Unfortunately, many U.S. accounting professionals remain unaware of the impact that the international convergence of accounting standards will have on their jobs in the short run and on their careers in the long run. Worse still, some professionals have embraced counter-productive myths about convergence. This article will debunk three of those myths.

Myth 1
Convergence means that other countries will start using U.S. Generally Accepted Accounting Principles (GAAP).

The Truth: Most countries of the world (including Canada and the European Union) have explicitly rejected convergence with U.S. GAAP in favor of convergence with a common set of country-neutral accounting standards known as International Financial Reporting Standards (IFRSs).

Commentary: For decades, U.S. GAAP was universally recognized as the most complete, highest-quality set of accounting standards in the world. Not surprisingly, many observers believed that U.S. GAAP would be the focal point of convergence. But U.S. GAAP has been slow to evolve and improve as the business world has become increasingly complex and global. Consequently, it became possible for alternative country-neutral standards to emerge and overshadow U.S. GAAP.

Although securities regulators in some countries allow listed companies to file financial statements prepared under U.S. GAAP, no country other than the U.S. requires companies to do so. In contrast, more than 100 countries around the world have recently chosen to use IFRSs instead of using U.S. GAAP or their own country-specific standards. Thus, it is now very clear that U.S. GAAP will not be the focal point of international convergence.

Myth 2
Even if the rest of the world uses a common set of country-neutral accounting standards, U.S. companies will stick with U.S. GAAP.

The Truth: In the short run, U.S. companies are likely to find it both feasible and desirable to switch to accounting standards that are globally-accepted and country-neutral.

Commentary: The U.S. Securities and Exchange Commission (SEC) is considering allowing all listed companies to use either IFRSs or U.S. GAAP in their filings (SEC May Give U.S. Filers IFRS, GAAP Choice). And because the world's sources of capital exhibit a strong preference for country-neutral standards, switching to IFRSs sooner rather than later would provide U.S. companies with expanded access to capital on a global scale. Switching to IFRSs would also dramatically reduce the cost of accounting and financial reporting for multi-national enterprises which now have to translate and reconcile books and records prepared under various country-specific standards prior to consolidation. And the increased availability of IFRS-trained accounting talent throughout the world is creating both cost-savings opportunities and expansion opportunities even for small, privately-held U.S. firms.

Ultimately, sticking with country-specific accounting standards like current U.S. GAAP makes about as much sense (and stands about as much a chance of succeeding) as sticking with DOS after the rest of the world has made the switch to Windows.

Myth 3
Convergence might affect other U.S. accounting professionals, but it won't affect me.

The Truth: Convergence has affected and will continue to affect all U.S. accounting professionals. Specifically:

• Under the convergence-oriented leadership of the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), U.S. GAAP and IFRSs have both changed and will continue to change, improving and becoming more alike (IASB, FASB Release Global Standards Map).
• In the short run, fewer U.S. companies will use U.S. GAAP – they will neither have to nor want to.
• Foreign companies with U.S. operations will abandon U.S. GAAP in favor of IFRSs.
• The global pool of accounting talent will be permanently altered, possibly to the point of commoditization.

Commentary: The international convergence of accounting standards will impact individuals, companies, and even entire countries. U.S. accounting professionals are certainly not immune to the effects of convergence.

U.S. accounting professionals who delude themselves into thinking of convergence as "something that happens to other people" are in big trouble. They will be ill-prepared from a skills perspective for the shift towards country-neutral accounting standards. They will also be ill-prepared to withstand the intensifying global competition for domestic accounting work that convergence will bring.

Conclusion
U.S. accounting professionals need to prepare themselves for the short-run and long-run challenges of convergence. The first step in that preparation is to discard the three common myths about convergence addressed in this article.

BRUCE POUNDER, CMA, CFM, is President of Leveraged Logic, a leader in the development, marketing, and delivery of professional education. He will be presenting at the Convergence Seminar on the international convergence of accounting standards on May 24-25, 2007, in Mexico City. Bruce can be reached at (828) 254-4812 or Bpounder@LeveragedLogic.com.