1. IQAB Mutual Recognition Agreements (MRAs ) Determining Substantial Equivalency IQAB Mutual Recognition Agreements (MRAs ) Determining Substantial Equivalency Presented to the IAAER Midyear Meeting American Accounting Association February 21, 2014

2. Ruben Davila, CPA, Esq. Former Member, U.S. International Qualifications Appraisal Board Professor of Clinical Accounting University of Southern California – Leventhal School of Accounting/ - Marshall School of Business

3. U.S International Qualifications Appraisal Board (IQAB) (Established early 1990s) Membership Membership NASBA – represents state boards of accountancy AICPA – represents the accounting practitioner Role: Role: Reviews accounting qualifications of professional accounting organization in other countries as basis for Mutual Reciprocity Agreements (MRAs) Reviews accounting qualifications of professional accounting organization in other countries as basis for Mutual Reciprocity Agreements (MRAs) Negotiates MRAs with foreign accounting organizations. Negotiates MRAs with foreign accounting organizations. Makes recommendations to adopt MRAs to state boards of accountancy Makes recommendations to adopt MRAs to state boards of accountancy MRAs grant vehicle to attain reciprocal practice rights MRAs grant vehicle to attain reciprocal practice rights

4. Who is AICPA? American Institute of CPAs American Institute of CPAs “The AICPA is the world’s largest member association representing the accounting profession, with more than 394,000 members in 128 countries and more than a 125-year heritage of serving the public interest. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for the profession and U.S. auditing standards for audits of private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination and offers specialty credentials for CPAs who concentrate on personal financial planning; fraud and forensics; business valuation; and information technology.”

5. Who is NASBA? National Association of State Boards of Accountancy: “ “ Founded in 1908, NASBA has served as an association dedicated to enhancing the effectiveness of the country’s 55 state boards of accountancy for more than 100 years. As a driving force within the accounting profession, NASBA accomplishes its mission by creating a forum for accounting regulators and practitioners to address issues relevant to the viability of the accounting profession.” Mission: “Enhance the effectiveness and advance the common interests of the Boards of Accountancy… Public Protection

6. Who is NASBA? Legal Authority Represents the interest of the state boards. State boards have legal authority: Represents the interest of the state boards. State boards have legal authority: Legal Authority to set licensing standards for CPAs Legal Authority to set licensing standards for CPAs Exam Exam Education Education Experience Experience Legal to Regulate CPAs – individuals & firms Legal to Regulate CPAs – individuals & firms Adopt professional standards Adopt professional standards CPE requirements etc. CPE requirements etc.

7. U.S. International Qualifications Appraisal Board Members NASBA NASBA Charles H. Calhoun, DBA, CPA Ruben Davila, CPA, Esq. Jeffrey A. Leiserowitz, CPA Antonio B. Smiley, CPA Kathleen J. Smith, CPA Staff Liaisons Louise Haberman Patricia Hartman AICPA AICPA Charles P. Heeter Jr., CPA, Vice-chair Khaled Abdou, Ph.D., CFA, CPA Lawrence J. Gramling, PhD, CPA Jim Knafo, CA, CPA Muhammad Padela, CPA, CFE, CFF,CITP Paula B. Thomas, DBA, CPA Staff Liaison Gordon Cherry Suzanne Jolicoeur William Treacy, Chair

8. What is a Mutual Recognition Agreement (MRA)? “A reciprocal agreement between governments or non-governmental professional bodies that indicates acceptance of the equivalence, compatibility or acceptability of the other jurisdiction’s regulatory standards for a particular group of licensees.” Creates means to get audit practice rights in other countries Creates means to get audit practice rights in other countries

9. U.S. International Qualifications Standards – con’t. U.S. IQAB uses the “three Es” to appraise the standards of a foreign jurisdiction’s accountancy body against those that U.S. CPA candidate must satisfy: Education: Education: Baccalaureate or graduate degree, or its equivalent Baccalaureate or graduate degree, or its equivalent At least 150 semester hours of quarter-hours equivalents in Board- recognized courses At least 150 semester hours of quarter-hours equivalents in Board- recognized courses Examination: Pass the Uniform CPA Examination Examination: Pass the Uniform CPA Examination Experience: Meet the work experience requirement Experience: Meet the work experience requirement

10. What MRAs are in place? U.S. IQAB has effected MRAs with the following: Under GATS: Institute of Chartered Accountants in Australia Institute of Chartered Accountants in Australia Chartered Accountants Ireland Chartered Accountants Ireland New Zealand Institute of Chartered Accountants New Zealand Institute of Chartered Accountants Hong Kong Institute of CPAs Hong Kong Institute of CPAs Under NAFTA: Canadian Institute of Chartered Accountants Canadian Institute of Chartered Accountants Instituto Mexicano de Contadores Publicos Instituto Mexicano de Contadores Publicos Appraisals are in progress or have been considered from other countries including the United Kingdom, Philippines, Zimbabwe, and India.

11. IQAB Issues: Substantial Equivalence Substantial Equivalence: Substantial Equivalence: Education Education Experience Experience Examination Examination Also: Continuing requirements, regulatory systems. Also: Continuing requirements, regulatory systems. Similar or Same Systems – Done Similar or Same Systems – Done Variance in Systems Variance in Systems

12. What is the International Qualifications Examination (IQEX)? An examination that evaluates the professional competence, from a U.S. perspective, of accountants from foreign jurisdictions determined by U.S. IQAB to have education, examination, and experience standards substantially equivalent to those of U.S. CPAs An examination that evaluates the professional competence, from a U.S. perspective, of accountants from foreign jurisdictions determined by U.S. IQAB to have education, examination, and experience standards substantially equivalent to those of U.S. CPAs IQEX tests reciprocity applicants on their knowledge of U.S. professional standards, taxation, and business law. IQEX tests reciprocity applicants on their knowledge of U.S. professional standards, taxation, and business law.