State Board Report

June 2007

Paul George, Director of the United Kingdom’s Public Oversight Board, outlined the responsibilities of his group at the May 4, 2007 meeting of the NASBA/AICPA International Qualifications Appraisal Board in Washington, DC. Asked to address the meeting by NASBA/AICPA International Qualifications Appraisal Board Chair William Treacy, Mr. George explained the aim of the UK’s Financial Reporting Council, which includes the POB, is to promote confidence in corporate reporting and governance. While Mr. George thought Section 1221 of the Companies Act 2006 might provide an avenue for recognition of US CPAs in the United Kingdom. He told IQAB Chair Tracey that he would confer with the professional accounting bodies in the UK to assess their present interest in such a mutual recognition agreement.

Unlike the strict division between regulators and professionals established for the PCAOB in the Sarbanes-Oxley Act, the United Kingdom’s POB brings the two together. Mr. George explained that his salary as director of the POB is partially paid by the government, partially by the profession and partially by business. While the POB has standard-setting authority, as the five UK professional bodies are members of the International Federation of Accountants (IFAC), they have accepted IFAC’s standards, including those for professional ethics.

Todd Nissen of the Office of the US Trade Representative also addressed the May IQAB meeting, focusing on the recent trade agreement that was signed with the Republic of Korea on April 1, 2007. The United States-Korea Free Trade Agreement (KORUS FTA) expands market access and investment opportunities in a number of service sectors, including accounting. Five years after the signing of the agreement, US citizens will be able to own up to 50 percent of Korean accounting firms, and US accountants who are not providing auditing services will not need to obtain reciprocal licenses to practice in Korea, Mr. Nissen stated.

The revised IQEX (International Uniform Certified Public Accountant QualificationExamination) was administered for the first time in November and the passing rate remained at about 60 percent, Patricia Hartman, NASBA Director of CPA Examination Services reported. The new examination focuses on tax and law, those subjects most peculiar to US practice. IQEX is available to professionals with non-US designations that are covered under mutual recognition agreements adopted by the state boards and is given during November each year. This past November, 321individuals took the IQEX. Information about IQEX can be found on the NASBA Web site.

IQAB Chair Treacy has appointed a new task force to review IQAB’s procedures and examine its charge to ensure they are meeting the needs of current international practice. He explained, “Just as we have had to re-examine how we determine substantial equivalency among the states, we need to reconsider how we determine substantial equivalency among international designations.” Gerald Burns (OR) was appointed to chair the new group.

Charles Calhoun, III, brought the IQAB members up-to-date on IFAC’s current projects, including the distribution of an Ethics Education Toolkit, which includes PowerPoint presentations, video clips and other teaching materials of practical use to those developing and delivering ethics education programs. The International Accounting Education Standards Board expects to adopt the final version of its International Education Practice Statement “Approaches to Developing and Maintaining Professional Values, Ethics and Attitudes” at its June 2007 meeting.

Professor Calhoun recommended the IQAB members read a comprehensive article outlining how the US-Canada-Mexico mutual recognition agreement has been implemented. It can be found in Global Perspectives in Accounting Education, Volume 4, 2007, “NAFTA Professional Mutual Recognition Agreements: Comparative Analysis of Accountancy Certification and Licensure,” by Lucia Peek, Maria Roxas, Georg Peek, Egbert McGraw, Yves Robichaud and Jorge Castillo Villarreal, academicians from the US, Canada and Mexico. It can be found at http://gpae.bryant.edu/%7Egpae/content.htm

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