NAFTA Professional Mutual Recognition Agreements: Comparative Analysis of Accountancy Certification and Licensure

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ABSTRACT

The North American Free Trade Agreement (NAFTA) countries have worked toward the signing of a Professional Mutual Recognition Agreement (PMRA) allowing for accounting professionals to practice across borders. On September 27, 2002, the representatives of the United States NASBA/AICPA International Qualifications Appraisal Board, the Canadian Institute of Chartered Accountants' International Qualifications Appraisal Board, Mexico's Instituto Mexicano de Contadores Publicos (Mexican Institute of Public Accountants), and Comite Mexicano para la Practica Internacional de la Contaduria (Mexican Committee for the International Practice of Accounting) signed the PMRA for the accountancy profession, agreeing on the principal elements for granting accounting certification and licenses: education, examination, and experience. NAFTA's Free Trade Commission affirmed the PMRA on October 7, 2003. It has taken ten years for the three countries to implement fully the final agreement.

This paper reports on the certification and licensing requirements that exist as of 2006 for Canada, Mexico, and the United States. It is critical for accounting educators to understand the requirements for achieving certification and licensure in Canada, Mexico, and the U.S. to better prepare students for the international career opportunities afforded by the NAFTA agreement and other PMRA agreements in the future.

Key Words: NAFTA, Professional Mutual Recognition Agreements, Accounting Certifications, Accounting Licensure

INTRODUCTION

The North American Free Trade Agreement (NAFTA) was entered into force on January 1, 1994 by Canada, Mexico, and the United States to reduce the barriers to trade. One area that NAFTA (2006) focused on in Article 1210 was the cross border trade in professional services. Since NAFTA came into force, the accounting professional bodies of the United States, Mexico, and Canada have worked toward the signing of a Professional Mutual Recognition Agreement (PMRA) that allows for accounting professionals to practice across borders in the NAFTA countries.

On September 27, 2002, representatives of the United States NASBA/AICPA International Qualifications Appraisal Board, the Canadian Institute of Chartered Accountants' International Qualifications Appraisal Board, Mexico's Instituto Mexicano de Contadores Publicos (Mexican Institute of Public Accountants), and Comite Mexicano para la Practica Internacional de la Contaduria (Mexican Committee for the International Practice of Accounting) signed the PMRA for the accountancy profession (AccountingWEB, 2002). NAFTA's Free Trade Commission (USTR, 2003) affirmed the PMRA on October 7, 2003 at its annual meeting in Montreal. The Free Trade Commission (USTR, 2006a) is comprised of the trade ministers from the three NAFTA countries. Its role is to facilitate the implementation of NAFTA, oversee the NAFTA committees and working groups, and to assist in resolution of disputes surrounding the agreement. Each NAFTA country has the responsibility to implement the PMRA, allowing for the certification and licensure of accounting professionals.

This paper reports on the certification and licensing requirements that exist as of 2006 for United States, Mexico, and Canada. It is critical for accounting educators to understand the requirements for achieving certification and licensure in the U.S., Mexico, and Canada to better prepare students for the international career opportunities afforded by the NAFTA agreement and other PMRA agreements in the future. BDO Seidman, the sixth-largest auditing firm in the U.S., has increased its global hires in 2005 to handle the audit work generated by Sarbanes-Oxley (Byrnes, 2005). If the demand for qualified auditors continues, more Canadian and Mexican students may consider a U.S. career path.

There are initiatives for global convergence of accounting and auditing standards by the International Accounting Standards Board and the International Auditing and Assurance Board. …