Many years ago, I was interviewing an executive from PepsiCo who regaled me with tales of his decades-long battle for market share with rival Coca-Cola. He told me that the soft-drink giants became so fixated on winning the "Cola Wars" that when they performed subsequent consumer studies at retail outlets such as supermarkets, to their amazement and marketing horror, they found that shelf space was now dominated not by either Coke or Pepsi, but by legions of bottled water brands.I'm sure we've all heard or read about similar stories of companies being caught unaware as a result of being singularly fixated on a single competitor or trend. How about an entire profession?
Several months ago, I wrote about convergence and how the accounting profession was - to be diplomatic - moving rather leisurely to prepare itself for the eventual meshing of International Financial Reporting Standards and U.S. GAAP.
But that was prior to the International Accounting Standards Board and the Financial Accounting Standards Board moving up the timetable for completing their major joint projects on IFRS-GAAP convergence by 2011. That was also before a slew of surveys such as a recent one by Robert Half Management Resources, which found in a poll of 1,400 chief financial officers that more than 70 percent thought international experience would either be "somewhat" or "very necessary" for accounting and finance pros five years from now.
I don't know about you, but I find that result hardly surprising. The world is indeed flat and it would stand to reason that IFRS experience would fuel a driving demand for CPAs and financial professionals in general.
Unfortunately, the current turmoil in the financial markets and the loss of more than $2 trillion of personal investments has removed much of the focus on IRFS - if only temporarily.
Preparing for convergence obviously would entail attacking the problem from multiple points - beginning with education and ultimately moving on to the back-office systems at CPA firms. With regard to education, just 22 percent of more than 500 accounting professors contacted by the American Accounting Association said that they would incorporate IFRS into their curricula in any significant way this year. That's not what I would call being in any great hurry.
But the issue of convergence also begs a larger and potentially more disturbing question. Does the CPA designation have the requisite legs to go global, or will it ultimately be usurped by an international credential such as the Chartered Accountant? Unfortunately, that's a debate that would require far more space than I'm allotted here. But it nonetheless should be a talking point for any CPA who comes into contact with IFRS in some way. (For more, see story, page 4.)
Regardless of the profession's degree of preparation, convergence is coming. I'm sure two major soft drink companies would gladly explain the cost and stress of not being prepared.
