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February 6, 2012

Editor’s letter: globalisation is here to stay

Nicola MaherGoing global is big business, not only for companies but for the accounting profession. While accounting firms have been integrating operations across vast regions, professional accounting bodies are increasingly expanding abroad.

The Accountant’s study of 44 professional bodies in 27 countries (see Going global for the full report) has identified a trend towards growing membership numbers in emerging economies. For example, the Institute of Chartered Accountants in England and Wales (ICAEW) membership has increased by 31% in China, 9% in Singapore, 7% in Malaysia and 4% in India in the past two years, while CPA Australia has increased its membership by 25%, 29%, 12% and 197% in the same Asian countries respectively.

Another method of expansion has been consolidation among national institutes, particularly in Europe and North America. For example, all of Spain’s national accounting bodies will merge by 2013 and there has been a similar union in the Netherlands.

Globalisation of the profession has many benefits. Long established institutes such as the Association of Chartered Certified Accountants, Chartered Institute of Public Finance and Accountancy and CPA Australia are able to provide a more complete service to their members working abroad.

These bodies also partner with local accounting bodies to help them on education, training and dual designation programmes.

These partnerships also help to improve the quality and numbers of professionals supporting the global financial markets.

Becoming obsolete

As globalisation of the profession continues at a rapid rate, there is a burgeoning questioning as to what this means for national accounting bodies who choose to solely focus on their domestic profession. One concern is this could render inwardly focused institutes obsolete.

This is an unlikely outcome because the major obstacle hindering globalisation is regulation.

There will always be a need for national institutes to educate local accountants on a country-specific basis.

In addition, it is unreasonable and impractical for global institutes to train the vast quantities of talent entering the profession in developing countries.

Mobility barriers

There is no one-size-fits-all approach to regulation and this is unlikely to occur in the near future. This creates a mobility problem for professional accountants to move seamlessly from one jurisdiction to another to serve the needs of clients.

Mobility is being looked at in the European Commission’s audit reform proposals in the form of a European passport for audit professionals to enable them to work on cross-border engagements more easily.

This is a good idea but questions remain over how such a system could be applied in practice to a vast region of countries with professions of varying standards and development.

The world is watching and waiting to see if a pan-continental solution is adopted in the EU and whether this could be replicated in other regions such as Asia-Pacific and Latin America.

Regardless, there is no doubt professional bodies will be busy moving further from national strategies to international strategies in the coming years.

Nicola Maher

nicola.maher@vrlfinancialnews.com

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