Collaborative research team conducts IFRS interviews in Europe
UW-Eau Claire research team at the University of Glasgow with Professor Chis Coles. Pictured are (l to r) Dr. Bill Miller, Professor Chris Coles, Josh Mondor, Tyrell Wirkus, and Matt Chybowski
A faculty-student collaborative research team led by University of Wisconsin-Eau Claire accounting faculty member Dr. Bill Miller traveled to the United Kingdom to learn how the adoption and application of the International Financial Reporting Standards (IFRS) has impacted both university accounting programs and businesses. The team left the United States on June 8th and returned on July 9th. Accompanying Miller on the month-long trip through England, Scotland and Ireland were accounting seniors Matt Chybowski from Appleton, WI, Josh Mondor from New Richmond, WI and Tyrell Wirkus from Edgar, WI.
As more companies became multinational, the need for uniformed international standards increased. In 2005, the United Kingdom and all the other European Union member countries replaced their individual accounting standards with International Financial Reporting Standards (IFRS), a set of globally accepted and recognized accounting principles and standards used to record, summarize and prepare financial statements. Prior to 2005, generally accepted accounting principles and standards (known as GAAP) varied from country to county. As of 2012, the United States is the only country of any significance that has yet committed to adopting these global standards.
An important obstacle that hinders the successful implementation of IFRS is how to educate current and future accountants on these new standards. According to Miller, educators generally agree that this new set of standards cannot be taught or applied in the same way as U.S. GAAP.
“IFRS is primarily principles based, while U.S. GAAP is primarily rules-based,” said Miller. “Educators in the United States may very well have to totally change how they have been teaching accounting for hundreds of years,” said Miller. “Practitioners will no doubt face similar challenges in implementing these new standards,” he continued.
Miller and his students interviewed thirty five accounting professors, department administrators and practicing accountants to determine the best approach for teaching IFRS to existing and future accountants. The researchers also wanted to gain a deeper and broader understanding of the issues encountered and the solutions found during the transition from localized GAAP to IFRS.
Miller and his students interviewed accountants in London at Deloitte, Ernst & Young, and KPMG, and in Dublin and Waterford Ireland at Ernst & Young, KPMG and Price Waterhouse. While in London, the group also interviewed representatives of both the International Accounting Standards Board (IASB), the independent, accounting standard-setting body of the IFRS Foundation and the International Financial Interpretations Committee.
In England, the UW-Eau Claire team visited with faculty at the De Montfort University, Nottingham Trent University, University of Newcastle, University of Northampton, University of Southampton, and University of Worcester. From England, they traveled to Scotland where they met with accounting faculty at the University of Dundee and University of Glasgow.
One of the UW-Eau Claire students’ favorite interviews was with Damian Pickard, an accounting professor at the University of Northampton. Prior to teaching at the University of Northampton, Pickard worked for EGG Bank where he oversaw the bank’s transition to IFRS in 2005. EGG Bank, with the help of KPMG, was the first company to issue IFRS statements when the EU made the transition to IFRS.
“Mr. Pickard was able to speak to us about what he personally encountered at the private company,” said Josh Mondor, “He also was able to share how University of Northampton managed the transition to IFRS and how they teach IFRS today.”
From Scotland Miller and his team crossed the Irish Sea to Ireland where they met with faculty at Dublin Institute of Technology, University College (Dublin) and Waterford Institute of Technology.
Some of the companies they met with included e2V Technologies, a global manufacturer of high tech engineering solutions, sub-systems and components located in Chelmsford, England; Standard Life, an international long-term savings and investments company headquartered in Edinburgh, Scotland; and Honeywell Transportation, in Waterford, Ireland, a subsidiary of the U.S. multinational.
While interest in IFRS is very high among educators and practitioners, there is only limited research surrounding the actual adoption and application of these new standards. A qualitative study like the one conducted by Miller and his students can provide a roadmap for U.S. accounting educators and practitioners to follow should the U.S. decide to move forward.
“Prior to taking the trip I would have said it was only a matter of time before the U.S. commits to abandon U.S. GAAP in favor of IFRS. IFRS has clearly proven itself as a high quality set of standards which compare quite favorably with US GAAP. Unfortunately, recent announcements from the Securities and Exchange Commission and the Financial Accounting Standards Board appear to indicate they are delaying the decision to move forward to avoid giving up control of the standard setting process,” said Miller.
Miller and his students’ travel was funded by a Blugold Commitment grant through the UW-Eau Claire Center for International Education (International Research Fellowship). The group received additional support from the UW-Eau Claire Department of Accounting and Finance.