08 June 2015

FEE: The possible impact of TTIP on European professional accountants and auditors

FEE Information Paper explores how TTIP could be relevant for the accounting and audit profession. It addresses three relevant subjects that have come up in the negotiations between the EU and USA.

The following three subjects could be relevant for the accounting and audit profession and are addressed in the FEE's Information Paper:

• recognition of the professional qualifications of accountants and auditors

• standards for the accounting profession

• oversight of the audit profession

Professional qualification

The recommendations of the professional bodies would specify the criteria for education, examination, practical experience and licensing of professional accountants.

Based on these recommendations, the EU and the USA could then negotiate and conclude a Mutual Recognition Agreement (MRA) for the relevant profession. Such a MRA would specify the requirements for recognising qualifications such as aptitude tests regarding national/state company and tax law.

Currently, without the TTIP, each professional body in the EU would need to negotiate and conclude its own bilateral MRA with the relevant professional body of the USA. Such negotiations require significant investments of time and resources and only very few professional bodies in the EU have (successfully) undertaken this effort.

Standards

At this stage, the TTIP discussions do not include accounting, auditing and other standards relevant the work of the accountancy and audit profession. It is unknown whether such standards would be discussed in the Regulatory Cooperation Body that the TTIP is foreseen to establish.

In this Regulatory Cooperation Body, senior representatives of EU and US regulatory authorities would set priorities for regulatory cooperation.

Audit oversight

It remains to be seen whether – once TTIP would be in place – audit oversight could become subject to regulatory cooperation.

Currently, EU and US authorities operate under comparable systems for the oversight of auditors and audit firms, but there is no automatic mutual reliance on quality assurance reviews or audit inspections. This is because the competent authorities in the USA – namely, the SEC and the PCAOB – have not recognised the equivalence of the EU systems.

For the moment, some EU Member States have cooperative arrangements with the PCAOB regarding audit oversight.

Full information paper

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