|What You Can Learn From China
The truth about accounting globalization. Join the survey; get the results.
February 4, 2010
The world isn't waiting for the U.S. to start using globalized accounting standards.
As AICPA Chairman Robert R. Harris has been telling CPAs across the country, "Accounting is already global."
"Even those who work in the smallest CPA firms, the smallest companies or the smallest governmental or not-for-profit entities are seeing ramifications," Harris says. In his year as chair, Harris is asking CPAs "to think globally about the future of our organization, our profession."
Busy Season 2010: How’s It Going So Far?
The hot debate in the profession is, of course, all about International Financial Reporting Standards. Adoption or convergence? Roadmap or no? Or when? And what about private companies? No room here to detail all the AICPA's activities on the topic. (For IFRS resources, start here.) But the bottom line remains the same: "Accounting is already global."
In China, 550,000 students sat for the accounting exam last year. In India, the institute of chartered accountants now has about 158,000 members (making it the second largest association in the world), plus another 518,000 student members working their way up.
For comparison, the AICPA now has about 342,490 members, 17,491 associate members and some 60,000 students are graduating with accounting degrees annually — all are record highs.
So in the world of accounting, the U.S. may be outnumbered. But numbers don't tell the whole story. In fact, roughly 85 percent of the global Big Four's revenues still come from North America, even though the BRIC nations (Brazil, Russia, India and China) are surging in growth.
In this environment, up-and-coming accountants and firms recognize that "international experience is a plus," according to Debra Feldman, an executive talent agent at JobWhiz and a contributor to the AICPA Insider newsletters. She says many employers are looking for at least one additional language. And not just the Western European languages, but also Russian, various Chinese dialects and Indian languages. "Minorities may have an advantage since they are multicultural," she has said in these pages.
Today U.S. accounting standards, as established by U.S. financial markets, accounting firms and global companies, are de facto standards for world trade. "Of the 14 foreign initial offerings in the American stock market in 2009, 11 were from mainland China, one from Hong Kong, one from Singapore and one from Brazil," according to Steven M. Davidoff, a professor at the University of Connecticut School of Law. And what kind of financial reporting standards are those companies using?
Davidoff says most are using U.S. GAAP. That's not to say that IFRS isn't building momentum. But for the moment, Davidoff says, "the global capital market still values American GAAP" and demonstrates "the value [of] American regulation and supervision."
It's something for every U.S. CPA to be proud of. But, by the same token, it's not to be taken for granted.
CHECKING YOUR PULSE: How’s busy season so far? Join the survey; get the results.
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