Date: March 6, 2002
To: Mr. Barry Melancon, President and CEO of AICPA
Mr. David Costello, President and CEO of NASBA
From: Advocates for Administering the U.S. CPA Exam in Other Countries

This letter endorses administering the Uniform U.S. Certified Public Accounting Examination (CPA exam) in countries outside the United States (U.S.) commencing in the year 2003 when the CPA exam is scheduled to be offered in a computerized format.

Reasons For Offering the U.S. CPA Exam Outside the U.S.

Currently, the CPA exam is administered only in the U.S.  Some of the State Boards of Accountancy, who administer the exam, discourage international candidates (non-U.S. residents/citizens) from taking the CPA exam.  However, many professional accountants in other countries wish to take and pass the CPA exam to prove their knowledge of U.S. accounting standards in order to enhance their marketability in their own countries.  Indeed, the world market place is currently pushing for the U.S. CPA to be the globally accepted designation for professional accountants.

It is in the national public interest of the U.S. to encourage professional accountants throughout the world to take and pass the CPA exam.  It will improve accounting practices, promote U.S. leadership in international commerce, facilitate international trade and finance, and help underdeveloped nations to create efficient, market-based economies.

Population growth and technological advances in transportation and communications have effectively made our world smaller, and the global economy daily becomes more of a reality.  One crucial aspect of globalization is the movement toward global methods of communication. 

What will be the financial language of the global economy?  Accounting has long been recognized as the language of business, and the world will need global accounting standards.  The widespread adoption of such standards will, in accordance with well-established principles of economics, tend to promote more efficient international operations and therefore freer trade by removing the barriers created by competing accounting systems.

The role of the U.S. CPA exam in this context is crucial.  By opening the CPA exam to candidates from abroad, the U.S. accounting profession will be able to adapt to, guide, and benefit from these trends.

Market forces outside of the U.S. are pushing strongly to make the U.S. CPA designation the global standard.  One effect of this trend is that, for the past few years, each May and November CPA exam has attracted thousands of international candidates.  Currently, most non-U.S. candidates come from countries in Asia (e.g., Japan and Korea) and the Middle East (e.g., Saudi Arabia and Jordan).  These candidates must travel to one of the 54 U.S. jurisdictions (50 states, D.C., Puerto Rico, Guam, and the Virgin Islands) to sit for the U.S. CPA exam.

Benefits for Everyone

Having accountants from around the world become experts in U.S. accounting standards will provide distinct benefits to the U.S.  One such benefit is that U.S. companies operating in foreign countries, including large accounting firms, will be able to hire residents who understand U.S. accounting standards.  Still greater benefits will accrue to U.S. companies operating abroad when local standards approximate U.S. standards.  Globalizing accounting standards will benefit both U.S. companies operating in foreign markets as well as foreign companies in the U.S. market.

The CPA exam will also help determine what standards become accepted internationally.  As the number of foreign CPAs increases, the likelihood that international standard-setting bodies will adopt U.S. GAAP as their reporting standards also increases.  On the other hand, if the CPA exam is not available to foreign-educated accountants, they will become certified in other systems of accounting, and the progress toward the adoption of a global financial language similar to U.S. GAAP may be impeded.

By making the U.S. CPA exam available to candidates outside the United States, the U.S. accounting profession will be taking a leadership position in influencing global accounting standards. Allowing accountants in other countries to take the U.S. CPA exam will result in accountants throughout the world becoming experts on U.S. accounting standards. This will increase the likelihood that global accounting standards will tend to mirror the U.S. standards. As a direct benefit,  U.S. CPAs won't be tasked with learning and adapting to new and different standards.

For international candidates wishing to take the U.S. CPA exam, current hardships created by having to travel to the U.S. to take the exam have significantly restricted the number of international candidates able to take it. More importantly, the failure to administer the CPA exam in other countries is generating activities by other organizations to offer more attractive alternatives to international candidates than the U.S. CPA exam.

For example, Japan has begun offering the Bookkeeping and Accounting Test for International Communication (BATIC). The exam allows candidates to demonstrate their knowledge of U.S. financial accounting standards. Approximately 1,500 candidates took the BATIC exam the first time it was offered in June 2001, and the number of candidates increased to approximately 2,500 for the second offering in December 2001. The AICPA and NASBA can expect to see this type of activity expand exponentially, on a global scale, unless actions are taken to make taking the U.S. CPA exam less onerous for international candidates.

Maintaining the status quo is not an option. If actions are not taken to facilitate international candidates wishing to take the U.S. CPA exam, the number of international candidates will decline. Such a decline would only serve to exacerbate the inevitable acceleration of declining applications to sit for the CPA exam.

Administering the U.S. CPA exam in other countries to international candidates can serve as a significant revenue stream to both the AICPA and NASBA. The added revenues can assist both of your organizations in providing critical services to the accounting profession. In addition, a reduced number of international candidates would add to the financial burden for future U.S. candidates since the increased fixed costs of administering the new computerized exam would have to be absorbed by a smaller overall number of CPA candidates. In contrast, an increased number of international candidates could help alleviate the financial burden to future CPA candidates.

The AICPA  and NASBA have the opportunity to make the U.S. CPA certification the accepted global designation for accountants world wide.  If the U.S. accounting profession fails to capitalize on the demand for a globally-recognized accounting certification, others will seize the opportunity.


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