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Some Implications of IFRS Adoption for

Accounting Education
Article in Australian Accounting Review December 2012
DOI: 10.1111/j.1835-2561.2012.00197.x

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Some Implications of IFRS Adoption for Accounting Education

Beverley Jackling, Bryan Howieson & Riccardo Natoli

his paper explores some of the key implications

for accounting education of the global movement
to replace national sets of generally accepted
accounting principles (GAAP) with international financial reporting standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Nations are not equally prepared or resourced for this
change so we review some of the perceived major
impediments to adapting national-based systems of
accounting education for the move from local GAAP
to IFRS. Our focus is primarily upon the education
of accounting students in higher education institutions
but we acknowledge there remains great variety around
the world in the pathways to entry to the accounting
profession (Karreman 2002). In addition, the move from
local GAAP to IFRS requires the re-education of existing
accounting practitioners, investors and other users of
financial information. Although these latter groups are
not our main concern in this paper, we believe many of
our remarks are relevant to their situations.
The rapid and widespread adoption of IFRS since
2005, particularly with regard to the potential impact
on United States (US) financial reporting, has been
described as constituting one of the most ambitious
and far reaching efforts in history (Carmona and
Trombetta 2010: 1). The potential impact on accounting
education within IFRS adopting countries is likely
to vary greatly because not all countries begin the
adoption process from the same starting point. For
example, prior to the growth in IFRS adoption, some
countries already had well-established and sophisticated
mechanisms for promulgating national GAAP whereas
other countries had little, if any, formal national GAAP or
they used financial reporting systems tied to, say, taxation
requirements rather than investor/creditor information
needs. Even among those countries which had welldeveloped national GAAP, there could be significant
differences between local GAAP and IFRS.
Differences in factors such as the level of economic development, the existence or otherwise of
national standard-setting arrangements, the presence
and maturity of a national accounting profession, and
other cultural and institutional arrangements make it
difficult to generalise about the potential impact of IFRS

This paper addresses challenges accounting educators face

in their teaching following the adoption of International
Financial Reporting Standards (IFRS). We use Australia
as an example of a developed nation and 2005 adopter of
IFRS, the United States as a potential adopter, and
Romania as an emerging economy with a history of
harmonisation and adoption initiatives. Accounting
educators globally need to strengthen their engagement
with the principles-based approach to teaching IFRS.
Teaching resources, educational research and Continuing
Professional Development activities related to a
principles-based approach to teaching IFRS are necessary
for educators to enrich the learning experience of students
given the move from a rules-based to a principles-based
set of accounting standards.

Correspondence
Beverley Jackling, Director, Financial Education Research
Unit, Victoria University, Melbourne 3000, Australia. Email:
beverley.jackling@vu.edu.au
doi: 10.1111/j.1835-2561.2012.00197.x
Australian Accounting Review No. 63 Vol. 22 Issue 4 2012

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IFRS Adoption and Accounting Education

adoption on accounting education across the globe.

Nevertheless, we can focus upon some of the perceived
characteristics of IFRS as a basis for exploring these
potential implications.
The paper commences with a discussion of principlesbased and rules-based standards and their implications
for education. We then consider the implementation
of IFRS in Australia from an accounting education
perspective. Additionally, we examine the education
implications of IFRS in two contrasting jurisdictions,
namely the US and Romania, to illustrate the differing
impacts on countries with diverse characteristics. Overall
we conclude that although much is made in the literature
of the so-called principles-based nature of IFRS and
the resulting need for students to develop skills in the
exercise of professional judgement, we, like several other
authors (for example, Schipper 2003; Barth 2008; Sunder
2010), believe that this aspect of IFRS is over-stated
relative to national GAAP. Nonetheless, a focus upon the
rhetoric regarding the claimed principles nature of IFRS
does provide a window of opportunity for accounting
educators to reassess the widespread use of a rulesbased education model, compared to a principles-based
model (Carmona and Trombetta 2010) that relies on
judgements in applying IFRS.

Principles-based Standards Versus

Rules-based Standards
One of the most common and key characterisations
of IFRS is the perception that they are principlesbased in their derivation and content. IFRS are typically
contrasted with other national GAAP (most frequently
US GAAP), which are characterised as being rulesbased. As Sunder (2010: 108) notes: The appeal of
this distinction rests on the longing for the simple idea
of fewer, more general standards that leave details of
implementation to individual judgment, as opposed to
more detailed standards that try to get into more specifics
of implementation.
Although this distinction has been made frequently,
considerable attention has been paid in the literature
to the exact nature of the difference between the
two characterisations (see, for example, Schipper 2003;
Alexander and Jermakowicz 2006; Benston et al. 2006).
Schipper (2003) and Bennett et al. (2006), among others,
attack simplistic notions that accounting standards are
either principles- or rules- based. Schipper (2003)
notes the FASBs standards are grounded in the FASBs
Conceptual Framework for Financial Reporting and so
are derived from principles while Bennett et al. (2006:
189) compare three standards that are either classified as
principles- or rules- based but find that all three have
rules, are based on principles, and require the exercise
of professional judgement. Wells (2011: 305) suggests
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B. Jackling, B. Howieson & R. Natoli

some IFRS standards (such as the standard on lease

accounting)1 are not principles-based because they are
not consistent with the concepts contained in the IASB
Conceptual Framework. Consequently the distinction
between principles- and rules- based standards can
be ambiguous in practice. Sunder (2010: 108) neatly
captures the process that drives standards from being
principles to becoming rules:
Most standards, rules and regulations, in accounting
and elsewhere, are born small. They grow over time,
not because standard setters prefer to add the details,
but because earlier versions generate requests for
clarification that arise from conflicting interpretations
rooted in the self-interest of those who implement
the standards . . . Therefore, the difference between
principles-based and rules-based standards is not a
matter of the intent of the standard setters, but the point
at which they stand in this dynamic process. IASB, being
a more recent entrant in the game, is in an earlier stage
of the same process than the FASB.

If Sunder (2010) is correct, then it may be that in the

medium to long term the move from national GAAP to
IFRS may mean that the currently perceived difference
between principles- and rules-based standards may be
of little practical importance.
Principles and Rules in Accounting
Education
Although the principles-/rules-based distinction may
have limited relevance for accounting regulations, paradoxically it has important implications for accounting
education. Countries that perceive their accounting
systems to be dominated by rules run the risk that
their education systems will emphasise bookkeeping
mechanics and rote learning of ever temporary rules
(Carmona and Trombetta 2010: 1). This charge has been
levelled at accounting education in the US (Carmona
and Trombetta 2010: 4):
Germane to many educators are the historically and
culturally determined regulatory solutions given to
accounting problems. In this case, in the U.S., some
accounting educators follow a rule-based model
to accounting education. Within this mode of education,
accounting exercises have right and wrong solutions.
There exists a correct way to account for a certain
transaction and it has to be spotted in every possible
business situation. The emphasis is on the outcome and
a much lesser importance is placed on the fundamentals
of the accounting model.

Sunder (2010: 109) is perhaps more strident in

his criticism of how the evolution of standard-setting

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B. Jackling, B. Howieson & R. Natoli

systems and their increasing proliferation of rules impact

on accounting education:
With the expansion of the scope of authoritative standards, educational discourse has progressively shifted
toward the rote memorization of written rules that
must later be regurgitated during examinations. With
the accounting standards written by the FASB/IASB
being granted a monopoly status for public companies,
intermediate accounting classes have moved toward
focusing on a chapter and verse application of those
standards, and not on critical examination of the merits
of alternative accounting treatments for various classes
of transactions. Instructors of accounting who try to
develop the analytical powers of their students face
inordinate pressures to cover the expanding volume of
written standards. Since time is limited, what is written
and definite takes priority over unwritten norms and
the development of subjective judgement.

Teaching to a set of detailed rules may bring with it

the comfort of certainty for the teacher and the student
but it also entails significant drawbacks. Among these
is a concern that talented people will not be attracted
to the accounting profession (Barth 2008; Sunder 2010)
and that a memory-based curriculum is unworthy of
both a university education and a profession (Sunder
2010). Accounting education, which emphasises rote
learning over understanding, also has the potential to
engender a paralysis in decision making when students
or practitioners encounter situations not covered by the
rules they learned or where the rules are ambiguous. As
noted by Baxter (1979):
Standards are a godsend to the feebler type of writer
and teacher who finds it easier to recite a creed than to
analyse facts and to engage in argument. If an official
answer is available to a problem, why should a teacher
confuse examination candidates with rival views? Thus
learning by rote replaces reason; the good student of
today is he who can parrot most rules. On this spare
diet, accounting students are not likely to develop
the habits of reasoning and skepticism that education
should instill.

Countries that are transitioning from perceived rulesbased standards to principles-based IFRS may find
that this process provides an opportunity to reassess
the model they use to design and present accounting
curricula. Attention to principles will necessarily
direct educators and students attention to learning
the concepts of financial reporting that, in an IFRS
harmonised world, are contained in the IASB Conceptual
Framework and to the development of skills in the
exercise of professional judgement that will allow
students to apply those concepts to resolve issues in a
variety of specific fact situations (Barth 2008; Carmona
and Trombetta 2010; Wells 2011). Several advantages

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IFRS Adoption and Accounting Education

are claimed for adopting a principles-based approach

to accounting education. Apart from addressing the
drawbacks noted above of a rules-based approach, an
understanding of the underlying principles of financial
reporting and how they can be applied gives students
knowledge and skills that are enduring and that will
be adaptable as accounting standards and business
transactions change over time (Barth 2008; Carmona
and Trombetta 2010; Sunder 2010).
Adopting a principles-based model of accounting
education is not simply limited to teaching the IASB
Conceptual Framework and how to apply it. Commenting
on the views expressed by a member of the Securities
and Exchange Commission (SEC), an ex-chairman of
the FASB Dennis Beresford writes (2008):
. . . perhaps we could change our approach to financial
accounting to one in which most of the focus in the
first place was on business issues. For example, if
covering lease accounting, the instruction could begin
with the differences between buying and leasing an asset,
what are the economics of doing one vs. the other,
and what would be the effects on financial statements
of capitalizing leases vs. expensing lease payments as
they are incurred. Then the coverage could move on
to the fundamental principles that determine whether
leases should be capitalized or not e.g., how much
of the fair value is covered by lease payments. Only
after the economic issues and the basic principles are
covered would some of the details (e.g., what to do with
contingent rentals) that distinguish IFRS from GAAP be
mentioned. In this approach, about 50% of the effort
would be on the economics, 25% would be on the
principles (that ought be to pretty similar), and 25%
on the rules (that could be different).
This kind of approach would almost certainly deal better
with why we account for things in particular ways
vs. what seems to be todays approach of emphasizing
what to do without enough attention to the underlying
reasoning.

Barth (2008), Carmona and Trombetta (2010) and

Wells (2011) stress the need to embed the teaching
of accounting within the context of its foundational
theories (Barth 2008: 1164) which include economics,
valuation concepts and techniques, and business
administration. Carmona and Trombetta (2010: 4)
argue it is absolutely impossible to account properly
for a structured finance product without first having
grasped proper understanding of the economics of
the instrument. Similarly it is impossible to account
properly for a business combination without reaching
an understanding of the strategic and organizational
implications of the combination.
To summarise to this point, if Sunder (2010) is correct
in his view that accounting standards systems evolve
over time from being general to highly detailed, then
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the current rapid adoption of IFRS combined with

the rhetoric of principles-based standards offers an
opportunity for accounting educators around the world
to revisit the pedagogical models they use; are students
being educated in transferable concepts or use-by-date
rules?2 In those countries where there has not been a
history of national standards, a debate must still occur
as to what is the most appropriate way to teach IFRS if
they are being adopted as national standards. Of course,
a reassessment and possible change in pedagogical
approach is not costless and a number of issues have
been identified with regard to the responsiveness of
accounting educators to IFRS adoption.

Accounting Educators Readiness for IFRS

Adoption
Given that different countries transition to IFRS
from different starting positions, the implications for
accounting educators will also differ across countries. In
those countries where IFRS have been mandated (for
example, Australia), accounting educators have been
expected to design their financial reporting curricula
around IFRS. The cost of this exercise will depend, inter
alia, on the extent to which national GAAP and IFRS
have diverged from each other and the amount of time
provided by regulators for the country to transition from
national GAAP to IFRS.
Prior to Australias adoption of IFRS on 1 January
2005, it already had in place a policy that converged
Australian GAAP with IFRS (AASB 1996). As such,
the adoption of IFRS in Australia was perceived to
have a relatively low impact on accounting education
compared to many other countries. The adoption of
the new standards in Australia resulted in only slight
variations from their IFRS equivalents. In addition, only
a small number of new standards were introduced (for
example, IAS 39 Financial Instruments: Recognition and
Measurement, IAS 36 Impairment, and IFRS 2 Sharebased Payment). The similarities between the Australian
and IASB accounting conceptual frameworks also meant
that the building blocks that formed the basis of financial
reporting were similar.
In addition, Australias Financial Reporting Council
(FRC) announced the adoption of IFRS in June 2002,3
which was two-and-a-half years before their mandatory
application from 1 January 2005 (FRC 2002). This
relatively long transition period, combined with the
pre-existing policy of converging Australian GAAP with
IFRS (AASB 1996), meant that Australian accounting
educators had time to understand the changes, develop
materials and modify textbooks with a widespread,
if implicit, decision to start teaching the Australian
equivalents of IFRS to students expecting to graduate
from 2005.
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B. Jackling, B. Howieson & R. Natoli

However, the perception of few differences meant

that opportunity to change the teaching approach to
one based on principles was overlooked by many
Australian academics. Wells (2012) has argued that only
some educators adopt what is known as a Frameworkbased teaching of principles-based standards when
adopting IFRS. In contrast, others around the globe have
continued with a more traditional rules-based approach
to teaching accounting standards, with a focus on the
recording process, particularly at the first or introductory
level of instruction.
A failure to change the approach to teaching has been
attributed partly to the nature of first-year courses in
accounting in Australian universities. Since they usually
cater for both accounting and non-accounting majors,
academics have seen less need to focus on teaching IFRS.
Additionally, a wide range of introductory textbooks is
used, including adaptations of American textbooks that
emphasise a rules-based approach. Overall the lack of
change in approaches to teaching in Australia may be
attributed to the fact that the adoption of IFRS resulted
in only slight variations from the Australian Accounting
Standards previously in place. This situation is not always
replicated in other parts of the world.
In countries currently transitioning to IFRS, or that
have not yet made a decision to do so, there are mixed
views on whether accounting curricula should include
or adopt IFRS. At the time of writing, the US is in this
position (see Erchinger and Street 2012, in particular).
The US experience could be useful to other countries
such as India, Indonesia, Japan and Saudi Arabia who
have also expressed interest in adopting IFRS. In the
US the SEC currently allows non-US registrants to
lodge financial statements prepared on the basis of
IFRS without providing a reconciliation statement to
US GAAP but it has not yet reached a determination as
to whether US companies will be permitted to use IFRS
for domestic purposes. Although some have speculated
that this might occur by 2015, the exact date, if there
is one, is unknown. This has created uncertainty on the
part of US accounting educators as to how, if at all, they
should accommodate IFRS in their programs. Typically,
any coverage of IFRS in US accounting programs has
occurred in separate courses on international accounting
(Barth 2008) but it has been argued that such crosscountry tours of financial reporting are rapidly becoming
obsolete as a result of the speedy adoption of IFRS by over
100 countries in recent years (Barth 2008: 1163).
The preparedness of US accounting educators to teach
IFRS has been frequently questioned (see, for example,
Leone 2008; Mintz 2009; Munter and Reckers 2009;
KPMG and AAA 2011). Since 2008 KPMG and the
American Accounting Association (AAA) have jointly
surveyed US accounting educators annually to gain an
understanding of where IFRS-related education is at
collegiate accounting curricula (KPMG and AAA 2011),

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B. Jackling, B. Howieson & R. Natoli

the most recent survey being for 2011. These surveys

have reflected considerable uncertainty on the part of US
academics as to the likely adoption of IFRS for domestic
purposes and in their responses to that potential event
for instance, in 2009 68% of those surveyed (out
of a total of 500 respondents) believed that the US
would adopt IFRS domestically but this had dropped
to 54% in 2011 (out of a total of 638 respondents).
Nearly 60% of those surveyed in 2011 believed that
adoption of IFRS was a low priority for the SEC and
only 40% claimed they had significantly incorporated
IFRS into their curriculum (KPMG and AAA 2011).
Various disincentives and implementation issues have
been identified across these surveys and by other authors.
These include:
a) the problem of making room in a curriculum for
IFRS while US GAAP remain the required standards
(Munter and Reckers 2008; KPMG and AAA 2011).
This problem is consistent with educators viewing
the teaching of accounting as being based on rules
rather than principles. Changing the education
model (which is considerably easier to propose than
do) would be one way of escaping the mentality that
every rule has to be covered. Even in many countries
that have adopted IFRS, the issue of cohabitation
(Carmona and Trombetta 2010: 2) between various
sets of standards persists for example, IFRS
are mandated for use by large for-profit entities
but may be modified (or there may be entirely
separate accounting rules) for the public sector,
small to medium enterprises, and private not-forprofit entities. New Zealand is one example where
there are separate accounting standards for forprofit and public benefit entities and the differences
between them need to be accommodated within the
accounting curricula;
b) the ageing demographic of accounting academics
resulting in less staff to cover teaching and the
problem that you cant teach old dogs new tricks
(it is argued that there is little incentive for those
near retirement to relearn a new set of standards)
(Leone 2008; Munter and Reckers 2009). In the
2011 KPMG/AAA survey, 91% of the accounting
educators who responded indicated no practical
experience in applying IFRS;
c) developing new materials and getting textbook
authors/publishers to incorporate IFRS material is
seen as problematic in the US as there is allegedly
little incentive to make changes until the SEC
mandates the domestic adoption of IFRS (Leone
2008; Munter and Reckers 2009; KPMG and AAA
2011);
d) US academics argue they are not appropriately
resourced to make the necessary changes to their
curricula because university administrators do not

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IFRS Adoption and Accounting Education

understand the potential impact of IFRS adoption

(Munter and Reckers 2009; KPMG and AAA 2011);
e) one major disincentive to incorporate IFRS into US
curricula is that many programs are designed and
delivered as a means of training students to pass the
CPA exam (Leone 2008; Mintz 2009) until the
exam is changed to include IFRS, curricula wont be
altered (Leone 2008). The 2011 KPMG/AAA survey
reported 61% of those surveyed believed the CPA
exam would incorporate a significant amount of
IFRS coverage within three years or so (KPMG and
AAA 2011).
From a positive perspective, the Big 4 accounting
firms in the US have been providing incentives for
accounting educators to incorporate IFRS into curricula
by firstly providing educational materials on their
websites and secondly adopting recruitment policies
that reward students who have a global perspective.
Hinson (2010) observes at least one of the Big Four
accounting firms is requiring some level of knowledge
[of IFRS] during the interviewing phase. This firm is
now requesting that interviewers ask IFRS-specific
questions and interviewees must display some level of
knowledge based on the courses they have completed.
The disincentives and implementation issues noted in
the US context are likely to be found in many other
countries, particularly emerging economies where a
lack of financial and academic resources may impede
the teaching of IFRS even if there is no transition
required from a pre-existing national GAAP. According
to Deaconu (2011), the ease of IFRS implementation in
emerging economies depends greatly on their political,
economic, social, cultural, legal and educational systems.
To examine this claim, we review the case of Romania,
one of a group of Eastern European ex-communist
countries to have made the decision to implement IFRS
(see Albu and Albus paper in this issue for a fuller
discussion of the adoption process in Romania).
Impact of IFRS Implementation in
Emerging Economies Example of
Romania
Typically, studies of emerging economies tend to focus
on countries that share similar reporting systems to
the United Kingdom (UK). The results show that these
similar countries are more inclined to experience a
smooth IFRS transition (see, for example, Ashraf and
Ghani 2005; Nobes 2003; Chamisa 2000) compared
to those that do not share similar systems (see, for
example, Bailey 1995; Belkaoui 2004). As Albu and
Albu (2012) explain, Romania, which is committed to
IFRS implementation, shares neither a similar cultural
background with the UK nor, from an accounting
perspective, follows the UK-based accounting reporting
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IFRS Adoption and Accounting Education

system. This has resulted in Romania experiencing a

different IFRS implementation blueprint. Building on
Albu and Albus (2012) work, this section focuses
on the possible implications of a dissimilar IFRS
implementation pattern on accounting education in
Romania.
As Albu and Albu (2012) point out, the most
recent phase of IFRS implementation (phase 3)
resulted in a mixture of French rules-based accounting
and the Anglo-Saxon principles-based International
Accounting Standards (IAS). In practice, this meant
that the Romanian national GAAP had to both satisfy
European directives as well as incorporate important
aspects of IFRS which dealt with applications of
consolidated financial statements of listed entities by
all financial institutions. Nobes and Parker (2008)
concluded the result was confusion due to the difficulty
arising from the differences between the two cultures.
Their conclusion supports the findings of Bailey (1995)
who found that countries with non-UK culturally
dominated histories have had difficulty in tailoring IFRStype accounting systems.
Further, as Tyrrall et al. (2007) asserted, another
barrier to the effective implementation of IFRS among
emerging economies is the lack of ability among indigenous accounting practitioners to operationalise IFRS
standards through the exercise of professional judgement. This has practical implications for accounting
educators in Romania whose approach to the teaching
of accounting has been somewhat mixed. As Albu
and Albu (2012) state, although some universities have
recognised that the IFRS competency of accountants
and auditors needs to be clearly improved, the nature
of change occurring in the profession is slow.
Romanias piecemeal approach is reflected in a World
Bank (2008) report on observance of standards and
codes. It asserted that Romanias rules-based accounting
tradition was an obstacle to effective implementation
of IFRS. This view was further supported by Deaconu
(2011) and Albu et al. (2011a) who suggest that
due to insufficient technical education, Romanian
accounting professionals were not fully prepared for
a principles-based accounting reporting alternative.
Further, a Romanian accounting professional body
representative stated that (Albu et al. 2011a: 93):
Romanian accountants have biases from school, they
should expand their capacities to think, to judge, to
estimate. This suggests that not only is there a need for
IFRS-based education in classrooms but also continuous
education is needed for accounting practitioners. Given
that the Romanian national regulations are based on
rules, accounting educators face a challenging task:
whether to base their teaching on principles, rules, or
a mixture of both.
In 2008, a World Bank report on the state of accounting in Romania concluded there was much to do in ac336

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B. Jackling, B. Howieson & R. Natoli

counting education. It added that although Romania had

implemented the relevant accounting directives, only
one main tertiary institution had strengthened its syllabus to a level where accounting graduates can seek exemption from examination by international accounting
qualification providers. According to Stevenson and von
Bergen (2009), such an improvement could be achieved
by a better understanding of accounting content and
through practical exercises. These improvements are traditionally more closely associated with the Anglo-Saxon
ideal of accounting education but may need to become
a future focus for Romanian accounting education.
Romanian accounting educators, like those in many
other countries, face the dilemma posed by the publish
or perish dictum and they do not necessarily have
the time to develop IFRS principles-based teaching
materials. To overcome this dilemma, access to preprepared IFRS materials would assist in implementing
a principles-based teaching approach of IFRS. Nonetheless, a major concern about access revolves around finding suitable materials in a nations local (non-English)
language.
As Baskerville and Evans (2011) and Zeff (2007)
posit, given the IASBs working language is English,
ensuring that translation of IFRS is accurate and conveys
the same/similar message has been demonstrated to
present a unique set of challenges for countries whose
first language is not English. Although debates about
meaning will always occur where judgement is being
applied, there may be implementation issues when IFRS
are translated and the teaching of IFRS may be difficult
if instruction does not occur in English.4
Textbooks are vital to accounting education. Since
exact equivalence cannot be achieved in translation,
educators may face greater difficulty in translating
accounting principles rather than detailed rules. Further
complicating matters, Baskerville and Evans (2011)
claim that, where a concept does not form part of the
culture (as is the case with Romania), its translation is not
meaningful no matter which words are chosen. Consequently, they claim equivalence cannot be achieved. For
instance, subtleties may be expressed in different ways,
and literal translation often is not possible.5
In an endeavour to overcome perceived difficulties
when adopting IFRS in non-English speaking countries,
various initiatives have been undertaken including the
provision of resources in languages other than English.
For instance, IFRS are available in Romanian from
the European Community website, while the Body of
Expert and Licensed Accountants for Romania publish
an annual translation of IFRS.
In summary, some progress has been made in the
implementation of IFRS by Romanian practitioners and
educators, despite the constraints demonstrated by Albu
and Albu (2012). Further, as Albu et al. (2011b) note, the
willingness to change exists as Romanian accountants

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B. Jackling, B. Howieson & R. Natoli

increasingly emphasise personal and environmentrelated competencies while more companies seek a wider
range of diverse technical competencies from graduates.
These objectives need to be part of a reformed accounting
academic education program.

Implications of IFRS for Accounting

Education in the Future
The number of countries adopting IFRS is expected to
keep growing (IFRS 2011a). This growth is consistent
with redefining the role of the professional accountant
to incorporate a broad set of professional skills, including
intellectual skills, interpersonal and communication
skills, and professional judgement and business management skills (IAESB 2008). As a consequence, there is an
increasing need for accounting educators to shift their
focus from the transfer of technical knowledge to the
development of skills and principles more appropriate to
future accounting and business practice. Consequently,
there is likely to be a greater demand on accounting
educators globally to adapt their teaching to a principlesbased approach.
The principles-based approach to accounting standards in IFRS provides accounting educators with a
perfect opportunity to make changes to the accounting
curriculum that enhance the development of a broader
range of skills. A principles-based approach is one
means of enhancing professional judgement, which has
been described as a hallmark feature of a profession
(Bradbury and Schroder 2012). As Penno (2008)
indicates, where there is any vagueness, judgement is
a valuable professional skill to have.
By focusing on exercising professional judgement,
a principles-based approach to accounting education
offers the possibility that students can learn to cope
with ambiguity, understand why there may be more than
one solution to an accounting question, and develop
the capability to create and defend their own choice of
accounting policy. The emphasis on teaching underlying
concepts instead of rules has the potential to free up
scarce resources as educators provide students with the
ability to discover solutions on their own without having
to learn every rule. Such an approach is already the
tradition in legal education where tomorrows lawyers
are not trained (or expected) to rote learn every law
(Bandy 1994; Sunder 2010). The example of the law
discipline with its focus on teaching of fundamentals,
rather than specific details of rules/statutes, provides a
useful analogy and one that is capable of being emulated
by accounting educators with the teaching of principles
rather than rules.
A major challenge for accounting education globally
will be to ensure accounting educators are suitably
equipped to teach IFRS using a principles-based

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IFRS Adoption and Accounting Education

approach. In addressing the opportunities to revise the

accounting curriculum, Wells (2011) has expounded
Framework-based teaching that relates the concepts in
the IASBs Conceptual Framework to particular IFRS
requirements (Wells 2011: 306):
Because Framework-based teaching is rooted in the
concepts that underlie IFRSs, such teaching lays
the foundations for a more robust and cohesive
understanding of the requirements in IFRSs. Because
the Conceptual Framework establishes the concepts that
underlie the estimates, judgements and models on which
IFRS financial statements are largely based, Frameworkbased teaching enhances the ability of students to
exercise the judgements that are necessary to apply
IFRSs by relating those concepts to the particular IFRS
requirements being taught.

The promotion of Framework-based teaching of IFRS

provides the impetus for accounting educators to make
a paradigm shift in their teaching and as such provides
guidance towards an accounting educational system,
which is independent of the specifics of accounting
standards issued by regulators.
A priority for accounting educators is not only to
take the opportunity to adapt the curriculum to reflect
Framework-based teaching of IFRS, but also to utilise
the increased range of resources for teaching IFRS.
To achieve this goal Coetzee and Schmulian (2012)
state that accounting educators need to have access
to several innovative methods of pedagogy, such as
simulations and role plays, problem-based learning, case
analysis with alternative solutions and oral presentations.
A student-centred pedagogy moves away from the
model of lecturer-dominated classroom instruction
to an approach where the student assumes a high
level of responsibility in the learning situation. This
approach can be supplemented by a range of teaching
methods available online. However, the opportunities
for accessing resources to enhance teaching of IFRS are
limited in emerging economies and in countries where
translation of material is required. As noted previously,
challenges can also exist in developed economies in terms
of re-educating accounting educators about the ways of
teaching a principles-based approach to IFRS, particularly where there has been a long established rules-based
approach.
An objective of the Director of the Education
Initiative of the IFRS Foundation, Michael Wells,
together with his team of advisors, is to reinforce the
IFRS Foundations goal of promoting the adoption and
consistent application of a single set of high-quality
international accounting standards (IFRS 2011b). To
meet that objective, they are endeavouring to take
account of the special needs of small and mediumsized entities and emerging economies. The education
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initiative is making available a range of high-quality,

understandable and up-to-date material and services
on standard setting and IFRS, including a range of
materials in languages other than English. It has also
established an education team, which has delivered
seminars for academics on Framework-based teaching
at major academic meetings such as those of the
AAA, British Accounting and Finance Association,
European Accounting Association and the International
Association for Accounting Education and Research.6
Despite these efforts, challenges remain for accounting
educators in meeting the IASBs objective of developing
a single set of high quality, understandable, enforceable
and globally accepted financial report standards based
upon clearly articulated principles (IASB 2012: 1).
Translation and broader institutional issues such as
political, cultural and legal barriers represent distinct
problems in the educational arena if a single set of
globally-accepted accounting standards is to be achieved
(Zeff 2007; Tsakumis et al. 2009; Judge et al. 2010).
Some argue that cross-country differences in accounting
quality are likely to remain following IFRS adoption
because accounting quality is a function of the firms
overall institutional settings, including the legal and
political system of the country in which the firm resides
(Soderstron and Sun 2007). Accounting educators need
to recognise these differences in their teaching of
financial reporting standards and adjust their teaching
so that key differences are, wherever possible, identified
in the interpretation and application of IFRS.
Another observation is that adoption of IFRS
has not been accompanied by a research agenda
in accounting education. Typically, research interests
around accounting education have related to topics such
as ethics in accounting education, graduate capabilities,
including more broadly the development of generic
skills, the use of technology in the classroom and
assessment considerations. Only in recent times has
teaching IFRS begun to feature as a research area with a
themed issue of Accounting Education: An International
Journal in August 2011 and a forthcoming featured
section in Issues in Accounting Education, scheduled for
publication in 2013.
The lack of accounting education research around
the adoption of IFRS reinforces the view that many
accounting educators have not embraced the needs of
principles-based standards, as reflected in the fact that
adoption of IFRS has not resulted in significant changes
to the day-to-day teaching routines of accounting
academics (Jackling et al. 2013). Future accounting
education research is warranted to address approaches to
teaching IFRS, evaluation of IFRS teaching resources and
an assessment of the enhancement of employability of
graduates where a principles-based approach to teaching
IFRS has been implemented. The impact of diverse

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B. Jackling, B. Howieson & R. Natoli

cultural, political and legal backgrounds on the teaching

of IFRS also warrants further investigative research to
inform educators as well as regulators.
An important step towards the education and
preparation of future professional accountants is
engaging accounting academics in curriculum revision
via the adoption of a range of IFRS teaching resources
and participation in professional development activities
linked to teaching approaches. Further inputs are needed
from standard setters and employers to help educate
todays and tomorrows accountants so they are aware of
the challenges they will face in interpreting and applying
IFRS as a result of cultural and language differences since
they threaten the comparability of IFRS across countries,
if nothing else.
Professional accounting bodies can play a role in
improving the quality of teaching of IFRS. For example,
in an Australian context where the professional accounting bodies maintain influence on academic programs
offered by universities and private providers, there is
scope for monitoring approaches to teaching IFRS as part
of the professional accreditation process. Additionally,
use of case studies linked to judgement in professional
entrance examinations would provide more opportunity
to test capacity to make judgements on current IFRS
requirements. Such an approach could incorporate
assessment tasks that require a basis for a conclusion
together with the rationale underlying a particular
standard, as well as recognition of any plausible
competing view. Finally, as Tweedie (2007) states, such
an approach could incorporate reasons for choosing a
particular view as well as reasons for rejecting others.
In summary, accounting educators globally need
to strengthen their engagement with the principlesbased approach to IFRS. Unless utilisation of teaching
resources, educational research and CPD activities
related to IFRS become priorities, it is likely accounting
educators will maintain the status quo and will neither
recognise nor respond to opportunities available to
enrich the learning experience of students beyond the
traditional approach of teaching accounting standards
as the application of a set of rules. Providing a range
of resources through the IFRS Education Initiative is a
positive and ambitious endeavour, which, if successful,
will improve the quality of the teaching of IFRS. But
there is also scope for further engagement by professional
accounting bodies in ensuring that accountants of the
future are equipped with knowledge and skills that
are enduring yet will help them to adapt, as accounting standards and business transactions evolve over
time.
Beverley Jackling and Riccardo Natoli are at Victoria
University and Bryan Howieson is at the University of
Adelaide.


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B. Jackling, B. Howieson & R. Natoli

Notes
1 Wells (2011) argues the lease accounting standard is not
principles-based because, at the time of writing, it does not require
the recognition of the assets and liabilities inherent in operating
leases.
2 We note in passing that the movement towards a single set of
accounting standards will also assist the International Accounting
Education Standards Board (IAESB) of the International
Federation of Accountants (IFAC) to promulgate a common set
of education standards for the profession.
3 Strictly speaking, Australia had been considering the potential
adoption of IFRS since at least 1997 when the federal government
proposed the replacement of Australian GAAP with IFRS as part
of its reforms in the CLERP1 paper (CSAC 1997).
4 Evans (2004), for example, explores how the translation of
technical accounting terms can lead to misunderstanding key
accounting concepts or requirements.
5 The reader may find it interesting, for example, to review the
exchange between Alexander (1993), Burlaud (1993), van Hulle
(1993) and others regarding the issues associated with translating
the English concept of a true and fair view into the European
Fourth Directive.
6 For small and medium enterprises see, for example: http://www.
ifrs.org/NR/rdonlyres/2E9A655483FD-4B509D343822374F0
59C/0/presentationAdoptionandImplementationSMEs.pdf;
whereas for framework-based teaching see, for example: http:
//www.ifrs.org/NR/rdonlyres/DA9A0B0F-E5244E4E-BBAC2C0988F06E84/0/2011_06_21PresentationMaterials.pdf).

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