conditions and much slower-than-anticipated recovery, the delay in adopting these standards is understandable, according to industry research firm IBISWorld. The present nature of work being undertaken by the industry is in a dramatic midst of change, with more emphasis now on bankruptcies, liquidations and workouts for clients. Far less emphasis is being undertaken on corporate advisory and capital raisings, constrained by the global banking crisis, credit squeeze, and stock exchange floats.