According to the World Bank definition, globalization refers to the witnessed integration of different economies in the world today. It is an ever-changing process that enhances interaction and integration of different people, nations, companies, and governments. It comes with both negative and positive effects. Apparently, globalization has the effect of shaping the world in which we live. It has resulted in the notion that the world is increasingly a smaller space to live. The shrinking effect refers to reduction of the space that exists between different communities or people living in different parts of the globe rather than the land area. It is as a result of political, social, cultural and economic unification of different countries around the world. Its impact is evident in different areas be it governance, business, technology or even culture. It presents various opportunities as well as challenges/problems to different professional fields. It strives to impose new personal and professional challenges for accountants. For accountants who embrace change in their workplaces, globalization offers them new opportunities (Prochazka, 2018) .With time, the world is getting smaller and smaller thanks to the globalization process. And as far as accounting is of concern, the majority view it an advantage in that it cultivates financial health in the global financial markets, enhances standardization as well as enhancing the ease of doing business across the international borders. In spite of such advantages, globalization is an issue of concern in the future given that it dictates adaptation of various measures as well as embracing change in the field of accounting. The globalization phenomenon will require accounting professionals to rewire their minds, deal legal, political and technological challenges that are a barrier to convergence as dictated by globalization process. This is a challenge as failure to adhere to such demands may dictate the need for alternatives that will make the accounting professionals.
Basically, globalization is not a very new phenomenon given that it has been there for the last two decades. It promotes interdependence between different economies. It promises more wealth and a significant reduction in the levels of poverty amongst different economies. To achieve these, different countries seek to develop economically through business. Therefore, attracting foreign investors is critical. So as to guide such investors in investments decisions making, different countries are adopting International Reporting Standards (IFRS) which is thought to help in transparency and consistency of financial data. Such is key in investments decision-making process but could be a challenge for the accounting field in the future (Needles Jr, 2010). This is for the simple reason that the financial constraints of developed and developing countries are not the same as always. This and the fact that there are always changes in culture, regulations, and accountability will make it difficult for accountants to adopt the IFRS in the future. Therefore, the process that is geared towards achieving convergence in accounting as dictated by globalization is a difficult one. This is so given that it will require more time, resources to put the required mechanisms in place. There will be a political aspect as some countries are reluctant to embrace the same and that accountants will have difficult time lobbying for the necessary changes that are needed. Different countries and regions have different regulation or even the way of doing things that will demand the foreign accountants to adopt and that adaptation and change in the usual way of doing things will be difficult.
In the 21st century, globalization has shaken the accounting world. There have been new software as well as new financial regulations that have been put in place to enhance the same. Now, financial applications and also software is able to record and keep expenses and income records. They can also work out the taxes and also predict the future expenses. Therefore, any business organization that owns such software packages can easily handle the process of bookkeeping without necessarily needing to employ an accountant for the same (Lietaer, 2013). This is the result of globalization process which demands an efficient, fast and easy way of doing things. Technological evolution as a result of globalization in such cases therefore, threatens the role of accountants both now and in future. To remain relevant, the accountants may be required to offer additional services of providing clients with guidance and many more services. Such will require them to seek more training in the future which obviously a challenge is as more training will be required. Therefore, despite the fact that globalization facilitates improvement in technology that eases the manner of doing things.
Usually, globalization symbolizes various changes that are taking place in the world so as to result in more interconnectedness. In trade, it could mean that a company of a particular country connects with another one from a different country. That way, the impact of globalization can be said to be significant in international trade and thus the accountancy education. Due to the changing dynamics in different countries or parts of the world, the accountancy students have to have good knowledge of the whole world. Unlike in the past when students were only required to have knowledge of tax and financial system of their countries, students will be required to possess vivid knowledge of the international tax and financial structure which will prove to be tougher (Saskia, 2017).
Another issue is the Generally Accepted Accounting Principles are usually the normal guidelines. However, due to the process of globalization, these principles are in a continuous change which will make it difficult for both students and professions of the accounting field to stay updated. There are also notable changes in as far as financial reporting is concerned and that such must be understood by both professionals and students. Changes are also witnessed in the capital markets especially for countries that are dependent on each other. Therefore, given that globalization is accelerating as time goes, such changes are expected to be rapid. Students and professionals will be required to study more and also stay updated. This could be a threat in the future given that it could scare away those wishing to have a career in accounting. The job market is also likely to seek accountants with certain knowledge which will be a blow to accountants of past years.
Globalization is a threat to those accountants working with enterprises that have gone international, those that work for the Security commission and also those whose skills limit them to do compliance work. This is due to the mere fact that globalization has resulted in GAAP that functions to limit their knowledge and skills and thus their relevance. Given that their knowledge, skills, and ability would be limited, this is likely to create the problem of unemployment in future. Globalization might also force accountants of the past years to leave their jobs so as to make way for the modern accountants who possess additional skills that are crucial. Also, due to the same, most organizations might be forced to demand accountant professionals that have specialized in the global matter. The net effect is that there is likely to be more accountants losing their jobs in the future creating an issue of unemployment.
Some may have the view that globalization has the brings about of barrier reduction, trade liberalization as well as quick response to changes which benefits accountants in that it enhances professional regulation and judgment. It is clear that to a large extent, globalization has eliminated borders in business and so is the accounting system. To achieve unification, standardization principles of management accounting and accounting have been put in place. In this regard, globalization brings ease of doing business internationally. But on the contrary and as far as accounting is concerned, globalization is a threat now and in the future in different ways. It could mean that many accountants might lose their jobs in the future given that accounts with the knowledge of international system will be demanded. To achieve unification, rules and regulations in some regions must be addressed. This will require persuading the political system which will be an uphill task for accountants. It could also force accountants to seek necessary legal and structural reforms which don’t come easy. Also, it could mean that accounting students will have tough times in covering curriculum and that is something that could scare away those wishing to pursue a career in accounting. From all this, it is possible to realize that even though globalization comes with its advantages, it is to a larger extent a challenge to the accounting profession.
References:
Burns, J. O., & Needles, B. E. (Eds.). (2014). Accounting Education for the 21st Century: The global challenges. Elsevier.
Needles Jr, B. E. (2010). Accounting education: The impact of globalization. Accounting Education: an international journal, 19(6), 601-605.
Meeting of the Society for Economics and Management. International Monetary Fund, 15.Top of Form
Procha?zka, D., & Annual Conference on Finance and Accounting. (2018). the Impact of
Globalization on international finance and accounting: 18th Annual Conference on Finance and
Accounting (ACFA).
Saskia, S. (2017). The State and Globalization 1. In Revival: The Third Way Transformation of
Social Democracy (2002) (pp. 59-72). Routledge.
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