Imagine a world in which a company could prepare a single financial statement that would satisfy the reporting requirements of all the countries in which it does business, rather than tailoring dozens of separate reports to meet dozens of different standards. That world is coming, and Jana Raedy is helping business schools get ready for it.
In July, UNC Kenan-Flagler received an unrestricted gift of $100,000 from the Ernst & Young Foundation. The grant is allowing Raedy, the Ernst & Young Scholar in Accounting and associate professor of accounting, to spend this academic year helping the Big Four firm develop curriculum materials for faculty who suddenly find themselves needing to teach the International Financial Reporting Standards (IFRS).
The standards, adopted by the International Accounting Standards Board in 2001, are designed to address broad rules and specific treatments, providing a template for financial statements that, like Visa, are accepted almost anywhere. Over the next several years, IFRS is slated to replace scores of often incompatible national standards, including the U.S. generally accepted accounting principles, or US GAAP.
Raedy is working with two other faculty members — one from Canada and one from Miami University of Ohio — and four Ernst & Young partners. The team is developing lecture notes, homework problems, lecture examples, case studies, debate issues, and Power Point slides, Raedy says, “everything for faculty to just take it and use it in the classroom.” The team will also bring faculty in and teach them IFRS using the new curriculum.
More than 100 countries now require IFRS or allow companies to use them, Raedy said. The new rules will be an incredible boon to multinational corporations, and to domestic firms that compete with foreign firms and want to provide investors and analysts with consistent information. But the Security and Exchange Commission’s announcement last year that it was fast tracking a plan to replace US GAAP with IFRS caught many people unaware, especially business school faculty.
“Academia is in trouble because virtually none of the faculty know IFRS,” Raedy said. “Everybody knows US GAAP. We learned US GAAP, we practiced US GAAP, we’ve been teaching US GAAP, with very little knowledge of the new standards.”
By partnering with faculty from top business schools to create the new curriculum, Ernst & Young will accelerate the process of bringing academia up to speed, according to Raedy. “There is a fairly large transition from what they give you to the classroom,” she said, and including faculty who come from reputable programs will result in materials that are “immediately usable.”
The group expects the new curriculum to be ready next summer.