As foreign markets have become increasingly accessible, and as foreign consumers and business partners become more eager to embrace global commerce, conducting business internationally has become the norm for American corporations. Whether involved in international trade, tax advising, internal auditing, business consultation or international acquisitions and mergers, CPAs and other accountants are looking to broaden their skills to include international accounting standards so as to position themselves to be part of the future of international business.
International accountants prepare periodic financial statements, analyze and record transactions, determine foreign currency exchanges, determine exchange rate fluctuations, prepare consolidated financial statements to recast foreign financial statements into U.S. dollars, audit foreign transactions and prepare tax returns for parent companies and their foreign subsidiaries.
The Growing Need for International Accountants
Although doing business in the global market is not a new concept, it’s only in recent years that American companies have come to accept globally recognized financial reporting standards. The idea of a universally accepted accounting platform began to take shape decades ago, as the industrialized nations of the world sought to create standards that could be used by developing countries that did not yet have their own accounting standards in place.
Because the growth of international trade and business has created the need for global standards in accounting, the international business community has begun adopting International Financial Reporting Standards (IFRS) to ensure consistency. U.S. corporations, and the accounting professionals that serve these corporations, are in the midst of profound change as more and more companies are coming to accept and adopt IFRS. This has brought attention to the need for integration between IFRS and current U.S. financial reporting standards.
There are currently some 120 nations and reporting jurisdictions that either permit or require the use of International Financial Reporting Standards, and about 90 countries that use IFRS exclusively. Canada, Korea, Mexico and Japan are all slated to adopt IFRS within a few years.
The IFRS Foundation, along with its standard-setting body, the International Accounting Standards Board (IASB), work as independent, not-for-profit organizations dedicated to educating accountants on IFRS and integrating the standards into global commerce.
Under current law, when filing reports with the Securities and Exchange Commission (SEC), U.S. companies must adhere to the Generally Accepted Accounting Principals (GAAP), which have been the standard in the U.S. for decades, however, the SEC has granted permission to 110 U.S. corporations to begin using IFRS with their foreign subsidiaries. These companies represent the first phase of the shift to international standards. If this phase is found to be a success, a mandated shift to IFRS will take place over the next three years, with the largest companies making the transition in the 2014 fiscal year.
The AICPA and IFRS
The American Institute of CPAs (AICPA) understands the importance of IFRS to international business and has implemented a number of efforts to ensure success with the integration of the standards. The AICPA is now requiring that continuing education for all AICPA members include some IFRS components. This organization is also working closely with educators, textbook authors and institutions of higher learning to begin making IFRS an integral part of the educational curricula for would-be CPAs.
The AICPA also notes that the adoption of IFRS will encompass much more than just financial reports. Instead, IFRS is expected to become the dominant accounting standard used in all aspects of business accounting, including tax reporting, information systems, employee compensation and even stock-based compensation for shareholders. As a result, the need for highly trained CPAs knowledgeable of IFRS will become essential as the U.S. moves toward the adoption of these international standards.
International Accounting Education Requirements
Degrees in international accounting and finance offered at the under-graduate and graduate levels are often found in universities in Canada and the United Kingdom. Within the United States, some institutions offer degrees specific to international accounting, while many general accounting programs include course offerings in IFRS or concentrations in international accounting. Because of the increasing demand for accountants familiar with IFRS, many universities and colleges are working to add more international accounting courses to their curricula. In fact, Paul E. Holt, PhD, an accounting professor at Texas A&M University, wrote in his article “What is an International Accountant?” for New Accountant, “Because of the rapid change in international business, the content of international accounting courses changes every semester, and the people who write international accounting textbooks are profoundly challenged just to keep up.”
The United States Department of Labor, Bureau of Labor Statistics, reports that the vast majority of accounting positions require a bachelor’s degree in accounting or a related field, and some employers seek job candidates who hold a master’s degree in accounting or business administration. Many universities offer specialty programs specific to particular areas of accountancy, such as internal auditing or financial accounting.
Many accounting professionals choose to pursue the Certified Public Accountant (CPA) designation. According to the Robert Half 2012 Salary Guide, Accounting and Finance, the CPA continues to be the accreditation in highest demand among corporate employers when considering candidates for senior financial analyst positions. Only licensed CPAs are legally permitted to file reports with the Securities and Exchange Commission (SEC), so publicly traded companies almost always either employ CPAs or retain them as needed through accounting and professional services firms.
In order to obtain a CPA license, accountants must pass a national exam and meet the requirements of the state Board of Accountancy specific to the state in which they practice.
Most states and jurisdictions either currently require or are in the processes of adopting uniform CPA educational requirements in accordance with the Uniform Accountancy Act (UAA). Under the UAA, CPA candidates are required to complete 150 semester hours of college credit, which is an additional 30 semester hours beyond a typical four-year bachelor’s degree program. To meet the 150-semester-hour requirement, many colleges throughout the country offer a five-year program in accounting.
All states and jurisdictions require that CPA candidates pass the Uniform CPA Exam, written and administered by the American Institute of Certified Public Accountants (AICPA). In 2011, an IFRS component was added to the Uniform CPA Exam. This IFRS section will be expanded gradually over the course of the next several years until IFRS is covered comprehensively. Because GAAP and IFRS have not fully converged, both areas are now covered in the CPA Exam.
After earning a CPA license, licensees are required to complete continuing professional education during each license renewal period. Most continuing education is completed through professional accounting associations.
AICPA IFRS Certificate Program
Currently, CPAs can achieve certification in IFRS through the AICPA IFRS Certificate Program. The AICPA now considers knowledge of the IFRS to be standard entry-level practice for CPAs, and encourages its members to learn both GAAP and IFRS.
Although only CPAs can pursue the AICPA IFRS Certificate, the AICPA IFRS Award of Educational Achievement is open to Chartered Accountants and other accounting professionals who possess, at minimum, an undergraduate degree in accounting, or equivalent work experience.
International Accountant Salary Expectations
According to the Robert Half 2012 Salary Guide, Accounting and Finance, senior-level financial accountants generally earn salaries that range between $60,000 and $79,250, while senior-level internal auditors earn between $71,500 and $94,000. Accounting managers in large companies typically earn salaries that range between $75,500 and $104,250.
The U.S. Department of Labor, Bureau of Labor Statistics reported in May 2010 that nationally, top earning accountants within the 75th percentile earned $81,290 on average, while those in the 90th percentile eared an average of $106,880.
According to the Robert Half 2012 Salary Guide, accountants and auditors in larger markets, such as Irvine and San Diego, California; Boulder, Colorado; Stamford, Connecticut; Chicago, Illinois and Miami/Fort Lauderdale, Florida, often exceed these salary estimates by 10 to 15 percent.