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State Board Report

March 2015

For many years most Boards of Accountancy have recognized non-U.S. accountants using the Mutual Recognition Agreements (MRAs) developed by the NASBA/AICPA International Qualifications Appraisal Board (IQAB). These accountants hold professional designations which IQAB has determined have similar requirements to those for being a licensed CPA, as outlined in the Uniform Accountancy Act.

It is likely that since adopting the MRAs your state has not seen an applicant from any of the MRA countries other than Canada. The lack of applicants from MRA countries should not be misconstrued as indicating that there is no interest from international accountants in becoming licensed CPAs. There is pent up interest among other countries’ professionals, but even if their requirements are as rigorous as those for the U.S. CPA, their professional or regulatory bodies may not be able to reach an agreement with IQAB that would provide for mutual recognition of U.S. CPAs.

The current MRA guidelines do not allow for granting a CPA to a professional from a country that has additional requirements for registered auditors. As an example, consider a country that has a large number of well-educated accountants who would like to have practice privileges in the U.S., but because their country requires six years of attest experience before they are granted audit practice privileges, the certifying entities will not accept U.S. CPAs under an MRA, as a CPA may only have one year of non-attest experience. Without an MRA, an accountant from that country would have to file an initial application for licensure, be individually evaluated, and ultimately sit for all four parts of the Uniform CPA Examination. Under an MRA, the international accountant would come to the Board with an acknowledged credential and would only need to take and pass the one-part IQEX.

For several years there have been discussions between the AICPA and NASBA about this issue. We have heard from firms across the country regarding their desire to have recognized as CPAs the foreign accountants they have hired. Recently, the leadership of AICPA and NASBA have asked IQAB to develop a different approach for identifying and accepting qualified international accountants from countries where a mutual recognition agreement is not in place. For lack of a better term, we are calling this process the "Licensed Professional’s International Pathway" (LPIP), a unilateral approach to recognition.

Recently, NASBA Chair Walter Davenport and I attended the annual meeting of the Association of Chartered Accountants in the U.S. (ACAUS). We have been meeting with ACAUS leadership for several years. Through that organization we have ascertained that thousands of international accountants are living and working in the U.S. in accounting firms and private industry. In our discussions we have concluded that many of these individuals would seek state licensure if there were a process available to them that would recognize their credential coupled with years of professional experience.

NASBA is considering how we can leverage the expertise we have developed within the NASBA International Evaluation Services to assist IQAB in its processes. In reaching out to some State Board Members and Executive Directors, we have been encouraged to consider the unilateral approach as an opportunity for enhancing public protection. There is still a lot of work to be done before this pathway becomes a reality. As we are taking some substantial steps, and per leadership’s promise of transparency, we want you to be aware that we are considering something new. Like most initiatives supported by NASBA, this effort will be spearheaded by State Board volunteers. NASBA Director-at-Large Telford Lodden (IA), who serves as Chair of NASBA/AICPA IQAB, will be leading this program.

Just as State Boards individually adopt MRAs, individual states will determine whether they will accept the LPIP applicants for licensure. We have recently spoken about how State Boards and NASBA need to react to what is increasingly becoming a global economy. We have a growing population of CPAs located outside the U.S. and a significant population of experienced international accountants located here in the U.S. who are actively integrated into business and accounting. We will be better prepared for both by changing our international thinking.

Semper ad meliora. (Always toward better things.)

— Ken L. Bishop
President and CEO

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