I write this blog primarily for financial statement preparers, but a recent high-level discussion about the impact of Convergence on financial statement auditors provides some insight into how various participants in the financial reporting supply chain view the challenge of educating, training, and developing U.S. accounting and finance professionals as U.S. GAAP and IFRSs converge.
On October 18, 2007, the Standing Advisory Group (SAG) of the U.S. Public Company Accounting Oversight Board (PCAOB) met in Washington, DC, to discuss, among other things, "Audit Implications of IFRS Financial Statements in U.S. SEC Filings." See the meeting page for links to audio recordings of the meeting and a Briefing Paper for the IFRS discussion. There's also a detailed summary of the meeting at FEI's Financial Reporting Blog.
To date, most discussions about Convergence education, training, and development (such as those held during the recent PCAOB SAG meeting) have focused on how to get accounting and finance students and professionals who are familiar with current U.S. GAAP to learn current IFRSs. But such discussions ignore a bigger issue: Because U.S. GAAP and IFRSs as we now know them will undergo rapid, profound change as they converge into a single set of global standards, accounting and finance students and professionals throughout the world will need to absorb many significant changes that will be made to existing standards, which will be a far bigger challenge than simply learning the current differences between U.S. GAAP and IFRSs. And the bigger challenge would essentially be doubled if companies are given the choice of preparing financial statements under either U.S. GAAP or IFRSs prior to Convergence.
Here are some quotes from the PCAOB SAG meeting that I found particularly relevant to the issue of educating, training, and developing U.S. accounting and finance professionals:
- Jeffrey C. Steinhoff, U.S. Government Accountability Office: "[C]hange is something that happens all the time. Accounting standards, accounting treatments, business -- it’s changing all the time. So education's a lifetime job."
- Vincent P. Colman, PricewaterhouseCoopers: "[I]f the environment is changing, . . . we must change with that environment."
- Samuel J. Ranzilla, KPMG: "[T]aking some of our people who are very good in U.S. GAAP and making them very good in IFRS is not really a whole lot about what’s in the two standards -- it’s actually much more around change management . . ."
In particular, I concur with Sam Ranzilla's characterization of the challenge as being much more about change management than about the technical differences between the two sets of standards. In my opinion, this is indeed a major issue that financial executives will need to contend with in the coming years: "How should we prepare for a future that will be very different from the present, not because we'll be adopting existing IFRSs but because the FASB and IASB are working aggressively to change both U.S. GAAP and IFRSs significantly in a short period of time in order to converge the standards with each other?"
The Challenge of Change
I write this blog primarily for financial statement preparers, but a recent high-level discussion about the impact of Convergence on financial statement auditors provides some insight into how various participants in the financial reporting supply chain view the challenge of educating, training, and developing U.S. accounting and finance professionals as U.S. GAAP and IFRSs converge.
On October 18, 2007, the Standing Advisory Group (SAG) of the U.S. Public Company Accounting Oversight Board (PCAOB) met in Washington, DC, to discuss, among other things, "Audit Implications of IFRS Financial Statements in U.S. SEC Filings." See the meeting page for links to audio recordings of the meeting and a Briefing Paper for the IFRS discussion. There's also a detailed summary of the meeting at FEI's Financial Reporting Blog.
To date, most discussions about Convergence education, training, and development (such as those held during the recent PCAOB SAG meeting) have focused on how to get accounting and finance students and professionals who are familiar with current U.S. GAAP to learn current IFRSs. But such discussions ignore a bigger issue: Because U.S. GAAP and IFRSs as we now know them will undergo rapid, profound change as they converge into a single set of global standards, accounting and finance students and professionals throughout the world will need to absorb many significant changes that will be made to existing standards, which will be a far bigger challenge than simply learning the current differences between U.S. GAAP and IFRSs. And the bigger challenge would essentially be doubled if companies are given the choice of preparing financial statements under either U.S. GAAP or IFRSs prior to Convergence.
Here are some quotes from the PCAOB SAG meeting that I found particularly relevant to the issue of educating, training, and developing U.S. accounting and finance professionals:
In particular, I concur with Sam Ranzilla's characterization of the challenge as being much more about change management than about the technical differences between the two sets of standards. In my opinion, this is indeed a major issue that financial executives will need to contend with in the coming years: "How should we prepare for a future that will be very different from the present, not because we'll be adopting existing IFRSs but because the FASB and IASB are working aggressively to change both U.S. GAAP and IFRSs significantly in a short period of time in order to converge the standards with each other?"