Integrating international financial reporting standards into the accounting curriculum: strategies, benefits and challenges.

James, Marianne L.

Business as well as accounting professionals must begin preparing for this impending change in accounting standards. Accounting educators should take action immediately and prepare their students for this tremendous change, which will affect not only accounting, but also core financial aspects of all public companies.

This study is based on the successful integration of IFRS into the accounting curriculum at a major public university and discusses how to motivate students to learn about IFRS; presents background material for educators; outlines and discusses the type, content, and level of IFRS material that realistically can be integrated alongside U.S. GAAP starting with the first accounting course; and discusses challenges and opportunities that arise for students and educators. A list of valuable resources for educators and students to help keep abreast of current developments is also included.

INTRODUCTION

Financial reporting in the U.S. is changing drastically. Within the next five years, U.S. public companies likely will have to switch from U.S. Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS). When this event occurs, the U.S. will join the more than 120 nations worldwide that currently require or permit the use of IFRS for financial reporting. The U.S. Securities and Exchange Commission (SEC), which has the legal authority to promulgate accounting standards for financial reporting in the U.S., and the Financial Accounting Standards Board (FASB), to whom the SEC delegated most of the standard setting process, support these efforts.

The ultimate authority to mandate or permit the use of IFRS in the U.S. rests with the SEC, which recently has taken very significant steps to support global standards. In fact, in 2007, the SEC issued a new rule that, for the first time, permitted non-U.S. companies that raise funds on U.S. capital markets to choose between IFRS and U.S. GAAP when filing financial reports with the SEC. In 2008, the SEC issued a "Roadmap" (SEC, 2008) that proposed a phased-in adoption of IFRS by U.S. public companies starting in 2014. After analyzing feedback received from financial statement users, preparers, academia, accounting organizations, and other stakeholders, in February of 2010, the SEC issued an update, reaffirming its commitment to the potential adoption of IFRS and including a detailed work plan to facilitate and further this goal.

Accounting students, the future accounting professionals, must be aware of what is on the horizon and must begin to learn detail about IFRS. Business students must understand the information presented in companies' financial statements, be aware of expected changes in U.S. financial accounting and reporting rules, and understand the implications of such changes for business entities and financial statement users.

Large public accounting firms are well aware of the importance of IFRS. The "Big Four" firms have spent millions of dollars educating their professionals, providing informational resources to organizations and other stakeholders, and through their foundations, providing educational funding. Graduates of accounting and other business programs who are knowledgeable about IFRS will enjoy a competitive advantage over those who do not possess such knowledge. For example, in 2009, PricewaterhouseCoopers, one of the largest global accounting firms, stated that "some knowledge of IFRS and its impact will help students in the future..." (PwC, 2009) and indicated that they would "consider an applicant's awareness level of knowledge starting in fall 2009" (PwC, 2009).

Educators play a crucial role in helping students learn about IFRS and its effect on financial statement preparers and users. This study presents information for accounting and business educators regarding IFRS and provides teaching material that educators can use to begin integrating IFRS into their class discussions.

The remainder of this paper is organized as follows: The first section discusses the reasons why IFRS should be integrated into courses and can be used to motivate students to learn about IFRS. The next section presents background information for educators regarding IFRS. The following section provides teaching material that can be used to begin introducing IFRS into classes. It provides sufficient detail for integration into an introductory (Principles) course and also can serve as an introduction, overview, and background for more advanced courses.

The following section outlines the topics and level of detail that could be discussed in more advanced accounting courses, such as Intermediate Accounting, alongside U.S. GAAP and provides a list for additional useful resources readily available to educators and students. The last section discusses strategies based on the actual integration of IFRS across the financial

accounting curriculum at a major U.S. public university and includes recommendations for the successful integration of IFRS into accounting courses.

MOTIVATING STUDENTS--WHY IS KNOWLEDGE OF IFRS IMPORTANT?

Successful integration into the accounting program depends on students' motivation to learn about IFRS. Educators can help motivate students to want to learn about IFRS by impressing upon them the benefits of such knowledge.

Educators teaching accounting courses and, particularly Intermediate Accounting, typically struggle with time constrains. The ever-expanding volume of accounting standards and recent changes such as the FASB Accounting Standards Codification (FASB, 2009) make it challenging to integrate yet another substantive topic into an already time-constrained accounting curriculum. So, why is it necessary to integrate IFRS into our accounting course (and perhaps some non-accounting business courses) even prior to the final SEC decision in 2011 and how can educators motivate students to learn about IFRS in addition to U.S. GAAP? The most important reasons why IFRS should be integrated into courses even prior to the SEC's decision are: (1) the FASB/IASB convergence project, (2) the planned integration of IFRS into the CPA exam in 2011, (3) the global prevalence of IFRS, and (4) the positive effect of knowledge of IFRS on students' career opportunities.

The FASB/IASB Convergence Project

Since signing their "Memorandum of Understanding" in 2002, the FASB and IASB have been working together very closely toward the goal of developing global standards (FASB, 2002). The boards' convergence project has affected and continues to affect U.S. GAAP, as well as IFRS.

In fact, a recent article in Financial Executive, emphasizes that the FASB/IASB joint projects have "significant business and operational implications and will require considerable lead time" (Gallagher, 2010, 19). The article further identifies five projects that will affect "... virtually every industry and company" (Gallagher, 2010, 19).

The primary purpose of the convergence project is to bring U.S. GAAP and IFRS closer to together, to eliminate differences, and to ultimately develop global accounting standards (FASB, 2002). By the end of the year 2011, the two boards plan to issue ten new joint standards addressing core financial accounting topics that will very significantly change both U.S. GAAP and IFRS. In addition, the two boards are jointly revising their conceptual frame works.

For instance, FASB and IASB recently issued exposure drafts that will change revenue recognition and accounting for leases (FASB, IASB, 2010). The revenue recognition exposure draft introduces a performance obligation model that shifts focus of recognition away from the income statement to the balance sheet; the lease exposure draft proposes a "right to use" approach that would virtually eliminate leases from being recognized as operating leases. The financial instruments exposure draft further entrenches fair value into U.S. GAAP and IFRS. The boards anticipate issuing final standards on these projects by June 30, 2011. Furthermore, the financial statement presentation convergence project (FASB, IASB, 2010) will revolutionize financial statements, creating a cohesive format, eliminating a separate income statement, and disaggregating items thereby increasing the number of line items in the financial statements by perhaps as much as 40%.

IFRS and the CPA Exam

Most accounting majors will sit for the CPA exam. The American Institute of Certified Public Accountants (AICPA) announced that starting in January 1, 2011, IFRS is eligible for testing on the CPA exam (AICPA, 2010). The extent to which IFRS questions will be asked and the nature of the questions has not been disclosed. Knowledge of IFRS will thus help students perform well on the CPA exam.

The Global Prevalence of IFRS

More than 120 nations currently require or permit the use of IFRS for financial reporting. For example, since January 2005, all European companies listed on European capital markets must utilize IFRS for financial reporting. Canada and Japan are adopting IFRS in 2011. U.S.-based multinational companies very likely already have affiliates, subsidiaries, or investments in companies that currently utilize IFRS. Knowledge of IFRS is needed by those who are involved in the financial or operational aspects of these companies.

Career Opportunities Arise from Knowledge of Global Accounting Standards

The global prevalence of IFRS and the relative lack of IFRS knowledge in the U.S. will create career opportunities both the in U.S. and abroad for those graduates who are knowledgeable about IFRS. In the U.S., multinational companies, accounting firms who provide services to multinational entities, and organizations that deal with global companies are currently seeking professionals that are knowledgeable about IFRS. This trend will accelerate sharply during the next few years, particularly if the SEC decides that all U.S. public companies must adopt IFRS.

Prospective employers are very well aware of this fact. For example, PwC, one of the largest global public accounting firms, already considers awareness and knowledge of IFRS an important aspect during their interviewing process in the U.S. Specifically, PwC expects that sophomores who have completed at least one accounting course and are interviewing for an internship should possess a "pre-awareness of IFRS" and its potential importance to their careers; PwC expects that juniors applying for internships or full-time accounting positions exhibit knowledge of IFRS background, including regulatory issues, global use, as well as knowledge of some key differences between IFRS and U.S. GAAP (PwC, 2009).

Furthermore, the U.S. Bureau of Labor Statistics (BLS) estimates that between 2008 and 2018, employment opportunities for accountants and auditors will increase by 22% (BLS, 2010). In their report, the BLS attributes this positive employment outlook in part to the movement toward IFRS and states that this "should increase demand for accountants and auditors because of their specialized expertise" (BLS, 2010, 4).

Opportunities will also arise abroad for accounting and business graduates. U.S. GAAP is country specific; students who wish to work for or with global companies will need to learn IFRS. Educators who proactively integrate IFRS into their classes will help students acquire internationally applicable knowledge and gain significant competitive advantages in the career market.

Benefits for Non-Accounting Business Majors

Even non-accounting business majors will benefit from fundamental knowledge about IFRS. Business majors are the future business professionals. Accounting is often referred to as the language of business and business majors must be able to disseminate the information provided in the financial statements and reports to be able to interpret results.

Advantages for Business Schools, Accounting Programs, and Faculty

Opportunities arise from the successful integration of IFRS into the curriculum not only for students but also for business schools, accounting programs, and faculty. Universities are just starting to integrate IFRS into their curriculum. A survey conducted by the American Accounting Association and KPMG in 2008 showed that 62% of the faculty responding to the survey indicated that they had not yet taken any significant steps to integrate IFRS into their classes (KPMG, 2008).

Business schools and especially accounting programs will benefit by proactively integrating IFRS. A proactive approach will enhance the schools' prestige and reputation--both with students and graduates' employers.

Furthermore, faculty with knowledge of IFRS and experience with integrating IFRS into the curriculum will be in high demand and thus enhance their marketability. Prior to starting to introduce IFRS into the accounting curriculum, faculty must acquire the necessary knowledge, starting with some background knowledge about the quest for and trend toward global accounting standards.

IFRS BACKGROUND

The following discussion provides background for educators about IFRS. Brief or more detailed discussions of this background also can be used in any business-oriented course, but is especially useful for accounting courses from Principles of Accounting to more advanced courses.

Globalization and Convergence Efforts

During the past few decades, organizations such as the International Organization of Securities Commissions (IOSCO), of which the SEC is an active member, have advocated the development of global financial accounting standards (Doupnik & Perera, 2009). In the U.S., in 1988, the SEC started encouraging the development of global accounting standards (AICPA, 2008).

In 2002, the FASB and the IASB signed a "Memorandum of Understanding," commonly referred to as the "Norwalk Agreement," in which the two standard setters agreed to work together toward the common goal of jointly developing a set of high quality accounting standards that can be used for cross-border financial reporting (FASB, 2002).

As a result of the Norwalk Agreement, the FASB and the IASB have worked together on many projects. The objective of this FASB/IASB cooperation is to bring U.S. GAAP and IFRS closer together. As a result of this cooperation, many new, or revised standards issued by the FASB and the IASB have eliminated many existing differences between U.S. GAAP and IFRS. In fact, a recent study (Henry et al., 2009) found that between 2004 and 2006, the differences between income and stockholders' equity derived under IFRS and under U.S. GAAP decreased significantly. While the FASB and IASB's joint efforts referred to as the "Convergence Project," have made the goal of developing global standards possible, the SEC's actions have lent authoritative power to their efforts.

SEC Actions

Until recently, non-U.S. companies that raise capital in the U.S., and thus are required to file financial reports with the SEC, had to either prepare U.S. GAAP-based financial statements or file form 20-F, reconciling their financial statement numbers with U.S. GAAP. This was a very costly process. However, in 2007, the SEC issued a rule that virtually eliminated the required reconciliation by allowing non-U.S. companies to file either U.S. GAAP or IFRS-based financial statements with the SEC (SEC, 2007). This new rule represents an important step toward a likely switch from U.S. GAAP to IFRS for financial reporting by U.S. public companies.

In November 2008, the SEC issued a proposal entitled "Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers" (SEC, 2008). In its 175-page proposal, the SEC details mile stones towards the adoption of IFRS in the U.S. and suggests a phased-in adoption of IFRS by U.S. public companies between 2014 and 2016. In addition, limited early adoption by companies that are among the 20 largest in their industry and whose affiliates currently prepare IFRS-based financial statements was permitted (SEC, 2008).

In response to comments received on its Roadmap, on February 24, 2010, the SEC issued a policy statement in support of global accounting standards and a work plan that specifies important considerations to be addressed prior to the potential adoption of IFRS by U.S. companies (SEC, 2010). In its policy statement, the SEC also rescinded the early adoption choice proposed in its Roadmap and indicated a potential adoption date of 2015. In both the Roadmap and its 2010 policy statement/work plan, the SEC indicated that it would make a definite decision regarding adoption of IFRS during the second part of 2011.

The SEC specified the following six key considerations:

* "Sufficient development and application of IFRS for the domestic reporting system

* Independence of standard setting for the benefit of investors

* Investor understanding and education regarding IFRS

* "Examination of the U.S. regulatory environment that would be affected by a change in accounting standards

* Effect on issuers, both large and small, including changes to accounting systems, changes to contractual arrangements, corporate governance considerations, and litigation contingencies

* "Human Capital readiness" (SEC, 2010)

Educators play a critical role with respect to the achievement of the SEC's sixth's key consideration.

INTRODUCING IFRS TO STUDENTS

Successful integration of IFRS into the curriculum begins with an effective strategy to allow for sufficient exposure to IFRS without jeopardizing the continuing coverage of U.S. GAAP. In their 2008 survey of accounting faculty, KPMG and the American Accounting Association found that the most cited key challenges associated with integrating IFRS into the accounting curriculum were: (1) the development of curriculum material (79%) and (2) finding time in the class schedule (72%).

Regrettably, in most text books, coverage of IFRS is not yet sufficiently detailed to provide the necessary material. Concise, yet clear material needs to be developed and utilized to achieve this goal. The information provided below can be utilized for class presentation.

While accounting majors need to acquire detailed knowledge of IFRS, all business students, who typically complete one or two financial accounting-oriented courses as part of their business core, also need to know about IFRS and understand the implications of IFRS for business organizations and financial statement users. Prior to learning details about specific IFRSs, accounting majors must be familiar with background information, which provides a foundation for more detailed discussions in their Intermediate Accounting courses.

Specifically, in the first financial accounting course, business and accounting majors should learn about: (1) current significant developments in financial reporting with respect to IFRS and the FASB/IASB convergence project, (2) the SEC's regulatory actions regarding IFRS, (3) the advantages and challenges of adopting IFRS, (4) some major current differences between IFRS and U.S. GAAP, and (5) the likely overall effect of IFRS on companies' financial statements. Each of these objectives is addressed in more detail in the "Teaching Materials" section.

The fundamental knowledge about IFRS that students should acquire in their first accounting course can also be taught in intermediate and other advanced accounting courses in the form of an introduction and background discussion. This is especially useful if students have not yet been introduced to IFRS in their lower division courses. The teaching material below can be used in class discussions; additional detail is shown in the "IFRS Background" section.

Teaching Materials

Current developments in financial reporting--IFRS

* Many countries have moved away from country-specific accounting standards. Instead, IFRS are emerging as global accounting standards.

* IFRS are issued by the International Accounting Standards Board (IASB) (website: www.ifrs.org)

** Headquartered in London, England; 15 member board, expanding to 16 in 2012

* Currently, 120 nations permit or require the use of IFRS for financial reporting

** All European public companies listed on European exchanges must use IFRS

** Canada and Japan are adopting IFRS in 2011

* The U.S. is considering to adopt IFRS

* The FASB and the IASB are working together--Memorandum of Understanding (Norwalk Agreement) signed in 200

** The FASB/IASB Convergence Project

** The FASB/IASB convergence project eliminated many differences between U.S. GAAP and IFRS

** The boards are still working on a number of joint projects Recent regulatory actions

* In 2007, the SEC issued a rule to allow non-U.S. SEC registrants to use IFRS when reporting to the SEC

* In 2008, the SEC issued its "Roadmap for the Potential Use of Financial Statements Prepared in Accordance With International Financial Reporting Standards By U.S. Issuers" (SEC, 2008)

* In February 2010, SEC issued an update "Commission Statement in Support of Convergence and Global Accounting Standards" and accompanied "Work plan" (SEC, 2010)

Potential benefits of IFRS adoption

* Enhanced access to global financial markets

* Easier to raise capital

* Potentially lower cost of capital (in the long-run)

* Lower financial reporting costs for companies with subsidiaries that prepare IFRS-based financial statements

* Globally transferable knowledge for accounting professionals

* Enhanced career opportunities for professionals knowledgeable about IFRS

Potential challenges of IFRS adoption

* High initial cost of adopting IFRS

* Need to convert accounting information systems

* Cost of preparing financial accounting information under two sets of accounting standards during the first few years (needed for comparative purposes)

* Staff training

* Investor education

Significant current differences between U.S. GAAP and IFRS

* IFRS is more principles-based, while U.S. GAAP is more rules-based

** This translates into (generally) broader rules that may require more professional judgment

* The LIFO inventory method is prohibited under IFRS

* Property, plant and equipment can be revalued to market value

** Affects assets and accumulated other comprehensive income and equity

* Qualifying intangible assets may be valued at market value

* Extraordinary item is not a valid category under IFRS

* Development costs may be capitalized under IFRS, but not under U.S. GAAP

** Research costs are still expensed as incurred

Expected overall effect of IFRS on financial statements of U.S. companies

* Tends to increase assets, equity, and income (if companies switch away from LIFO)

* Tends to increase assets and stockholders' equity (if property, plant, and equipment are written up to market value)

INTEGRATING IFRS INTO INTERMEDIATE ACCOUNTING

Intermediate accounting students need to know some specific details about IFRS while still focusing mainly on U.S. GAAP. After an initial introduction of IFRS in the first accounting course or at the beginning of Intermediate Accounting, educators can integrate IFRS into their Intermediate Accounting courses utilizing the following strategy.

As educators discuss specific topics in class each week consistent with U.S. GAAP, significant expected changes and some significant continuing differences between U.S. GAAP and IFRS can be introduced. This strategy tends to be the most efficient and effective method for using the scarce class time available in Intermediate Accounting. When prioritizing what IFRS topics to address, instructors may want to focus on (1) the FASB/IASB convergence projects and (2) significant current differences between IFRS and U.S. GAAP that are not slated to be superseded in the near future.

The FASB/IASB Converge Projects

The first priority should be the discussion of the convergence projects. This strategy would likely be most efficient and effective because students will need to learn about changes brought about as a result of these joint FASB/IASB projects. Discussion of final standards, exposure draft, and discussion memorandums relating to those projects should take priority because these projects will become or affect GAAP in the U.S., regardless of the SEC's decision about a switch to IFRS.

The following projects currently are most advanced toward final standards and likely will have the greatest impact on U.S. and non-U.S. companies' financial accounting and reporting during the next few years.

1. Fair value measurement

2. Revenue recognition

3. Accounting for leases

4. Accounting for financial instruments and hedging

5. Balance sheet offsetting

6. Consolidation policy and procedures

The FASB and IASB as planning to issue a final standard on fair value measurement during the first quarter of 2011, and final standards on the other projects during the second quarter of 2011.

In addition, the boards identified three other projects for completion by December 31, 2011. These are:

1. Financial statement presentations

2. Reporting discontinued operations

3. Financial instruments with characteristics of equity

In addition, several other projects, such as a new standard on "earnings per share" still are on the boards' agenda for completion at a later date.

Continuing Significant Differences between U.S. GAAP and IFRS

The second priority should be given to significant continuing differences that exist between U.S. GAAP and IFRS. Some of these are minor, some a very significant. Given the typical time constraints in Intermediate Accounting courses and the continuing necessary emphasis on U.S. GAAP, focusing on significant substantive differences would be most useful and manageable given the time constraints. Here are some highlights:

* LIFO inventory method is prohibited under IFRS

** Switching from LIFO to FIFO or weighted average likely would increase income for the current year and inventory and retained earnings on the balances sheet because of the cumulative effect of prior year LIFOFIFO/weighted-average differences

* The lower-of-cost or market rule--lower-of-cost-or net realizable value rule

** Essentially the same principle

** However, under IFRS, market is always defined as replacement cost

** Results in different "market" (except when ceiling is market under U.S. GAAP

* Property, plant and equipment can be revalued to market value

** Affects long-term assets and accumulated other comprehensive income

** Initial revaluations are recognized in a revaluation account under other comprehensive income, increasing accumulated other comprehensive income and equity

** Subsequent impairments reduce equity, excess impairments are recognized as losses in profit or loss statement (income statement); subsequent recoveries may be recognized as gains if they relate to amounts previously recognized in income statement.

** Revaluations tend to affect subsequent depreciation expense

* Qualifying intangible assets may be valued at market value

** Rules for recognition are very similar to those for tangible long-lived assets

* Extraordinary items is not a valid category under IFRS

** These item would be categorized as "other revenue, expense, gain or loss"

* Development costs may be capitalized under IFRS, but not under U.S. GAAP

** Research costs are still expensed

** Increases intangible assets, increases equity because of the revaluation allowance, increases income because of lower expense

** Increases subsequent year's amortization expense

* Impairments generally can be reversed in subsequent years

** This is currently prohibited under U.S. GAAP

** Exception under IFRS is goodwill impairment, which is irreversible

* Convertible bonds: Issue price is allocated between debt and equity

IFRS RESOURCES FOR EDUCATORS AND STUDENTS

Disseminating and analyzing current IFRSs and discussion memorandums and exposure drafts issued by the IASB and FASB takes a significant amount of time. Fortunately, excellent sources of information that help educators understand the key provisions of new accountant standards are available. Many of these resources can also be used in class discussions. The following discussion focuses on some select resources and is not intended to be exhaustive.

The "Big Four" global public accounting firms have spent significant resources educating their professionals and have also developed valuable resources for educators and students. These include periodic webcasts, briefing notes, downloadable U.S. GAAP/IFRS comparisons, and much more. For example, PricewaterhouseCoopers and KPMG provide frequent and very timely webcasts on IFRS and the FASB/IASB convergence projects. The live discussions and the downloadable presentation slides are excellent. In addition, the webcasts are archived and can be conveniently replayed. Faculty, as well as students can register for these webcasts.

PricewaterhouseCoopers developed interactive financial statements that can be used in class to show students how financial statement items would be presented on IFRS-based financial statements. A simple click on a particular line item and the IFRS version of the presentation with some added explanations can be seen.

KPMG's faculty portal link includes access to more than 200 IFRS PowerPoint slides that are organized by topics. Deloitte's recently issued its 2010 edition of "IFRSs in your Pocket," which provides brief summaries of currently effective IFRSs.

Each "Big Four" accounting firm has dedicated a specific website/webpage to IFRS education: These are (in alphabetical order):

Deloitte: http://www.iasplus.com/dttpubs/pubs Ernst & Young: http://www.ey.com/US/en/Issues/IFRS KMG: http://www.kpmginstitutes.com/ifrs-institute

PricewaterhouseCoopers: http://www.pwc.com/us/en/faculty-resource/ifrs-ready

In addition, professional organizations, such as the AICPA have created websites on IFRS and also provide valuable resources. For example the AICPA created its "IFRS.com" website that provides up to date information on regulatory and standard setting developments, provides convenient links to original pronouncements, and publishes its own resources, such as "International Financial Reporting Standards--Backgrounder."

Finally, the IASB and FASB also have public webcasts that both students and educators can listen to. In addition, instructors and students can periodically access the SEC's website to keep abreast of regulatory developments, such as updates on its "Work Plan," which can be found in the "Proposed Rules" link on the SEC website.

RECOMMENDATIONS BASED ON AN ACTUAL INTEGRATION

The key to a successful integration of IFRS is to engage students' interest. This can be accomplished by focusing on benefits to students, such as career opportunities, and for accounting majors, emphasizing the expected integration of IFRS into the CPA exam. It is essential to include IFRS as a topic on syllabi so that students consider it a required part of the course. In addition, some questions on IFRS should be included on exams. Exam questions are available to members of the American Accounting Association on the organization's AAA Commons website, as well as from some other sources.

During the Spring Quarter of 2010, IFRS was integrated into the accounting curriculum at a major public university. All instructors utilized the same material that was development by one faculty member. Overall, the experience was positive and students were receptive to learning about IFRS. Comments received in anonymous end-of- quarter surveys generally were positive and most students felt that they were more knowledgeable about IFRS and that this knowledge would be very useful to them in their careers. The following strategies worked well for students and instructors.

Lower-Division Accounting Courses

During the first week of class, instructors build awareness of IFRS and briefly discuss the trend toward global accounting standards and the current regulatory and standard setting environment. During the second week, together with an overview of U.S. GAAP financial statements, instructors focus on the benefits and challenges of IFRS for companies, financial statement users, and professionals and indicate the overall likely effect of IFRS on entities' financial statements.

Throughout the quarter, while covering accounting topics consistent with U.S. GAAP, instructors refer to significant current differences between U.S. GAAP and IFRS, focusing on the topics outlined above in the "Teaching Materials" section. Coverage of IFRS in that manner requires about ten to 15 minutes each week.

Intermediate and Advanced Accounting Courses

During the first class meeting, or by the end of the first week of classes, instructors cover the issues/topics shown in the "Teaching Materials" section. This requires approximately 45 minutes. Over time, as students gain exposure in other courses (e.g., Principles) this coverage can be condensed and utilized as an update.

Throughout the quarter, as specific U.S. GAAP topics are discussed, instructors refer to significant continuing differences between U.S. GAAP and IFRS, discussing the topics in more detail than in the first accounting course and also explain the main provisions of convergence projects that are in the exposure draft or discussion memorandum stage. This requires approximately 25-30 minutes per week.

CONCLUSIONS

Given the strong possibility that U.S. public companies will have to switch from U.S. GAAP to IFRS and because of the changes arising from the FASB/IASB convergence project, educators should begin integrating IFRS into their accounting course. This study presents information and teaching materials that can be utilized to integrate IFRS into financial accounting courses.

The study discusses strategies for motivating students to learn about IFRS; presents IFRS background information for educators; outlines and discusses the type, content, and level of IFRS material that realistically can be integrated alongside U.S. GAAP starting with the first accounting course; and discusses challenges and opportunities that arise for students and educators. A list of valuable resources for educators and students to help them keep abreast of current developments is also included. The strategies and materials presented in this study have

been successfully utilized in an actual integration of IFRS into the financial accounting curriculum at a major public university.

AUTHOR'S NOTE

The author gratefully acknowledges the financial support provided by the PricewaterhouseCoopers Charitable Foundation's IFRS Ready Grant.

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Marianne L. James, California State University, Los Angeles