Education Lags Behind IFRS Momentum

Accounting professors predict they'll need at least two years before they can ready students for widespread use of international standards. Don't expect the first knowledgable class until 2011.

The first crop of U.S. accounting students trained in the ways of international financial reporting standards won’t arrive until the Class of 2011, according to a new survey of professors.

The Securities and Exchange Commission’s move to allow — and eventually mandate — U.S. companies to use IFRS hinges in part on academia’s ability to keep up with educating students on the international rules. On Thursday, KPMG and the American Accounting Association said that 30 percent of professors believe students graduating in 2011 will be the first to have a substantial amount of IFRS education.

That same year, the SEC is expected to decide whether to require that all U.S. publicly traded companies begin using IFRS by 2016. The commissioners have said that their decision will be based on several factors, including how the education of accountants, auditors, and investors has progressed.

In KPMG’s survey of 535 professors over the summer, only 22 percent said that they could incorporate IFRS into their courses this year in any significant way. The professors estimate that they’ll need another two years to provide better IFRS training, because that’s when IFRS textbooks will likely be available.

Some professors were more optimistic about their ability to incorporate the global standards into the curriculum. Five percent of respondents said that the Class of 2009 will have substantial IFRS knowledge, and 17 percent said that will be true of the Class of 2010. However, 24 percent of the professor that said the accounting field will have to wait until 2012 before they could hire entry-level accountants trained in IFRS.

“Part of the challenge for professors is to make sure that their upperclassmen have some knowledge of IFRS before they leave campus, and therefore they are likely in the early phases to focus in the areas of intermediate and advanced accounting,” said Philip M.J. Reckers, vice president of the American Accounting Association Professional Advisory Board.

During the past year, professors have told the SEC that making a major change to their courses will take a long time. Along with the need for textbooks that haven’t yet been written is the uphill battle they’ll face with their universities’ bureaucracy and the struggle with squeezing in new rules along with the already long list of accounting principles that U.S. students are currently learning.

Nearly half the surveyed professors indicated that they will have to be in charge of educating themselves on the global standards, and convincing their administrations that it is worthwhile to incorporate IFRS education into their courses.

Conrad Hewitt, the SEC’s chief accountant, has been meeting with professors to gauge their progress with IFRS education. “I have to admit that they haven’t done a lot to date, but all of a sudden now they’re starting to get interested,” he said last week. They will more seriously incorporate the global standards in their courses within the next two years, he predicted.

Also underway are changes to the CPA exam. A third of professors responding to KPMG’s survey said that 2011 would be the earliest the exam could include comprehensive coverage of the international rules.

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