Globalization is defined as “the act or process” of globalizing – the condition of being globalized – the development of a more integrated global economy, marked primarily by free trade, capital flow, and tapping into cheaper labor markets. Globalization has led to a change in accounting standards, resulting in the need for a uniform set of reporting standards. Globalization has had a significant impact on accounting education due to its urgent need for Globalized Accounting Standards. To ensure that accountants are able to compete in today’s globalized economy, and provide financial information users with comparable data, it is important to address the globalization of the accounting profession.

Any functioning, developing, or growing capital market needs reliable financial information. Effective accounting standards and procedures have been established to support capital markets that are successful. These standards are commonly known as GAAP in the United States. GAAP can be defined as a set of accounting rules and procedures that have been established by an accounting rule-making body in an area. Over time, GAAP has become accepted because it is universally applicable. International Financial Reporting Standards (IFRS), are all accepted accounting standards for international use, as issued by the International Accounting Standards Board, (Kieso, Weygandt, & Warfield,2012). The difference is that IFRS are very general and open to interpretation while GAAP is specific and complicated. Users of IFRS have a greater advantage than those using GAAP. GAAP does not provide similar information for investment purposes.

Enron and World Com accounting scandals brought to light the need for convergence of GAAP/IFRS. FASB & IASB signed “Norwalk Agreement”, in 2002, with the intention of converting GAAP and IFRS to high-quality Global Accounting Standards. These two boards renewed their agreement on this common goal in February 2006. The Securities and Exchange Commission, (SEC), no longer requires foreign firms to reconcile statements from IFRS and GAAP for filings on US stock exchanges.

It is obvious that globalization has had an impact on the accounting standards. The shift towards IFRS has impacted the knowledge accountants need to compete in today’s globalized market. Accounting professionals in the U.S. need to be able understand the differences between GAAP reporting standards, IFRS, and other standard and communicate these differences to clients when making investment decisions. The SEC’s decision allowing the use of both IFRS/GAAP on U.S. Stock Exchanges is another example of why accounting education must include both IFRS/GAAP. Bruce Pounder made a valid point regarding the impact on accounting education. He stated that “as international standards have begun to outweigh U.S. standards, most U.S. accounts will find their knowledge, skills and abilities are obsolescing more quickly than ever before” (Pounder (2006). It could be argued that U.S. accounting professionals will need to adapt to both GAAP AND IFRS in order prepare for the shift to IFRS.