substantial equivalence between qualifications of accountants and auditors prof dr gert h. karreman...
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Substantial Equivalence between Qualifications of Accountants and Auditors
Prof Dr Gert H. KarremanDePaul University, Leiden University
Objectives
Present a framework to compare the education of qualified accountants and auditors among countriesIntroduce a benchmarking process to facilitate mutual recognition
GAER 2012 Global Accountancy Education Recognition Study (Needles, Karreman for NASBA)
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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
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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
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IFAC International Education Standards
IES 1 – Entry RequirementsIES 2 – Content Professional Accountancy EducationIES 3 – Professional Skills & General EducationIES 4 – Professional Values, Ethics & AttitudesIES 5 – Practical Experience RequirementsIES 6 – Assessment of Professional Capabilities IES 7 – Continuing Professional DevelopmentIES 8 – Competence Requirements for Audit Professionals
IES as basis for a competency and benchmarking framework
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Competency Pillars
Competency Pillars for comparison of qualificationsPersonal 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
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Structure of Accountancy Education
Countries differ with regard to Certification RequirementsProviders: professional accountancy organizations, universities, othersResponsibility: government, government with the profession, profession, universitiesLicensing Requirements
These structural elements are important to developing and applying a benchmarking framework
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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
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Comparison of Qualifications
Sequential steps for comparison of qualificationsStep 1: Country InformationStep 2: Accountancy ProfessionStep 3: Characteristics of Accountancy EducationStep 4: Compliance with International Education StandardsStep 5: Specific Requirements
Benchmarking is an iterative process as is shown in the next slide
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Basis forSubstantialEquivalence
Decision
Data GatheringProcess
SubstantialEquivalence?
No Basis forSubstantialEquivalence
AdditionalInformation
Collect AdditionalData
Figure 1 Benchmarking Process
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
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Comparison of Countries and Qualifications
Country characteristicsAccountancy professionCharacteristics of qualificationsIES as benchmarks for accountancy educationCountry specific requirementsPosition of stakeholders
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Country Characteristics
Sample: 6 regions, 16 countries; 21 professional accountancy organizations and qualificationsLegal System: 6 common law, 8 civil law, 2 mixedCommon law countries in general have a more professional focus on accountancy educationCivil law countries in general have a more academic focus on accountancy education
Exception: USA common law and focus on academic requirements
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Accountancy Profession
All PAOs in the sample are full member of IFACThere is a wide range of responsibilities of PAOs for qualifications: ranging from no responsibility to full responsibilityEU requirements are important for auditor qualifications and practice rightsMRAs exist mainly in common law countries
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Qualification Characteristics
Professional accountancy education, practical experience, final assessment and CPD are mandatory for all qualifications in the sampleAcademic requirements are in general mandatory in civil law countries but not always in common law countriesGovernments and government agencies are increasingly responsible for accountancy education, either direct or through public oversight
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IES as Benchmarks
In most countries IES are not mandatoryIncreasingly the IES are accepted as benchmarks to achieve comparability of qualificationsThe main focus of IES is on professional requirements; less attention is given to academic requirements
The Uniform Accountancy Act contains specific academic requirements
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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
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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
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Global Accountancy Education Recognition Study 2012
Section 1: Research Objectives and MethodSection 2: Analysis of Country CharacteristicsSection 3: Substantial Equivalence QualificationsSection 4: Overall ConclusionsAppendix: Country Overviews
The GAER 2012 study was made possible by a research grant from NASBA
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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
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Thank you for your attention:What questions do you have?
Prof Dr Gert H. KarremanDePaul University, Leiden University
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