International Reciprocity in Accounting: Where in the World Are We Headed?

Beginning of article

The 1980s saw a tremedous surge in global trading, which is expected to continue the future at a rapid pace. This dramatic expansion has led to the emergence of many new international accounting problems. This article deals with one such problem--evident to many but largely ignored--the lack of international licensure reciprocity to practice accounting.

RECIPROCITY

"Reciprocity," a term commonly used by professional and occupational licensing bodies in many countries, means mutual professional recognition. Two independent bodies guarantee each other's members certain commercial or professional privileges.

Reciprocity can be either absolute or conditional. Absolute reciprocity exists when two license-granting bodies enter into bilateral agreements recognizing each other's licenses in total, without requiring applicants from either jurisdiction to take additional tests or prove requirements have been met.

In conditional reciprocity, two license-granting bodies recognize each other's licenses only if some mutually agreed-on additional education, experience or examination requirements are satisfied. Internationally, reciprocity would recognize the license of a duly certified professional accountant from one county who seeks to practice in another.

CAUSES OF THE PROBLEM

The strong trend toward internationalization of profesional activities makes reciprocity in accounting practice a desirable goal. However, a number of practical problems impede this effort. The most serious barrier is widespread differences in qualifications for admission to the public accounting profession.

Education. There is considerable international diversity in accountants' educational backgrounds. While in most advanced countries a baccalaureate degree in accounting fro a recognized university is required, many countries accept less education or experience in lieu of education. Italy, for example, accepts 10 years' accounting experience as a substitute for a college degree. More extreme cases include Morocco and Uruguay, where there is no requirement for an auditor to be professionally qualified, much less to have any minimum education.

Practical experience. Diversity also exists in the nature of practical experience. In the United States, the United Kingdom, Canada and India, for example, experience outside of public accounting usually is not acceptable, while in Norway, Israel and Belgium, nonpublic accounting experience generally is considered sufficient. Countries such as Denmark and Norway also require accountants to have experience in internal and government auditing.

There are also differences in the …