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Theory-to-Practice Grant, “Globalization of Accounting”

Learn how OWU’s Course Connections, Travel-Learning Courses, Theory-to-Practice Grants, and other programs prepare students for global citizenship and leadership and help them…Make the Connection.

Justin Breidenbach, assistant professor of accounting, and seniors Josh Townsend, Roger Skidmore, and Steven Uhler visited the Institute of Chartered Accountants in England and Wales as part of their January 2015 trip to London. They used the Theory-to-Practice Grant-funded experience to learn more about accounting standards and practices in a global context. (Photo courtesy of Justin Breidenbach)

Name: Justin Breidenbach, M.Acc., CPA, CFE
Title: Assistant Professor of Accounting
Experience: Theory-to-Practice Grant, “Globalization of Accounting: U.S. Generally Accepted Accounting Principles (US GAAP) vs. International Financial Reporting Standards (IFRS),” London, England

Lessons Learned:

The Application of International Financial Reporting Standards:

“International financial reporting standards (IFRS) are designed to be a common language for business transactions and events so that financial statements are understandable and comparable across international borders.

“During our experience in London, we met with a representative of the International Accounting Standards Board (IASB). … [I]t was intriguing to hear how countries are adopting IFRS, but creating ‘carve outs’ so specific sections of IFRS are manipulated based on how the country would like the financial information to be reported.

“When it comes to the United States adopting IFRS, the comment was made that U.S. accounting regulatory bodies should not be concerned about giving up control because the U.S. could adopt IFRS and then create ‘carve outs’ where needed.

“I thought this was interesting because it appears to go away from the underlying mission of IFRS to create a set of standards that are comparable among entities in various countries. Furthermore, there were comments about how IFRS was first easily created because it was conceptual in nature and was sort of what accounting should be in theory. …

“However, as more countries have adopted IFRS, it has been difficult to revise standards and create standards that meet various users’ needs. … It makes me wonder how IFRS will continue to develop as more governments adopt the standard and become players for standard setting.”

As part of their educational experience, OWU seniors Roger Skidmore, Steven Uhler, and Josh Townsend met with Parliament’s Lord Lyndon Harrison of the Lords EU sub-committee on economic and financial affairs. (Photo courtesy of Justin Breidenbach)

Liberal Arts Approach to Creating Accountants:

“During our visit, we met with the Institute of Chartered Accountants in England and Wales (ICAEW) and the Association of Chartered Certified Accountants (ACCA). … There was much discussion about the Certified Public Accountant (CPA) credential in the U.S. compared to the Chartered Accountant credential found is many other countries.

“It was interesting to see how the Chartered Accountant credential appears to follow more of a liberal arts approach compared to the U.S. CPA designation. It is commonplace for accountants to go to university and study subject matter outside of accounting (art, biology, chemistry, history, etc.) and then enter into the accounting profession, where additional accounting-related courses and training are completed.

“The theory is that this approach creates a more well-rounded accountant as many professionals may be providing services to an organization based in the sciences or arts, and this allows a stronger understanding of the industry and accounting work being performed.

“This being said, it creates pride in the way that OWU services its accounting students as it is commonplace for many of our students to minor or double major in areas outside of accounting and business. Many do this to develop the appropriate number of university credit hours to become a candidate for the CPA exam in the U.S.; however, I think that our students and OWU programs package courses in a way so that students can gain insight into other studies and see how this knowledge connects backs to accounting and providing services for various users.”

Why Does an Experience Like This Matter?

“The United States’ view of IFRS is significant as the United States still currently utilizes its own set of accounting standards known as U.S. Generally Accepted Accounting Principles (US GAAP). However, in 2008, the Securities and Exchange Commission developed and announced a roadmap for US GAAP to converge with IFRS.

“The United States accounting setting bodies and the IASB have made some progress in converging the two standards. There is also still much debate on whether complete convergence will ever take place. …

“It is important for OWU’s students, as with any accounting student, to understand that accounting standards are no longer landlocked based on where a company is headquartered and global market is starting to dictate accounting standards based on various users’ needs.

“This experience matters because it gives our students an ability to critically think about how accounting standards are generated while also allowing them the flexibility to work in a global market.”