Big Four Make Big Plans for IFRS

Each of the top-tier firms is, in its own way, getting involved in college curricula for global accounting.
Roy HarrisMay 22, 2008

The competition is heating up in the latest Big Four contest: over who will do the most to help the educational system, and corporate clients, prepare for international financial reporting standards.

Deloitte & Touche, Ernst & Young, PricewaterhouseCoopers, and KPMG all claim supremacy in this area, of course. But treading between serious accomplishment and hype, as usual, takes some doing for the independent observer.

The latest competitive round may have begun — in the eyes of business journalists, anyway — with a press release last Thursday from Deloitte announcing the formation of an IFRS “University Consortium.” Working with Ohio State University and Virginia Polytechnic Institute, the accountancy has taken on the task of helping develop college curricula to get caught up in the area of international standards and their relation to generally accepted accounting principles.

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Going to the Deloitte website to investigate also connects the reader with
a primer on IFRS and U.S. companies, subtitled “implications of an accelerating global trend.” That publication suggests the outline Deloitte is using with its clients: explaining IFRS and its costs and benefits, and examining next steps for companies.

The thrust of Deloitte’s academic initiative involves an attempt to speed the integration of IFRS into the college curriculum through the drafting of case studies and other course materials involving international accounting standards, and by providing Deloitte personnel as lecturers. Deloitte partner D.J. Gannon notes in the press release that today’s curricula “have scant amounts of IFRS content,” and points out the three- to four-year cycles that apply to most textbooks. Deloitte recognizes a “responsibility to step forward and help academia educate and prepare tomorrow’s accounting professionals to apply this new language of accounting and financial reporting,” Gannon says.

On Friday, a day after the Deloitte program was announced, Ernst & Young was promoting its own “Academic Resource Center” to “develop curriculum and arm faculty members with time-critical learning materials focused on emerging global issues in accounting,” with IFRS at the top of the agenda. An outside public relations representative pitched that story by noting that “Deloitte made a similar announcement yesterday,” but stressing that E&Y’s Resource Center “has significantly more breadth and depth — including funding, focus, and reach.” E&Y, she claimed, had put $1 million into its program, while Deloitte was spending a mere $81,000.

Of course, E&Y also has
an extensive discussion of IFRS on its website, calling the move to international standards “a strategic opportunity.”

Other IFRS initiatives had been percolating for months, however, even if they weren’t quite as well publicized. Accounting expert Jack Ciesielski, on his blog, wrote after the Deloitte announcement that he was “not aware of IFRS-curriculum building/funding going on with the other three of the Big Four firms,” although he thought it a good idea to develop classroom materials in international standards.

But other efforts had started earlier. KPMG’s “IFRS Institute,” a bit more quietly, had been
announced back on April 22. The Institute already has “at least several thousand members,” a KPMG spokesman says, and in addition to academia has been attracting a cross-section of members from companies, audit committees, the accounting profession, rating agencies, and shareholders, among other groups.

In fact, the KPMG effort was promoted in the press release by chairman and CEO Timothy Flynn, who said the institute would “give a voice to each participant in the financial reporting process.” An earlier discussion of KPMG’s thoughts about the coming of IFRS is discussed on its website in a November 2007 report titled “How the IFRS Movement Is Expected to Affect Financial Reporting in the U.S.”

Meanwhile, PwC claims it has not been outdone. In a statement, Jean Wyer, the PwC partner who leads its academic initiatives, says the consultancy “has been developing IFRS curriculum materials for students and faculty since last year.” It has been working through its existing PwC University for Faculty, which will introduce a new IFRS-related program in July. She adds that IFRS-related studies at PwC date back to 2002, when it was working with the British and the U.S. Financial Accounting Standards Board on the development of international standards and how to treat them in the classroom.

As far as helping clients and the public understand the move to IFRS, among PwC’s initiatives on its website are an installment in its “10 Minutes” series titled “10 Minutes on IFRS.”

Second-tier accounting firms, too, are paying attention to IFRS education, each in its own way. And other offerings to help companies and others learn about international standards include “self-study programs” being offered in Europe, and in one case available through a U.S.-based company called ContractualCFO.

If the Big Four connections on IFRS with university instruction all sound well-organized, at least some people think it might be a bit too well-organized.

“While it’s in the self-interest of all the accounting firms to develop the university relationships that will get IFRS taught in the United States schools, is there a risk that they might have too much influence on the whole curriculum?” Jack Ciesielski asks in a recent blog post. “After all, the university system is not supposed to be the farm system for entry-level public accountants.” Rather, he observes, it should be “exposing students to other accounting disciplines: managerial accounting and tax, for instance.” There is a danger, he suggests, that if the Big Four imposes itself too deeply, “the pendulum could swing too far.”