Implications of Ifrs Adoption on the Organization and Human Resource Management Practices of Global Accounting Firms

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Many industries have experienced a globalization process that has led to fundamental shifts in industry dynamics and changes to the basic structure of firms. However, the international accounting industry has largely remained a collection of inter-related but separate nationally-based industries. This nationally-based structure has been driven by the existence of country-specific accounting standards and professional licensing boards that are unique to each country. Various financial market regulators also prescribe financial reporting and other requirements for firms listed on specific equity exchanges. Cultural, economic, and legal factors all contributed to the development of country-specific accounting approaches.

Now, a number of factors are facilitating a globalization of the accounting industry. These factors include the recent development of international accounting standards, the trend towards listing equities on multiple exchanges, and increasing prevalence of electronic accounting information and communication. These trends will likely lead to changes in the structure and organization of accounting firms, changes in the nature of accounting work performed in certain countries, and a shift in accounting tasks to locations that can perform functions more efficiently.


The twentieth century saw dramatic changes in the nature of national and global competition in many industries. In the past transportation costs, trade barriers, and communication limitations meant that most industries were organized on a national basis with minimal cross-border activity. Now, many industries have been transformed, and firms compete globally in industries where most national boundaries are transparent. These trends have been captured in research studies (Bartlett & Ghoshal, 1998), and popularized in the trade press (Friedman, 2005). While globalization happened faster in some industries than others, and competition evolved in unique ways as a result differing structural characteristics, few industries have been unaffected by globalization. One industry that has remained very much influenced by national boundaries is public accounting. The recent development of international accounting standards, the trend towards listing equities on multiple exchanges, and the increasing prevalence of electronic accounting data, are among the factors that are now facilitating a globalization of the accounting industry. Although the largest accounting firms have operated across many countries for decades, in practice local partnerships have been semi-autonomous entities that focused on the domestic market while facilitating the audit, tax, and consulting needs of multinational companies. In many ways this was similar to how IBM, other computer companies, and software consulting firms operated prior to the development of the internet. In these industries, local sales, service, support, and software development teams worked closely with local companies to develop specific solutions for each client's unique needs, even if they were part of a multinational corporation. Similar to other industries, the accounting industry may experience changes in competition, organizational form, and distribution of work in the coming decade. More specifically, national offices are likely to become less autonomous, and certain tasks will be performed by employees or contractors who might be located anywhere in the world.


Large companies operating in multiple countries have responded to the increasing flatness of the global economy in many ways (Friedman, 2005). In the world of financial reporting, however, a variety of regulatory forces seem to have constrained responses by large public accounting firms. While the largest public accounting firms, known as the "big four," are global organizations, they are organized as networks of national affiliates rather than as truly integrated global firms. …


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