In an unofficial survey of accounting students looking to graduate within the next several years, one concern (beyond, of course, securing employment with a solid firm after graduation) seemed to come from a significant number of students: IFRS and how its planned adoption in the United States will impact not only the remainder of their educational careers but most importantly the CPA exam.
How should current students plan for IFRS in Financial Accounting and Reporting if they have little to no experience with International Standards in school?
The first answer to that is obvious - find a CPA exam review course that prepares you as if you have no previous experience whatsoever. If you are not planning on taking a review course, your best bet is to make sure you have an understanding of the new standards before they are actually implemented.
Oddly enough, it turns out that IFRS should not be too large of a concern for new or soon-to-be accounting grads. We were lucky enough to have a few of our accounting industry friends - well past the CPA exam worries, from the Big 4 to academia - to weigh in on the potential impact of adoption in the United States.
Said Gary Sandefur, CPA, Corporate Controller of public corporation R.G. Barry and member of the Ohio Society of CPAs' Accounting & Auditing Committee, "IFRS adoption will move ahead on the 2014 timetable, after much debate, at least for the very large publicly held companies. There has been plenty of noise about Mary Shapiros opinions with regard to IFRS adoption, but I think in the long run the marketplace will decide. Early adoption is likely off the table that will be the most heavily contested item in the short-term. With the Congress and Obama administration potentially looking at repealing LIFO, that may remove one of the most significant obstacles." Meaning accounting grads don't have to worry all that much about pending adoption as first expected.
Mr Sandefur's Committee submitted a March 31, 2008 comment letter to the SEC endorsing a transition to principles-based standards on behalf of the OSCPA.
Keep in mind that though the AICPA Board of Examiners has insisted it will adapt as always and is simply waiting for a solid announcement from the SEC regarding IFRS so it can move forward with testing International Standards on the CPA exam, there is also a lag of about 6 months when it comes to new pronouncements.
The AICPA Board of Examiners will test new questions without scoring them before applying these questions to a candidate's score in a later testing window. This lag gives you an advantage as a CPA exam candidate to prepare just after new pronouncements are announced knowing you have a few months (or at minimum one testing window) to learn them.
Just when you thought you had enough to worry about, Peter Margaritis, CPA from Ohio Dominican University says watch out for an iGAAP! "I think that there is pretty strong evidence that we will have global standards (iGAAP) long before I decide to retire," says the '09-'10 OSCPA Chair-Elect. Apparently he's also a bit of a comedian like a certain CPA Review instructor we know so who knows if he's kidding.
And what about the "GAAP" (it's a joke, get it?) in the education of current accounting students on the University level who may have to tackle IFRS on the CPA exam in coming years?
Dr Michael Kraten, CPA of Suffolk University in Boston believes the worry that accounting students entering or emerging from school amidst the transition might have trouble is much ado about nothing.
"There are only a few major areas in any specific industry where GAAP differs dramatically from IFRS, and auditors routinely assess the differences between GAAP and IFRS whenever those differences are material."
It is that faith in the accounting industry which Dr Kraten possesses that does not come through in survey responses concerning the SEC's motivation for pushing IFRS in the U.S. But the desire to function smoothly in a global marketplace also appears to be a large motivator for the SEC, according to responses.
Says Marty McCutchen, CPA of Texas-based software-for-CPAs company CPA Service Group, the hidden benefit of IFRS adoption lies in the savings in comparison to "the costs for compliance" associated with the complex rules of GAAP. He also cites a need for simplification in adoption to save on the costs of complying with two distinct sets of accounting rules in conjunction.
The truth is that much of IFRS adoption in the United States is waiting to be ironed out.
So there's no need to panic. The industry seems open to the suggestion but certainly wants as always for the larger concerns to be addressed before the SEC ushers us forward to an evolving financial statement standard. This means you as a current accounting student or soon-to-be CPA exam candidate have time to prepare while these details are determined.
Stay tuned for our next IFRS piece; how Chartered Accountants in countries like Australia have already managed the transition and how Canadian CAs are bracing for the change before U.S. CPAs.