Substantial Equivalence between Qualifications of Accountants and Auditors Prof Dr Gert H. Karreman DePaul University, Leiden University

Objectives Present a framework to compare the education of qualified accountants and auditors among countries Introduce a benchmarking process to facilitate mutual recognition GAER 2012 Global Accountancy Education Recognition Study (Needles, Karreman for NASBA) Click Insert > Header & Footer to add Area/Division/Department name.

Benchmarking for International Mobility International mobility of accountants and auditors and the mutual recognition of their qualifications are of global interest The principle of substantial equivalence can be used for the comparison of qualifications of accountants and auditors A benchmarking methodology is introduced that is based on competences and capabilities of accountants and auditors Click Insert > Header & Footer to add Area/Division/Department name.

Core Model of Accountancy Education Country Characteristics Cultural background Legal system Economic position Higher education International Requirement Standards Guidelines Directives Core Elements of Accountancy Education Professional qualification Final examination Professional education Practical experience General education Country systems of education and training subject to international codification Click Insert > Header & Footer to add Area/Division/Department name.

IFAC International Education Standards IES 1 – Entry Requirements IES 2 – Content Professional Accountancy Education IES 3 – Professional Skills & General Education IES 4 – Professional Values, Ethics & Attitudes IES 5 – Practical Experience Requirements IES 6 – Assessment of Professional Capabilities IES 7 – Continuing Professional Development IES 8 – Competence Requirements for Audit Professionals IES as basis for a competency and benchmarking framework Click Insert > Header & Footer to add Area/Division/Department name.

Competency Pillars Competency Pillars for comparison of qualifications Personal Development: university entrance & exit level; skills, values, ethics, and attitudes (IES 1,2,3,4) Professional Accountancy Education (IES 2) Professional Development: practical experience, assessment of professional capabilities, CPD IES 5,6,7) Advanced Competence for Audit Professionals (IES 8) The pillars reflect academic and professional contributions to accountancy education and form the basis for determining substantial equivalence Click Insert > Header & Footer to add Area/Division/Department name.

Structure of Accountancy Education Countries differ with regard to Certification Requirements Providers: professional accountancy organizations, universities, others Responsibility: government, government with the profession, profession, universities Licensing Requirements These structural elements are important to developing and applying a benchmarking framework Click Insert > Header & Footer to add Area/Division/Department name.

Principles of Benchmarking MRAs are the responsibility of standard setters and/or regulators; as a result requirements are different from country to country International standards are useful benchmarks but they have no absolute relevance Establishment of a general benchmarking methodology can promote comparison between countries Benchmarking must be flexible to allow for different approaches by stakeholders Click Insert > Header & Footer to add Area/Division/Department name.

Comparison of Qualifications Sequential steps for comparison of qualifications Step 1: Country Information Step 2: Accountancy Profession Step 3: Characteristics of Accountancy Education Step 4: Compliance with International Education Standards Step 5: Specific Requirements Benchmarking is an iterative process as is shown in the next slide Click Insert > Header & Footer to add Area/Division/Department name.

Selection of Countries Asia & Pacific: Australia, Hong Kong, India, Japan, New Zealand European Union: Czech Republic, France, Germany, Netherlands, United Kingdom Eurasia: Turkey Latin America: Brazil, Mexico North America: Canada, USA Sub Saharan Africa: South Africa Click Insert > Header & Footer to add Area/Division/Department name.

Comparison of Countries and Qualifications Country characteristics Accountancy profession Characteristics of qualifications IES as benchmarks for accountancy education Country specific requirements Position of stakeholders Click Insert > Header & Footer to add Area/Division/Department name.

Country Characteristics Sample: 6 regions, 16 countries; 21 professional accountancy organizations and qualifications Legal System: 6 common law, 8 civil law, 2 mixed Common law countries in general have a more professional focus on accountancy education Civil law countries in general have a more academic focus on accountancy education Exception: USA common law and focus on academic requirements Click Insert > Header & Footer to add Area/Division/Department name.

Accountancy Profession All PAOs in the sample are full member of IFAC There is a wide range of responsibilities of PAOs for qualifications: ranging from no responsibility to full responsibility EU requirements are important for auditor qualifications and practice rights MRAs exist mainly in common law countries Click Insert > Header & Footer to add Area/Division/Department name.

Qualification Characteristics Professional accountancy education, practical experience, final assessment and CPD are mandatory for all qualifications in the sample Academic requirements are in general mandatory in civil law countries but not always in common law countries Governments and government agencies are increasingly responsible for accountancy education, either direct or through public oversight Click Insert > Header & Footer to add Area/Division/Department name.

IES as Benchmarks In most countries IES are not mandatory Increasingly the IES are accepted as benchmarks to achieve comparability of qualifications The main focus of IES is on professional requirements; less attention is given to academic requirements The Uniform Accountancy Act contains specific academic requirements Click Insert > Header & Footer to add Area/Division/Department name.

Country Specific Requirements Country specific requirements are largely outside the scope of the study; nevertheless some general observations can be made: IES focus on professional requirements; in general the IES are perceived to be relevant for accountancy education stakeholders in a country Increasingly accountants and auditors need to comply with academic degree requirements, that are not considered in the IES Click Insert > Header & Footer to add Area/Division/Department name.

Position of Stakeholders IFAC IAESB: responsible for IES; no comparison between qualifications EU: general requirements for auditors in line with IES; recognition of audit rights; no recognition of qualifications NASBA/AICPA: establishment of substantial equivalence as basis for MRAs; focus on degree requirements and CPA examination Country regulators: criteria for MRAs based on home country qualification requirements Click Insert > Header & Footer to add Area/Division/Department name.

Global Accountancy Education Recognition Study 2012 Section 1: Research Objectives and Method Section 2: Analysis of Country Characteristics Section 3: Substantial Equivalence Qualifications Section 4: Overall Conclusions Appendix: Country Overviews The GAER 2012 study was made possible by a research grant from NASBA Click Insert > Header & Footer to add Area/Division/Department name.

GAER 2012 Limitations The study shows that comparison of qualifications can be based for a significant part on international professional standards The actual use of the standards for recognition purposes is the responsibility of standard setters and regulators Most countries have specific academic requirements for qualifications of accountants and auditors Consideration of benchmarks for academic requirements is outside the scope of the study Click Insert > Header & Footer to add Area/Division/Department name.

Thank you for your attention: What questions do you have? Prof Dr Gert H. Karreman DePaul University, Leiden University Click Insert > Header & Footer to add Area/Division/Department name.