Globalizations Effect on Accounting Industry

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How The Changing World Will Change The Accounting World

The public accounting industry, due to rapid changes in the global landscape, will grow internationally while remaining flat domestically. This is due to the two major facets of globalization and its effect on the industry. These facets are the globalization of markets and the globalization of production. The globalization of markets is the creation of one world-wide marketplace due to deregulation of international trade. This gives accounting firms the ability to sell their services anywhere in the world. The globalization of production is the ability to take advantage of goods and services, sourced from different nations. This allows accounting firms to outsource their services to areas where labor is less expensive, reducing costs and thus increasing profitability. The public accounting sector is affected by both facets differently. Furthermore, the global landscape has changed more rapidly over the last twenty five years than any other time in history. This is due to a combination of two major vehicles; technological advances and regulatory reform. The impact of these new technologies and regulations has rewritten the role of the traditional accountant. Traditionally accountants were used mainly for financial data entry; the new accountant is a consultant, an auditor and an advisor as the industry moves away from financial accounting and towards managerial accounting. Globalization has occurred more rapidly in the last thirty years than any other time in history for two very distinct reasons, the advancement of technology coupled with government deregulation of markets. Technological advances effecting the globalization of the accounting industry include improvements in the travel industry, the advent of the internet and the rise of cellular technology. These advances have improved record keeping abilities, created the ability to instantly share financial information and the increased ability to handle multiple corporate contracts simultaneously. The Pathways Commission, a joint project between the American Accounting Association and the American Institute of CPA’s, released its final report in July 2012 finding: Complex business transactions and globalization continue to change the business environment. Additionally, technology’s rapid development introduces new opportunities and challenges. Enhanced technological skills are increasingly important for businesses’ success and, therefore, for future accountants. Fraud control, risk management, and specialized skills will be needed. Regulation will certainly evolve and be complicated by global operations. All of these changes increase the need for both knowledge and skills that meet the changing environment. As a result, the importance of lifelong learning is magnified.” (Pathways Commission, 2012, p. 133) Based on this reading, The Pathways Commission believes that the accounting field is changing before our eyes due to the change in the global marketplace. This evolution of the field will require accountants to be proactive in learning new skills to keep up with these changes. The commission argues that the increase in skills required by the accounting industry as a whole will, in turn, require an increase in the amount of accountants in the industry. They believe the increase in global trade will bring about higher government regulation regarding corporate accountability, in turn inflating the demand for future accountants. (Pathways Commission, 2012) Intuit, the company behind leading accounting software QuickBooks, released a report on their view of the future of accounting. Similar to the findings in The Pathways Commission report, ‘2020 Report: Future of the Accounting Profession A New Mindset and Model for Thriving in a Connected World’ views the future accountant to be better connected and more informed in the global marketplace. The report states: Globalization will be the norm,...
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