Text 3. Accountancy Qualifications and Regulation

The requirements for entry in the profession of accounting vary from country to country.

Accountants may be licensed by a variety of organizations, and are recognized by titles such as Chartered Certified Accountant, Chartered Accountant, Certified Public Accountant, Certified Management Accountant, Certified General Accountant and Certified Practicing Accountant. Many countries recognize two or more accounting bodies. There is, however, no legal requirement for an accountant to be a paid-up member of one of the many Institutes and other bodies which are effectively a form of professional trade union. Unlike the Law Society, which can legally stop a solicitor from practicing, accountancy institutes do not have such authority. Generally, certain specialized areas of accountancy such as auditing and insolvency are tightly regulated.

The Certified Management Accountant (CMA) designation is unusual in the United States in that it does not have a statutory basis. However, it is accepted by industry and by its peer associations. In Canada the Canadian CMA designation is recognized under provincial/territorial legislation.

United Kingdom

In the UK, there are no license requirements for an individual to describe himself/herself or practice as an accountant (except in the areas of audit or insolvency) but to use certain titles requires membership of one of the many appropriate professional bodies.

• A Chartered Certified Accountant must be a member of the Association of Chartered Certified Accountants (designatory letters ACCA or FCCA).

• A Chartered Accountant must be a member of one of the following:

  • the Institute of Chartered Accountants in England & Wales (ICAEW) (designatory letters ACA or FCA)

  • the Institute of Chartered Accountants of Scotland (ICAS) (designatory letters CA)

  • the Institute of Chartered Accountants in Ireland (ICAI)

  • a recognised equivalent body from another Commonwealth country (designatory letters being CA (name of country) e.g. CA (Canada))

• A Chartered Management Accountant must be a member of the Chartered Institute of Management Accountants (designatory letters ACMA or FCMA).

• A Chartered Public Finance Accountant must be a member of the Chartered Institute of Public Finance and Accountancy (designatory letters CPFA).

• A Certified Public Accountant must be a member of the Association of Certified Public Accountants (designatory letters ACPA or FCPA).

• An International Accountant must be a member of the Association of International Accountants (designatory letters AIAA or FAIA).

• An Incorporated Financial Accountant must be a member of the Institute of Financial Accountants (designatory letters AFA or FFA).

Each of these bodies admits members only after passing examinations and undergoing a period of relevant work experience. Once admitted members are expected to comply with ethical guidelines and gain appropriate professional experience.

Chartered Accountants may also become Registered Auditors in accordance with the Companies Act, providing they can demonstrate the necessary professional ability in that area and submit to regular inspection. It is illegal for any individual or firm that is not a Registered Auditor to perform a company audit.

United States of America

In the United States, legally practicing accountants are Certified Public Accountants (CPAs), and other non-statutory accountants are Certified Internal Auditors (CIAs), Certified Management Accountants (CMAs) and Accredited Business Accountants (ABAs). The difference between these certifications is primarily the legal status and the types of services provided, although individuals may earn more than one certification. Additionally, much accounting work is performed by uncertified individuals, who may be working under the supervision of a certified accountant.

A CPA is licensed by the state of his/her residence to provide auditing services to the public, although most CPA firms also offer accounting, tax, litigation support, and other financial advisory services. The requirements for receiving the CPA license varies from state to state, although the passage of the Uniform Certified Public Accountant examination is required by all states. This examination is designed and graded by the American Institute of Certified Public Accountants.

A CIA is granted a certificate from the Institute of Internal Auditors (IIA), provided that the candidate passed a rigorous examination of four parts. A CIA mostly provides his/her services directly to his/her employer rather than the public.

A CMA is granted a certificate from the Institute of Management Accountants (IMA), provided that the candidate passed a rigorous examination of four parts and meet the practical experience requirement from the IMA. A CMA mostly provides his/her services directly to his/her employers rather than the public. A CMA can also provide his services to the public, but to an extent much lesser than that of a CPA.

An ABA is granted accreditation from the Accreditation Council for Accountancy and Taxation (ACAT), provided that the candidate passed the eight-hour Comprehensive Examination for Accreditation in Accounting which tests proficiency in financial accounting, reporting, statement preparation, taxation, business consulting services, business law, and ethics. An ABA specializes in the needs of small-to-mid-size businesses and in financial services to individuals and families. In states where use of the word "accountant” is not permitted by non state licensed individuals, the practitioner may use Accredited Business adviser.

The United States Department of Labor‘s Bureau of Labor Statistics estimates that there are about one million persons employed as accountants and auditors in the U.S.

U.S. tax law grants accountants a limited form of accountant-client privilege.

Unit 7. THE TELEPHONE