I was sitting in on a lecture given by Dr. Albrect, one of the top accounting experts in the US, and paid particular attention to his unique perspective on the international trends in accounting standards.
Accounting is the life-blood of any business (as it monitors and measures the cash flow) and standards are absolutely necessary for having common reporting practices. For years the board that creates the accounting standards in the USA (the FASB), and the majority of university programs and accounting professionals assumed that the American standards in accounting would end up being the world’s standards. Well, recently and quickly it looks like the tides are shifting more toward the standards created by the more recently established IASB (International Accounting Standards Board). Although nearly 80% of the standards are the same, there is a huge need right now for people to understand the differences.
If I wasn’t afraid of boring you, I’d be tempted to give an exposition on all the fascinating international issues in accounting: with more jobs going overseas to less-expensive workers, subsidiaries and products being bought in foreign countries, products being created in one country and “bought” by a subsidiary of the same company in a different country in a way to minimize taxation by having a majority of the profit recognized in the country with the lowest tax rate (e.g. Cayman Islands, Puerto Rico, etc), translation and transaction issues with fluctuating exchange rates, etc., etc., etc. – more and more international issues present themselves than ever before.
In the 1950’s most everything a US company bought, produced and sold was all done in the US.
Today, with an engineer in the US costing about $80K/year vs. one in the Philippines costing about $10K/year or a programmer in the US costing about $75-85K/year vs one in Eastern Europe costing about $7K/year – it is easy to see how even the workers of US companies will increasingly be individuals in other countries. Immediate cost savings in salary is obvious, but other difficulties arising from things such as cultural differences and expectations in work environments, communications and relationships are less obvious.
Dr. Albrect shared a specific example of how England, Ireland, and Canadian accountants debate “ad nauseam” with accountants from the US over standards in education and certification of accountants. Whereas the US puts a lot of emphasis on a major exam that is a standardized test and 1 year of experience to receiving the CPA certification, formal education and big tests means less in these other countries – instead a lot more emphasis is placed on a 3-4 year apprenticeship model towards becoming a chartered accountant.
Well, this entry has been a mesh of a bunch of issues – but the essence of it is (1) Americans need to be a whole lot more sensitive to international issues than they are, and (2) that the network of people who we work with and/or receive even daily services from will increasingly be of an international flavor (I read recently a post on how perhaps even fast food ordering will soon be outsourced internationally).
My goal is to look at the way in which technology is connecting us all in international collaborations – and the ways in which cultural differences can be turned from liabilities and into assets – for all of us.
I just recently became aware of a book on this topic by a respected scholar, Dr. Lee Radebaugh. “International Accounting and Multinational Enterprises, 6th Edition” See http://www.wiley.com/WileyCDA/WileyTitle/productCd-0471652695.html