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

By Gupta, Parveen P. | Journal of Accountancy, January 1992 | Go to article overview
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International Reciprocity in Accounting: Where in the World Are We Headed?

Gupta, Parveen P., Journal of Accountancy

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," 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.


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 length of experience required. In the United States, for example, a three-year requirement is rare, but Greece, Qatar and Switzerland require more than seven years' experience. In addition, procedures to certify the nature and length of a candidate's experience differ employer attestion while other rely on periodic reports by a candidate or on entries in his or her diary.

Professional examinations. The content, rigor, scope and length of professional examinations administered by license-granting bodies worldwide also vary. For example, a 1982 survey found that professional examinations for accountants in Australia, Canada, Denmark, France Japan, South Africa, the United Kingdom and West Germany stressed practical applications while in Fiji, India, Israel, New Zealand, Norway, the Philippines, Singapore and Turkey the emphasis was on theoretical or academic knowledge.

Continuing education. Minimum continuing education requirements for audit practitioners also differ. Some countries require as many as three to five days of formal continuing education per year while others do not require any continuing education at all; professional accounting licenses are granted for life without any periodical renewal requirements.


Organizational structure.

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


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