Negotiations to enable US accountants to practise in the UK, and vice versa, have stalled amid disagreements, including how to evaluate the standard of American audit training, the Financial Times has reported.
The proposed agreement, which would allow US accountants to practise in the UK and UK accountants to work in the US, was intended to facilitate the movement of auditors at top firms, especially when working on audits for large banks and dual-listed companies.
The pilot programme, first agreed in 2018 between professional bodies in the US and Scotland, had allowed limited recognition of each other’s accounting qualifications.
This agreement, which was extended twice while talks continued, ultimately expired in 2024.
Efforts to expand the arrangement to include accountants qualified in England and Wales, and to enable Americans to undertake audit work in the UK, have faltered, people familiar with the negotiations told the FT.
“I would describe the process as suspended, not ended,” said Bruce Cartwright, CEO of the Institute of Chartered Accountants of Scotland told the publication.
The UK government had expressed support for mutual recognition agreements.
The Big Four accounting firms including Deloitte, EY, KPMG, and PwC, have also backed the idea.
Cartwright remarked, “We shouldn’t underestimate the complexity of these big financial institutions. If there is senior audit expertise available in the US that could be brought to London and vice versa, then that would be good for everybody.”
A key point of contention, according to the report, has been the requirement for UK accountants to complete additional work before being able to add an audit qualification, necessary to sign off on financial accounts.
Cartwright explained that while there was general agreement that US audit experience could count towards a UK qualification, it proved difficult to establish an oversight system to ensure American auditors possessed the required skills.
The American Institute of Certified Public Accountants (AICPA) has expressed that, in general, US CPAs should receive the same recognition as licensed accountants from other countries, the report said.
Another issue has been the US’s refusal to include one of the three main UK bodies that provide audit qualifications in the negotiations.
While the AICPA has been in talks with two professional bodies — the Institute of Chartered Accountants of Scotland (ICAS) and the Institute of Chartered Accountants in England and Wales (ICAEW) — the Association of Chartered Certified Accountants (ACCA), the second-largest UK body, has been excluded.
The ACCA stated that the Financial Reporting Council (FRC), the UK’s audit regulator, had the final say on mutual recognition agreements, and that any agreement reached by the FRC would apply to all UK bodies.
The ICAEW declined to comment, while the FRC expressed hope that all parties would “continue to work together to conclude this long-running matter.”
