RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/73
4 December 1998
(98-4870)
Council for Trade in Services
ACCOUNTANCY SERVICES
Background Note by the Secretariat
I. INTRODUCTION
1. At the request of the Council for Trade in Services, the Secretariat has prepared this Note on
accountancy services as part of the information exchange programme.  As with previous sectoralnotes by the Secretariat, this Note is not intended to be exhaustive, but rather to serve as a background
to discussions by Council Members.
2. Accountancy is an important element in the production of both physical goods and other
services.  Perhaps even more important is accountancy's essential role in respect to the
implementation and enforcement of prudential requirements and other financial regulatory measures.Another consideration is that the range of activities undertaken by accountancy firms is wide and
expanding:  as the European Commission publication Panorama of EU Industry 1997 has observed,
"There is no strict correspondence between accountancy services and the field of activity of theaccounting profession".
1  This is due to the fact that the skills developed by accountancy professionals
in order to produce, process, analyse or audit financial information can also be used for otherpurposes.  The result has been a major expansion into such areas as taxation services and management
consulting.
3. Perhaps the most significant issue in respect to  international trade in accountancy services is
the widespread nature of local qualification and licensing requirements, both in regard to individual
practitioners and as conditions for the ownership and management of firms.  The response of the
largest accountancy entities, notably the "Big Five" (as described below), has been to form
international networks of local firms in an attempt to overcome the effects of these and otherrestrictive national regulations.  Such networks, however, may not necessarily be the most efficient
management and organizational structures for the delivery of accountancy services.  In addition, small
and medium-size firms are much less likely to possess the necessary resources to create similar
structures, and therefore may be placed at a comparative disadvantage.  Individual accountancy
professionals are likely to be even more disadvantaged, especially those from developing countries.
4. The usage of international standards in accountancy has recently intensified as another major
issue.  In October 1998, for example, the World Ba nk issued a request to the "Big Five" to stop
putting their names to accounts published in the Asian economies, unless such accounts are prepared
                                                     
1 P. 25/25.  Major sources for this Note also include the following documentation of the WTO Working
Party on Professional Services (WPPS):  Functions of the Working Party on Professional Services in Relation to
Accountancy, Note by the Secretariat, 27 June 1995 (S/WPPS/W/1);  The Accountancy Sector , Note by the
Secretariat, 27 June 1995 (S/WPPS/W/2);  and Synthesis of the Responses to the Questionnaire on the
Accountancy Sector, Note by the Secretariat, 5 May 1997 (S/WPPS/W/11).S/C/W/73
Page 2
using international financial reporting standards.2  The Financial Times has observed that a
consequence of the World Bank request may well be to accelerate the development and usage of
international accounting and auditing standards.  In addition, the request is expected to put increased
pressure on regulatory authorities to modify current practices.
5. During the Uruguay Round negotiations, the Secretariat released a Note entitled "Trade in
Professional Services"  (MTN.GNS/W/67, dated 25 August 1989).3  The Note focused on licensed
professions, notably accounting, law, architecture and medicine, with the objective of identifying the
core issues of relevance to these sectors.  Topics addressed by the Note included:  activities
comprising professional services;  forms of trade;  the motivations and objectives for rules and
regulations;  descriptions of typical regulations and measures;  and considerations related to the
application of major GATS-related concepts and principles.  W/67 makes the observation that "The
issue of barriers to trade in professional services concerns, for example, the question of whether or not
certain types of regulation are necessary to protect consumers or whether and to what extent suchregulations unnecessarily discriminate against foreigners".
4
II. DESCRIPTION OF THE SECTOR
6. Accounting, auditing and bookkeeping services are part of subsector "A." of "1. Business
Services" of the Services Sectoral Classification List (MTN.GNS/W/120).  The corresponding
classification number under the United Nations' "Provisional Central Product Classification"(CPC) is
862.  There are no further sub-categories provided for under W/120.
7. Under the Provisional CPC, however, the catego ry of "Accounting, auditing and bookkeeping
services" (CPC 862) is further sub-divided, as follows:
Accounting and auditing services (CPC 8621)
• Financial auditing services (CPC 86211)
Examination services of the accounting records and other supporting evidence of anorganization for the purpose of expressing an opinion as to whether financial
statements of the organization present fairly its position as at a given date and the
results of its operations for the period ended on that date in accordance with generally
accepted accounting principles.
• Accounting review services (CPC 86212)
Reviewing services of annual and interim financial statements and other accounting
information.  The scope of a review is less than that of an audit and therefore the level
of assurance provided is lower
• Compilation of financial statements services (CPC 86213)
Compilation services of financial statements from information provided by the client.No assurances regarding the accuracy of the resulting statements are provided.
                                                     
2 Financial Times, 19 October, 1998, p .1.
3 In the context of the Uruguay Round, the United States proposed an "Annex on Professional
Accounting Services" (MTN.GNS/PROF/W/2, dated 2 October 1990) which would have set out guidelines and
procedures for facilitating the international provision of  accountancy services through the mutual recognition of
professional qualifications.  The proposed Annex also recognized the importance of the wider user of
international standards.
4 P. 9.  W/67 also states, "Among the principal broad concerns which motivate regulations and policies
affecting professional services are consumer protection, promotion of domestic business and local employment,
the need to manage foreign exchange and th e preservation of cultural identity" (p.8).S/C/W/73
Page 3
Preparation services of business tax returns, when provided as a bundle with the
preparation of financial statements for a single fee, are classified here.
Exclusion:  Business tax preparation services, when provided as separate services, are
classified in sub-class 86302 (Business tax preparation and review services).
• Other accounting services (CPC 86219)
Other accounting services such as attestations, valuations, preparation services of pro
forma  statements, etc.
Bookkeeping services, excep t tax returns (CPC 8622)
• Bookkeeping services, excep t tax returns (CPC 86220)
Bookkeeping services consisting in classifying and recording business transactions in
terms of money or some unit of measurement in the books of account.
Exclusion:  Bookkeeping services related to tax returns are classified in subclass
86302 (Business tax preparation and review services).
8. The adoption of CPC Rev. 1 would bring little substantive change in regard to accounting,
auditing and bookkeeping services, as noted in the Secretariat document, "Detailed Analysis of the
Modifications Brought about by the Revision of the Central Product Classification:  ProfessionalServices", dated 27 March 1998 (S/CSC/W/6/Add.10, p. 4).  The revisions for accountancy were
limited to minor changes in definition and wording.
9. As observed above, the range of services offered by accountants is wide and growing and,
"As a consequence, some may argue that a distinction should be made, in certain cases, between
accountancy services and services provided by accountancy firms.  Others would argue that if aservice is provided by an accountancy firm it is, by definition, an accountancy service".
5  As a result,
the domain of accountancy services has been defined differently in different countries, and the
boundaries with other regulated professions (e.g. the legal profession with respect to taxation) or non-
regulated services providers (e.g. management consultants) are therefore not defined consistently from
country to country.
III. ECONOMIC IMPORTANCE OF THE SECTOR AND ITS MAIN ECONOMIC
FEATURES
10. While accounting and auditing services constitute the core activities of accountancy firms, a
wide range of additional services may also be offered, most notably merger audits, insolvency
services, tax advice, investment services and management consulting.6  The internal expertise
developed by the profession in regard to information technology has resulted in accountancy firms
becoming among the world's largest suppliers of such consultancy services.  Demand for accountancy
services results from both mandatory legal requirements, such as financial reporting, as well as clients
seeking advice on various issues, for example taxation. Although individuals are also consumers of
accountancy services, the majority of work involves services to enterprises.
11. As noted in Panorama of EU Industry 1997 (p. 25/29), "Obviously, the size of the profession
in a given country does not in any way reflect that of its economy".  This is the result of different
national practices for organizing the profession. In many countries, for example, the profession is
defined to include all those who have received a specified level of training, regardless of whether they
                                                     
5 S/WPPS/W/2, p. 7.
6 Given the focus of the GATS on professional services, this Note (as with the documents of the
WPPS) concerns itself primarily with the public prac tice of accountancy, i.e. the provision of professional
accountancy services to clients, either individually by sole practitioners, or collectively by firms of accountants.S/C/W/73
Page 4
are in public practice, employed within the accounting division of a corporation, working in another
profession, etc.  Other countries, however, might defi ne the accountancy profession to strictly include
only those actually in public practice.  Within Europe, for example, membership in the professional
bodies which make up the Federation of European Accountants (Fédération des Experts Comptables
Européens) totals about 350,000.  About 40% of these actually work in the accountancy services
sector, with most of the remaining 60% practising in industry, trade, education or the public sector.[TABLE 1]  In the case of the United States, the American Institute of Certified Public Accountants
lists a total membership of approximately 330,000, with about 40% also in public accountancy.
7
[TABLE 2]
12. For the reasons discussed above, data on accountancy industry revenues are often not
available on a regional or global basis.  In the case of U.S. statistics, total accounting and management
consulting revenue at the 100 leading U.S. firms was US$21.2 billion in 1996, a 14% increase over
the previous year.  Of this amount, the "Big Six" (now the "Big Five" as noted below) generated 83%of the total.  U.S firms were also estimated to account for about 60% of the global industry's world-
wide revenue in these two areas. Significantly, for the 100 largest accountancy firms, management
consulting has replaced accounting-relating activities as the most important area of activity,
accounting for the largest single source of revenue (39%) and the highest rate of annual growth in
1996 (24%).
8  Among the reasons for the relative weakness of accountancy services is the downward
pressure on fee income in this area, resultin g from increased competitive pressures between
accountancy firms as well as increased use of in-house accountancy services among large
corporations.
13. Unlike most professional services, accountancy in most countries is largely practiced at the
level of firms or partnerships rather than individuals, with small-scale firms predominant.9  The
largest professional services firms are found in the accountancy field, with a few very large-scale
entities, collectively known as the "Big Five",  involving thousands of professionals and very
prominent internationally.  (The "Big Five" firms are:  Arthur Andersen, operating in 78 countries
with a staff of 58,000;  Deloitte Touche Tohmatsu, in 132 countries with over 82,000 employees;
Ernst & Young International, also in 132 countries with over 82,000 employees;  KPMGInternational, located in 155 countries with over 85,000 employees;  and PricewaterhouseCoopers,
recently formed by the merger of the former Price Waterhouse and Coopers & Lybrand, in 152
countries with over 140,000 employees.)  The higher level of recent mergers within the profession
reflects a belief in the competitive advantages of being able to offer clients a wider range of services,
together with wider geographic coverage.
14. As noted in W/2, "the internationalization of accountancy firms has mirrored that of the
clients they serve".
10  The practice of international accountancy activities potentially includes the
following:
                                                     
7 U.S. accounting/audit firms employed an estim ated 250,000 accountants in 1992, compared with
about 1.15 million accountants in private industry.  The EC accounting industry was estimated to have about
200,000 certified accountants in 1993, with another 215,000 employed by industry and government (OECD
Report on Regulatory Reform, Volume I, Paris, 1997, p. 144).
8 The strength of U.S. firms is said to derive from the global expansion of their U.S. multinational
client firms, which typically continue to use the same accountancy firm overseas as domestically (United States
International Trade Commission, Recent Trends in U.S. Services Trade, Washington, D.C., May 1998, pp. 3/39-
41).
9 Within the EC, for example, only Italy continues to prohibit collective entities.  Partnerships have
been the legal form traditionally used by most accountancy firms, especially in the Anglo-Saxon world.
10 p. 18.  The forms of possible international transactions in accountancy are detailed below in
[TABLE 3]. W/2 also observes that a variety of factors of production need to be permitted to circulate freely in
order for international transactions in accountancy serv ices to take place to their fullest extent (p. 19).S/C/W/73
Page 5
• Providing services domestically to domestic clients on foreign issues (e.g. advice on
foreign taxation);
• Providing services abroad to domestic clients on foreign issues (e.g. purchase
investigations of potential foreign acquisitions);
• Providing services abroad to foreign permanent establishments of domestic clients
(e.g. performing the locally-required statutory audit of a foreign subsidiary);
• Undertaking the foreign element of services provided domestically to domestic
clients (e.g. audit a foreign subsidiary for the purposes of issuing a domestic audit
report on the consolidated financial statements of a domestic parent company);
• Providing services abroad to foreign clients on domestic issues (e.g. advice on
domestic taxation to a foreign company);
• Providing services domestically to domestic permanent establishments of foreign
clients (e.g. performing the statutory audit of a domestic subsidiary of a foreign
parent company);
• Undertaking the domestic element of services provided abroad to foreign clients (e.g.
audit a domestic subsidiary for the purposes of issuing a foreign audit report on the
consolidated financial statements of a foreign parent company);  and
• Providing services abroad to foreign clients on foreign issues (e.g. acting as liquidator
for an insolvent foreign company).
15. As noted in an earlier Secretariat document, A Review of Statistics on Trade Flows in
Services (S/C/W/27, dated 10 November 1997), statistics for many services sectors are generally
unavailable, especially data on the trade of foreign affiliates.  For accountancy, the situation is further
complicated by the lack of common definitions of accountancy activities, the wide range of additional
services (as noted above) currently available from accountancy firms, and the fact that accountancy
statistics are often included together with data for other activities.  In the case of the U.S. International
Trade Commission (ITC) publication, Recent Trends in U.S. Services Trade, the data on accountancy
include information on management consulting and public relations.  In this regard, the ITC notes that
"affiliate transactions of accounting and management consulting services far exceed cross-border
transactions due to the difficulty of providing such services across borders".11   According to the ITC,
cross-border trade of accounting and management consulting services resulted in a U.S. surplus of
US$969 million in 1996, compared to a surplus of just over US$1 billion in 1995;  in 1995, U.S:
affiliate transactions in accounting and management consulting services resulted a trade surplus ofUS$3.4 billion, unchanged from 1994.
16. Although the accountancy profession has expanded internationally in order to follow clients,
the structures of the largest accountancy entities are completely unlike those of their multinational
clients.  Rather than parent firm/subsidiary relationships, world-wide networks have been formed
                                                     
11 United States International Trade Commission, Recen t Trends in U.S. Services Trade, Washington,
D.C., May 1998, pp. 3/36-37.S/C/W/73
Page 6
between independent, domestically owned firms in various countries.12  This is the result of extensive
domestic regulation (as discussed in Part IV), which makes it impossible to have unified ownership,
management and control on an international scale.13  While such networks take various forms, they
are generally characterized by avoidance of the need to transfer between countries those resources,
especially natural persons, most subject to regulatory restrictions.  The most common feature is the
presence of fixed arrangements for the referral of work or clients across borders, from one member ofthe network to another.  The referrals might be ma ndatory or voluntary, and might involve fee-sharing
arrangements.  Consequently, the maintenance of hi gh-level quality controls across the network has
become an essential requirement.
14
IV. REGULATORY STRUCTURES AND RELEVANT TRADE RESTRICTIONS
17. The regulatory structure of the accountancy profession is described at length in WTO
documents W/2 and W/11.  The latter document is a synthesis of responses to the questionnaire on
accountancy distributed by the WTO Working Party on Professional Services (WPPS), together withadditional information provided by the OECD, UNCTAD and the International Federation of
Accountants (IFAC).  As noted in numerous publications concerning the profession, accountancy has
been highly regulated for a long time in most countries.  W/1, for example, observes that "It is clear
that most if not all service industries, and particularly the professions, will always be subject to
regulation;  protection of the public interest requires the maintenance of adequate standards ofcompetence and integrity"
 15
18. Of greatest concern, however, is the fact that the profession is often regulated in different
ways between (and sometimes even within) nations.16  The scope of regulation includes both the
service provider and the service itself, extending from educational requirements for accountancy
professionals to licensing requirements for firms and to the setting of mandatory standards forperforming the service (e.g. auditing procedures) and for the final product itself (e.g. financial
reports).
                                                     
12 According to Panorama of EU Industry 1997, small and medium-sized accountancy firms "are at
present developing regional networks in order to achieve national or even international coverage of the market"
(p.25/28).
13 Consequently, the types of international linkages developed by the big international networks of
accountancy firms are structured in a manner similar to fr anchising:  i.e. "independent local firms exploit in
common a single commercial name and voluntarily agree to apply the same methodology and standards, tosubmit themselves to mutual scrutiny and quality control, to contribute (financially and technically) to thedevelopment and implementation of these tools, etc.  Profit sharing can also exist but remains the exceptionrather than the rule" (W/11, pp. 15-16).
14 As noted in Panorama of EU Industry 1997, "One of their main characteristics is their ability to
provide the same service with the same level of quality irrespective of the part of the world where their clients
are located" (p. 25/28).
15 P.1.  Noting, however, that many existing rules and regulations were originally created in respect to
purely national markets, W/1 also states, "The growth of international trade, particularly the cross-border
provision of services, and the advent of the GATS makes it necessary for  regulators to see the public interest
and the concept of regulation itself in a wider context" (p.2).
16 As observed by the European Commission, "Accounting and auditing services are subject to a high
degree of regulation in the EU.  The forms of regulation are both numerous and complex, and vary from country
to country despite the attempts at Community harmonization".  Consequently, "Nearly 40 years after the signingof the Treaty of Rome, there are still fifteen national markets for the accountancy profession and accountancyservices in the EU" (Panorama of EU Industry 1997, pp. 25/26 and 25/30.  The statutory verification of accounts
is in fact the only service provided by the accountancy profession that is regulated in the same way in all the
Member States of the EU.S/C/W/73
Page 7
19. Both the scope and form of accountancy regulation differ widely between countries.  In some
cases, certain accountancy activities may be regulated in one country and not another.17  In other
cases, activities which may be performed by accountants in one country, such as taxation services or
management consultancy, may be legally restricted in other countries to entirely separate professions.
In most countries, regulatory powers are shared between public and private authorities (typically
professional associations), but the balance between them differs widely between nations.  In addition,the accountancy profession in some countries is regulated at the national level, and at the sub-national
level in others.
20. Professional accountancy associations ranges from strictly government bodies to completely
private organizations.  Their activities may encompass any or all of a wide range of functions,
including examinations and authorizations, education and training, professional standards,
disciplinary measures, quality control, providing various membership services and representing the
profession.  Various examples of regulatory forms are noted in W/2, i.e.:  (i) Countries where aprofessional title is attributed by the State and membership of the relevant professional body is
mandatory;  (ii)  Countries where a professional title is attributed by the State, membership of one
professional body is mandatory and membership of other bodies is voluntary;  (iii)  Countries where a
professional title is attributed by the State or a public authority and membership of a professional
body is voluntary;  and (iv)  Countries where a professional title is attributed by a given professionalbody, membership of which is mandatory, with membership of other existing bodies being purely
voluntary.
21. In addition to professional associations at the domestic level, accountancy associations have
long been active at the regional and, more recently, international levels. The two world-wide
organizations for the accountancy profession are the International Federation of Accountants (IFAC)and the International Accounting Standards Comm ittee (IASC).  Both are non-governmental bodies,
with IFAC involved in a wide range of professi onal issues and IASC focused on the harmonization of
financial reporting.  Membership in IFAC is open to national-level accountancy bodies, and this
automatically includes membership in IASC.  There are currently 143 IFAC member bodies from
103 countries, representing 2 million accountants.
18
22. Domestic restrictions placed on the legal forms for the practice of accountancy activities are
typically intended to ensure liability and prevent conflicts of interest.  According to the 29
questionnaire responses as reported in W/11 (which include a mix of developed and developing
countries), incorporation is prohibited and partnership is the only collective form of practice allowed
in 40% of respondents.19  W/2 notes that, "For a firm to be considered as a member of the
accountancy profession, it is generally required that at least the majority of the capital and the voting
rights be in the hands of locally qualified accountants, and that the majority of the directors or
members of the management body be locally qualified accountants".20  Many countries, however,
                                                     
17 Among the information provided to the WPPS by the International Federation of Accountants
(IFAC) was the IFAC Questionnaire on Issues Relate d to International Trade in Accountancy Services:
Summary of Responses, dated 1 July 1995.  The information provided included data on:  regulation of the
accountancy profession;  authorization to practice and qualifications; treatment of firms;  regulation of
international transactions;  obtaining professional work;  professional independence;  and cross-bordermovement of professionals.
18 An example at the regional level is the Eastern, Central and Southern African Federation of
Accountants (ESCAFA).  Additional information on IFAC and IASC is provided in W/2 (pp. 13-14 and pp. 29-
32).
19 P. 13.  The list of WPPS questionnaire respondents is given as an Annex to W/11.  In accordance
with WTO practice, the questionnaire treats the European Communities as a single entity.
20 P. 10.  W/11 notes that the ownership of a firm can be determined according to either the nationality
of the owner, or on the basis of the origin of the licen ce held (foreigners holding lo cal licenses are considered as
foreign in this respect).  When the foreign/domestic distinction is made on the basis of nationality, and on thisS/C/W/73
Page 8
actually impose even stricter requirements in terms of ownership and control of management:  70% of
questionnaire responses indicated that firms must be controlled by locally licensed accountancy
professionals and, in most cases, the required level of control was well in excess of a simple majority.
The consequence of such requirements is that very few foreign professionals or professional firms
will have the possibility of holding a local license.21  The OECD has questioned these requirements,
stating "While there may be consumer protection arguments in tying ownership to a certain degree ofprofessional qualification, the question is whether requirements on an investor/owner need to be as
strict as requirements to practice".
22
23. For about 25% of the questionnaire respondents, the licensing of firms was not possible,
either because professional firms were not regulated, or because the practice of regulated accountancy
activities was not permitted by firms or partnerships, but restricted to individual practitioners.  For the
remaining respondents, the registration of firms was required, in addition to any licensing
requirements for the members of the firm.  In some cases, managers of accountancy firms are alsorequired to be nationals of the country concerned;  in the majority of cases, however, Members
require all managers, or a least a majority of them, to be locally qualified and licensed. The objective
of such licenses is typically to ensure that the firm and its employees respect the relevant laws and
regulations.  In regard to documentation requireme nts, in the absence of a recognition agreement,
foreign documentation is typically not accepted when applying for a license.
24. In a few cases, the hiring of local professionals by foreign firms is directly restricted or
prohibited.  In a large number of other cases, ethical requirements frequently have the same effect,
stating that, when practising regulated activities, accountants be either self-employed or employed by
another licensed professional or professional firm.
25. Qualification requirements differ both between  and within WTO Members, depending on the
national regulatory regime and type of qualification desired (i.e. accountant, auditor, etc.).  In some
cases, there may be alternatives for achieving the same qualification, e.g. trade-offs between the level
of training and experience required.  Requirements typically include three to five years of higher
(post-secondary) education (and in some cases graduate education as well), as well as a specified
period of practical experience.  About one-half of the respondents to the WPPS questionnaire alsorequire a professional examination as a final step.
23
26. In addition to qualification requirements, licensing is typically also required for individual
professionals, whether sole practitioners or members of a firm or partnership.  Requirements generally
include proof of education and training, proof that the applicant does not have a criminal record, etc.
and, in the majority of cases, proof of membership in the relevant professional organization.  In manycases, the relevant professional organization is actually the designated licensing authority. For about
25% of the questionnaire respondents, proof of professional indemnity insurance was also required.
Other common requirements, also in about 25 to 30 per cent of the cases, were residency and
citizenship requirements, respectively.
                                                                                                                                                                    
basis only, investment and ownership are GATS Article XVI issues. When the distinction is made on the basis
of a local qualification or licence of the owner, they are Article VI issues (p.13).
21 pp. 10, 15.  In some cases, shareholding in professional firms was restricted to individuals.
22 Communication from the OECD:  Work in the Area of Professional Services (S/WPPS/W/4),
14 November, p. 12.  Annexes to W/4 present data from the OECD's categorized inventory of measures
affecting trade in professional services, including accounta ncy.  Preference, however, is given in this Note to
data from the WPPS questionnaire, which includes a greater range of data from developing countries.
23 The potential trade restrictiveness of such requirements is probably greatest for developing country
professionals.  As noted in MTN.GNS/W/67 (p.15), written in the context of the Uruguay Round negotiations,
"An important consideration in respect of the ability of developing country professionals to gain access todeveloped country markets relates to qualification requirements and the recognition of educational and/or
professional competence".S/C/W/73
Page 9
27. General impediments to trade in accountancy services include:  restrictions on international
payments;  restrictions on the mobility of personnel;  impediments to technology and information
transfer;  "Buy National" public procurement practices;  differential taxation treatment/double
taxation;  monopolies;  and subsidies.  [TABLE 4]   The most common specific impediments affecting
accountancy are:  nationality requirements;  residence/establishment requirements; professional
certification/entry requirements;  compartmentalization/scope of practice limitations/incompatibilities;  restrictions on advertising, solicitation and fee-setting;  quantitative restrictions on
the provision of services;  differences in accounting, auditing and other standards;  restrictions on
business structures;  and restrictions on international relationships/use of firm names.
28. Nationality requirements in respect to accountancy are generally being removed.
24 Residency
requirements, however, remain widespread, and definitions vary between countries.  W/11 observes
that, in principle, an individual has only one residency, while the number of potential domiciles is
unlimited.  Further distinctions can be made between permanent residency, prior residency andtemporary residency requirements.
25  Only a small number of countries have neither establishment nor
residency requirements.  Most countries do, however, allow individuals and firms to have professional
establishment in more than one country.  In regard to the cross-border movement of accountancy
professionals, few questionnaire respondents indicated the existence of procedures to rapidly facilitate
the temporary entry and stay of foreign professionals for the purpose of supplying accountancyservices.
29. A significant amount of the regulation affecting accountancy professionals and services is
defined at sub-national level in federal states.  Consequently, inter-state or provincial trade in
accountancy services can potentially meet with problems similar to those of inter-country trade.  The
international agreements reached with federal countries will therefore have varying effects accordingto the degree of autonomy of the sub-national structures regulating the accountancy sector and,
conversely, to the level of authority of the federal structures on sub-national ones. In the case of the
United States, for example, W/2 notes that "federal structures have hardly any authority on the States'
institutions in the accountancy sector".
26
30. The restrictions imposed on investment and ownership, typically in the form of local licensing
requirements as described above, restrict the international accountancy networks to their present
franchise-like form, as described in Part III.  Approximately 20% of questionnaire respondents have
indicated they maintain restrictions on the use of international or foreign names by professionals or
professional firms.  In some cases this involved se eking authorization for their use, in only two cases
was the use of such names actually forbidden.  Certain restrictions on advertising, marketing andsolicitation of new clients by professionals have traditionally been imposed under codes of ethics;
such codes of ethics have been developed both at  the domestic and international levels.  According to
the questionnaire responses, these restrictions are actually limited in their effect.  Guidelines or other
restrictions in regard to fee-setting are present in some countries.  Some countries also have
prohibitions in place against such practices as predatory pricing, "low-balling" and contingency fees.
31. In addition to market access and national treatment issues, the lack of mutual recognition
agreements (MRAs) or other recognition procedures can act as a major barrier to international trade.As noted above, local qualifications are typically  required in respect to firm ownership and
management;  therefore, the lack of MRAs or other recognition procedures affects not only the
                                                     
24 Nationality and citizenship requirements would normally come under the scope of GATS
Article XVI, i.e. market access, as they represent "zero quotas" on foreign professionals.
25 W/11 also observes that residency and prior residency requirements could pertain to Article XVII if
they modify conditions of competition in favour of nationals, but could alternatively pertain to Article VI.4 ifthey treat nationals and foreigners identically ( de facto  and de jure ) (p.17).
26 P. 10.S/C/W/73
Page 10
movement of natural persons, but also investment opportunities.  An important observation in this
respect is that MRAs, while potentially increasing the circulation of professionals, do not in
themselves promote regulatory competition between jurisdictions or lead to the removal of trade
barriers.
32. At the regional level, the European Commun ities has instituted procedures for the mutual
recognition of diplomas.  In almost all cases, however, an aptitude test is still required to cover thespecificities of national law, which may help explain why the use of the provision has been minimal
to date.
27  Under the North American Free Trade Agreement (NAFTA), professionals from NAFTA
countries are required to be given non-discriminatory access to certification and licensing procedures.
In this connection, the three countries concerned have agreed to try to eliminate all residency and
citizenship requirements for certification to practice accountancy.
33. At the bilateral level, the American Institute of Certified Public Accountants, the U.S.
National Association of State Boards of Accountancy and the Canadian Institute of CharteredAccountants in 1991 concluded an agreement on "Principles of Reciprocity". The agreement was a
recommendation to state boards of accountancy in the United States and provincial authorities in
Canada to permit an abbreviated examination intended to demonstrate satisfactory knowledge of
relevant local and national legislation, standards a nd practices in the jurisdiction being entered.  The
recommendation was subsequently adopted by 36 U.S.  states (as of June 1996).  The Protocol on
Trade in Services to the Australia-New Zealand Closer Economic Relations Trade Agreement
(ANZCERTA), concluded in July 1996, establishes as a basic principle the right of a person registered
to practice an occupation in one of the two countries  to practice an equivalent occupation in the other
country.
28
34. Notifications to the WTO, under GATS Article VII:4, of recognition procedures which
specifically mention accountancy have been relatively infrequent.  They include:  the March 1996
notification of Macau (S/C/N/15), describing pr ocedures permitting the registration of accountants
and auditors who are members of foreign professional associations;  the February 1997 notification of
the United States (S/C/N/51), concerning the 1991 U.S.-Canadian agreement (as described above);
and the March 1998 notifications of Australia and the United States (S/C/N/67 and N/68), describingA Principles Agreement for Reciprocal Licensing signed in October 1996.  The latter agreement
involves Australia, on a national basis, and U.S. states on an individual basis (19 as of July 1997).
Considering the major effect that national qualification requirements have on trade in accountancy
services, the number of MRAs on accountancy notified to the WTO to date appears to be remarkably
small.
35. In a chapter entitled "Regulatory Reform and Professional Business Services", the 1997
OECD Report on Regulatory Reform makes a number of recommendations relevant to the
accountancy sector.29  The recommendations are for (OECD) Member countries to:  examine rules
and practices to increase economic competition;  make competition law applicable to professional
services, subject to safeguards to ensure consumer protection;  have regulatory bodies revise
restrictions on entry, affiliation, and business form if they unnecessarily prevent entry, including entry
                                                     
27 As observed in Panorama of EU Industry 1997, "The general system was not in fact designed in
order to remove the existing barriers, but was meant to help accountants to establish themselves abroad in spite
of these barriers" (p. 25/26).
28 The ANZCERTA Agreement was notified to the WTO under GATS Article V.7 (S/C/N/66, dated
21 October 1997).
29 OECD Report on Regulatory Reform, Volume I, Paris, 1997, pp. 141-142.S/C/W/73
Page 11
by foreign professionals30;  give consideration to the development on a multilateral basis of core
requirements regulating access to services and activities;  and implement the earlier policy
recommendations of the Third OECD Workshop on Professional Services, held in February 1997.31
36. The accountancy profession historically has played a prominent role in the development of
domestic accounting standards.  In recent years, however, public bodies have played a increasing role
in the development process.  At the international level many countries, as noted in W/2 (and updatedin a March 1998 informal Secretariat Note), have voluntarily integrated international standards into
their (often mandatory) domestic standards.
32  The task of creating international standards is
essentially divided between the International Accounting Standards Committee (IASC) and the
International Federation of Accountants (IFAC), w ith IASC responsible for accounting standards and
IFAC responsible for auditing, educational and ethical standards. The International Organization of
Securities Commissions (IOSCO), comprising securities-market regulators worldwide, is looking to
IASC to provide mutually acceptable international accounting standards (IASs) which are acceptablefor multinational securities listings and other international offerings.
33 IOSCO and IASC earlier
announced a multi-year programme to accelerate the standards-setting process, with revisions to the
IASs expected to be completed by the first part of 1999, after which IOSCO will decide whether to
grant its approval.  The decision of IOSCO, while non-binding upon its members, is likely to strongly
influence the approval processes of national regulators.
Questions for further discussion :
*  Is there a need to gather further information on the industry:  for example, should Members who
have not yet responded to the accountancy questionnaire be encouraged to do so?
*  Are the needs of small and medium-sized accountancy firms, and those of individual accountancy
professionals, adequately addressed by the existing regulatory structures?
*  Is further work needed in respect of mutual re cognition of agreements, for example to ensure that
there is no unjustified discrimination against third countries, as required by Article VII:3?
*  Should Members give consideration to discussion of the recent OECD recommendations on
professional services, perhaps in the context of the Working Party on Professional Services?
                                                     
30 The report states that alternative rules, such as insurance, bonding, client restitution funds, or
disciplinary control at the point of original licensing, could provide adequate protection while permitting greatercompetition.
31 The recommendations of the Third Workshop are:  (a) professional service providers should be free
to choose the form of establishment, including incorporation, on a national treatment basis, as alternative
measures are available to safeguard personal liability, accountability and independence of professional serviceproviders;  (b) restrictions on partnership of foreign professionals with locally licensed professionals should beremoved, starting with the right to temporary associations  for specific projects;  (c) restrictions on market access
based on nationality and prior residence requirements should be removed;  (d) restrictions on foreignparticipation in ownership of professional services firms should be reviewed and relaxed;  (e) local presence
requirements should be reviewed and relaxed subject to availability of professional liability guarantees or other
mechanisms for client protection;  and (f) national regu latory bodies should cooperate to promote recognition of
foreign qualifications and competence and devel op arrangements for upholding ethical standards.
32 Although international standards for accountancy are wi dely used at the national level, to date this
has only occurred on an individual, voluntary basis.  Panorama of EU Industry 1997 also notes, "The fact that
there have long been professional standards in this  sector has hitherto considerab le limited the real impact of
ISO 9000 Standard as regards accountancy services" (p. 25/28).
33 A number of stock exchanges already require or allowed foreign issuers to present financial statements
in accordance with IASs and, as a result, private companies are increasingly reporting that their financial
statements conform with IASs.S/C/W/73
Page 12
V. NEGOTIATIONS ON ACCOUNTANCY SERVICES AND EXISTING
COMMITMENTS UNDER THE GATS34
37. As of November 1998, 56 Members (counting the European Community 12 as one) have
made commitments under the category of accounting, auditing and bookkeeping services.35 Regarding
other areas of interest to accountancy firms, 62 Members made commitments on computer and related
services and 51 on management consulting, but only 34 Members made commitments on taxation
services.  Within the Professional Services subsector, the accountancy category ranks second to
engineering services (with 58 commitments), and ahead of architectural services (50 commitments).
[TABLE 5]
38. Of the 56 Members, 49 referred to CPC classifications in their schedule.  In some cases,
however, the use of CPC classifications by Members is somewhat unclear.  For example, in one case aMember has listed only "accounting" in its schedule, while indicating the general CPC category (CPC
862, which covers accounting, auditing and bookkeeping services) in parentheses. Another Member
has listed "accounting and bookkeeping services" while also using the CPC 862 category in
parentheses.  A third Member has listed only "accounting" as a subcategory, while specifying in
parentheses CPC categories that also include bookkeeping.
39. By mode of supply, for accountancy as a whole, the greatest level of full market access (i.e.
"None" specified in the schedule to indicate no restrictions) is granted for consumption abroad, i.e. by
41% of the Members making commitments.
36  [TABLE 6]  The greatest use of "Unbound" in the
schedules (i.e. to indicate no commitments) is in respect to cross-border supply (30% of schedules).
Commitments for partial market access are very high for commercial presence (89%) and thepresence of natural persons (86%).  Regarding national treatment, by mode of supply, the pattern is
very similar, except that the level of full access for commercial presence (32%) is far higher than is
the case in respect to market access (9%).  [TABLE 6]
40. By sub-category, 51 Members have made commitments in accounting, 50 in auditing and 42
in bookkeeping. [TABLE 7]  This means that the ma jority (39) made commitments in all three sub-
categories.  Eight Members made commitments in only one sub-category (typically accounting), and
nine other Members made commitments in two sub-categories.
41. As noted above, only partial market access and national treatment are typically granted in
respect to commercial presence and the presence of natural persons.   In the case of commercial
presence, the most common restrictions appearing in Members' schedules are limitations on the typeof legal entity permitted, e.g. only partnerships or sole proprietorships may be allowed; limitations on
equity participation;  economic needs tests;  and restrictions (or even prohibitions) on the use of
foreign company names.  [TABLE 8]   Regarding the presence of natural persons, the most common
entry in respect to market access, as for most sectors listed in GATS schedules, is "Unbound, except
as indicated in the horizontal section".  Mode 4 restrictions specifically listed under accountancy
typically include residency and qualification requirements.  In some cases, a number of years of
experience in the country concerned is also mandated.  In a few cases, Members have specified
                                                     
34 This analysis of existing GATS commitments is based on data from the electronic database currently
under development by the Secretariat, and th erefore should be regarded as preliminary.
35 The schedules of Austria, Finland and Sweden are counted separately, as they have not yet been
integrated into the schedule of the European Community and its Member States.  Aruba, the NetherlandsAntilles and New Caledonia also have schedules, but are not counted separately.
36 It must be noted, however, that accountancy se rvices purchased abroad are unlikely to be accepted
for satisfying domestic accountancy requirements.S/C/W/73
Page 13
conditions for accountancy which are somewhat more liberal than listed under their horizontal
commitments.
42. In many cases, the qualification requirements and requirements for residency or even
citizenship listed in schedules affect multiple modes of supply.  In one case, a Member has placed a
horizontal market access restriction, for professional services as a whole, that persons seeking to
provide professional services must obtain recognition of their professional degree, enrol in therelevant college and establish legal domicile.  In the case of auditing services, citizenship
requirements are fairly common in Member schedules, despite the recent trend to remove them from
national legislation.
43. Seven WTO Members have taken MFN exemptions which directly specify either accountancy
services or professional services in general.
37  These MFN exemptions all involve reciprocity
provisions for the exercise of professional activities.  Additionally, a number of Members have taken
general MFN exemptions which may have an effect on the accountancy sector, most notablypreferential access measures for natural persons.
44. Separately from the market access and related negotiations on accountancy conducted in the
context of the Uruguay Round, Members have also discussed issues regarding domestic regulation in
the accountancy sector in connection with the ma ndate given in Article VI:4 of the GATS.  The
Ministerial Decision on Professional Services  (S/L/3, dated 4 April 1995) mandated the establishment
of the Working Party on Professional Services (WPPS) , and gave priority to work in the accountancy
sector.
38  The initial phase of work by the WPPS consisted of the collection and analysis of data and
studies of domestic regulation in the accountancy sector.  In this regard, several seminars were
organized.  A questionnaire on specific aspects of dom estic regulation was circulated to Members, and a
synthesis of questionnaire responses was prepared by the Secretariat.  In regard to international
standards, the Singapore Ministerial Declaration of 13 December 1996 included the statement, "We
encourage the successful completion of international standards in the accountancy sector by IFAC,
IASC and IOSCO."   The WPPS also worked on development of the non-binding Guidelines for Mutual
Recognition Agreements or Arrange ments in the Accountancy Sector ;  these were completed and issued
in May 1997 (WTO document S/L/38, 28 May 1997).39
45. The next phase of work consisted of the submission of proposed disciplines by several
Members (WTO documents S/WPPS/W/15-19).  These proposals were consolidated by the
Secretariat into an informal note.  Ten revisions of the disciplines were prepared by the WTO
Secretariat;  the draft final version is entitled Disciplines on Domestic Regulation in the Accountancy
Sector  and contained in S/WPPS/W/21, dated 27 November 1998.  Separately, a Chairman's Note was
developed on the relationship between Article VI and Articles XVI and XVII (and is included in
S/WPPS/W/21). Members also extensively discussed the question of potential legal forms for
adoption of the accountancy disciplines; the outcome of the discussions (as of November 1998) is a
draft Decision of the Council for Trade in Services, which the WPPS has recommended for adoption.
                                                     
37 The countries are Costa Rica, Dominican Republic, Honduras, Panama, Thailand, Turkey and
Venezuela.
38 The mandate under the Ministerial Declaration has three parts:  1) Establishment of guidelines for
the recognition of qualifications;  2) Concentration on the use of international standards;  and  3) Developmentof disciplines on domestic regulation.
39 S/WPPS/W/22, 25 November 1998, p. 1.S/C/W/73
Page 14
Questions for further discussion:
*  Should attention be given to the question raised by the OECD concerning professional
qualifications, i.e. whether requirements on an investor/owner need to be as strict as requirements to
practice?
*  Should the scope of GATS definitions be expanded to include "residency" and other potentially
ambiguous terms?
VI. SOURCES OF ADDITIONAL INFORMATION
46. Relevant sources of additional information also include the following Internet sites:
-  Arthur Andersen (http://www.arthurandersen.com/homepage.asp)
-  Confederation of Asian and Pacific Accountants (http://www.capa.com.my)-  Deloitte Touche Tohmatsu (http://www.dttus.com)-  Ernst & Young International (http://www.eyi.com)-  Fédération des Experts Comptables Européens  (http://www.euro.fee.be)
-  International Federation of Accountants (http://www.ifac.org)
-  International Accounting Standards Committee (http://www.iasc.org.uk)-  International Organization of Securities Commissions (IOSCO) (http://www.iosco.org)-  KPMG International  (http://www.kpmg.com)-  OECD, Accounting Reform in Estonia,  Latvia, and Lithuania (http://www.oecd.
   org//daf/peru/accounting/accref.pdf)
-  OECD, Accounting Reform in Central and Eastern (http://www.oecd.org//daf/peru/
   accounting/reform_cee.htm)
-  OECD, Links to Other Accounting and Audit Sites (http://www.oecd.org//daf/peru/
    accounting/other_links.htm/)  {Includes non-OECD national sites}
-  PricewaterhouseCoopers (http://www.pwcglobal.com)
-  UNCTAD, Accountancy Reform in Deve loping Countries  (http://www.unicc.org/
   unctad/en/techcop/finc0104.htm)
- World Bank, Strengthening Auditing and Accounting Performance in Sub-Saharan Africa
(http:// www.worldbank.org/aftdr/findings/english/find60.htm)S/C/W/73
Page 15
Table 1: Membership of FEE Member Bodies, 1995
Number of
MembersShare in Public
Practice (%)
Austria 5,474 100
Belgium 8,538 53
Denmark 2,577 77
Finland 574 77
France 24,760 100
Germany 8,310 100
Greece 350 100
Ireland 9,484 39
Italy 75,727 95
Luxembourg 340 100
Netherlands 10,011 39
Portugal 1,074 70
Spain 4,666 n/a
Sweden 1,992 99
United Kingdom 219,351 21
Source:  Fédération des Experts Comptables Européens (as found in Panorama of EU Industry 1997 , p. 25/28).S/C/W/73
Page 16Table 2: American Institute of Certified Public Accountants
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Total AICPA membership 240,952 254,923 272,479 286,359 295, 634 301,410 308,280 314,427 318,829 323,779 328,214 329,019
Public Accounting 49.10% 47.60% 46.50% 45.80% 44.50% 43.20% 42.60% 42.20% 41.30% 40.65% 40.40% 39.60%
Business and Industry 39.50% 39.50% 39.60% 39. 90% 40.40% 40.65% 40.60% 40.30% 40.90% 41.65% 42.30% 43.10%
Education 2.80% 2.80% 2.65% 2.65% 2.65% 2.80% 2.40% 2.30% 2.40% 2.40% 2.40% 2.40%
Government 3.20% 3.40% 3.60% 3.65% 3.65% 3.90% 4.10% 4.30% 4.40% 4.40% 4.40% 4.40%
Retired and Miscellaneous 5.40% 6.65% 7.60% 7.90% 8.65% 9.40% 10.30% 10. 90% 11.00% 10.80% 10.50% 10.50%
Membership in public practice 118,226 121,349 126,771 131, 014 131,575 130,078 131,306 132,821 131,630 131,887 132,617 130,439
Firms with one member 25.10% 25.60% 24.80% 23. 60% 23.60% 24.10% 23.60% 23.20% 23.50% 23.20% 22.90% 23.10%
Firms with 2-9 members 34.30% 34.00% 33.60% 34.00% 33.65% 35.20% 35.50% 35. 80% 36.50% 36.50% 36.40% 36.20%
Firms with 10 or more members,
except the 25 largest firms15.00% 15.50% 16.40% 17.30% 18.10% 18.80% 19.80% 20.00% 19.90% 20.40% 20.50% 21.00%
The 25 largest firms 25.60% 24.90% 25.20% 25. 10% 24.60% 21.90% 21.10% 21.00% 20.10% 19.90% 19.90% 19.70%
Source:  AICPA Internet site (http:\\aicpa.org/members/membbkdn.htm).S/C/W/73
Page 17
Table 3: Forms of International Transactions in Accountancy Services
As leading providers of professional business services, the internationalisation of accountancy
firms has mirrored that of the clients they serve.  Examples of the types of international transactions
which could take place include the following, where it is assumed that country A exports and
country B imports.
1. Production is wholly in country A, by resident s of country A.  Consumption is wholly in
country B, by residents of country B.  The vehi cle of trade is communications.  Both information
and payments cross frontiers.
Examples:
- Referred audit work, whereby a parent company in country B retains an
auditor in country A to audit a subsidiary of the parent company in country A,
for the purposes of reporting back to the parent.
- International consultancy work, whereby a client in country B seeks the
advice of a consultant in country A.
- Computer software, whereby a program is developed in country A, but
exported for use in country B.
2. Production is principally in country A, by residents of country A.  Consumption is in country A,
by residents in country B.  Both consumers and payments cross frontiers.
Examples:
- Training courses, for either staff or clients.
- International consultancy work, whereby a client in country B visits a
consultant in country A to receive advice.
3. Production is by residents of country A.  Consump tion is by residents of country B.  Production
and consumption take place in delocalised fashion.  Payments cross frontiers.
Example:
- Long-term training programmes, software development projects or
consultancy assignments, whereby there is a large element of travellingbackwards and forwards between countries A and B by both the producers
and the consumers.
4. Production is conjointly by residents of more than one country, and consumption is by residents
of one country.  Payments might or might not cross frontiers and part of the production does.
Example:
- Major consultancy assignments carried out by international firms or networks
of firms, whereby specialists drawn from several different countries arebrought together to form a single project team.S/C/W/73
Page 18
5. Production is by residents of country A, partly during their temporary presence in country B.
Consumption is in country B by residents of country B.  Payments and the producer's personnel
cross frontiers.
Example:
- This is a very common form of international trade in accountancy services,
and can apply to any of the services provided by accountants.
6. Production is partly in country A and partly in country B through some form of permanent
commercial presence.  Consumption is in country B by residents of country B.  Payments cross
frontiers.
Example:
- Specialist consultancy assignments, whereby services provided by country A
producers are supplied with the assistance of an affiliated firm or other form
of representative office in country B.
7. Production is partly in country A, but mostly in country B through a form of permanent presence
other than a subsidiary.  Consumption is in country B by residents of country B.  Payment for
services does not cross frontiers, although profits from them do.
Example: -
- Any form of accountancy service, involving the use of the producer in country
B of information, technology or know-how provided free of charge by a
producer in country A, but where the two producers are linked together in aprofit-sharing partnership, joint venture or some similar arrangement.
8. Production is partly in country A, but mostly in country B, facilitated by the presence in
country B of the producer's employees from country A.  Payments cross frontiers.
Example:
- This method of trade differs only from that described in 5 above in respect of
the amount of production carried out in country A, and therefore can apply to
any of the services provided by accountants.
9. Production is wholly in country B by a producer normally resident in country A.  Consumption is
in country B, by residents of country B.  Only  the producer, but no payments for the service cross
frontiers, although the producer might use his earnings to make transfers to country A.
Example:
- This form of trade applies to accountants who live in one country, but who
commute to another where they have their practices.  It can therefore cover all
forms of accountancy services.
10. Production is by a subsidiary of a producer from country A, located in country B.  Consumption is
in country B, by residents of country B.  Capital crosses the frontier, but before the transaction
takes place.  Payments for the service do not cross the frontier, but the subsidiary's earnings might
be remitted as income to country A.
Example:
- This situation is analogous to that in 7 above, except the relationship is a
parent - subsidiary one.  It can cover all forms of accountancy services.S/C/W/73
Page 19
11. Production by a producer in country B is accompanied by the purchase of know-how from a
producer in country A.  Consumption is in country B by residents of country B.  Payments for the
service do not cross the frontier, but the know-how and payments for it do.
Example:
- This arrangement, or variations on it, form the basis for most international
firms or networks of accountants.  Locally owned firms contribute towards
centralised expenditure on research, development, training and other such
costs, and in return have access to the results of this work.  Most agreements
also provide for adherence to common standards, the use of a common firm
name and for the referral of all work  between members of the network only.
The degree of integration of ownershi p and management within the networks
can vary, with some being relatively loose groupings and other having a profitsharing and common management arrangement.
12. A producer receives his education, training and professional qualification in country A, and then
moves to country B, where he takes up residence and provides the same range of services to
consumers in country B as he did in country A.  Payments for the services do not cross frontiers,
although the producer may wish to bring his reta ined earnings with him should be subsequently
choose to leave country B.
Example:
- This situation relates to the emigration or long-term expatriation of qualified
accountants, and thus covers all forms of accountancy services.
Source:  S/WPPS/W/2, pp. 33-35.S/C/W/73
Page 20
Table 4: Impediments to Trade in Accountancy Services
A. GENERAL IMPEDIMENTS
- Restrictions on international payments
Countries can prohibit or ration different categories of international payments, both
inward and outward, or oblige the conversion to or from foreign currencies at
disadvantageous exchange rates.  Different rules may apply to capital transfers,
repatriation of profits, payments for current transactions and so forth.  As a
consequence, the cross-border provision of services, personnel and know-how is
discouraged or prohibited, as is investment in a permanent presence or cost- and/or
profit-sharing with a local affiliate.
- Restrictions on the mobility of personnel
Visa, work-permit and immigration provisions may prohibit or restrict the ability to
move persons with specific skills to the location where they could be deployed mosteffectively.  This may apply to both short-term and long-term stays, and to
management or specialist staff.  In many cases, such mobility is necessary to serve
clients directly, transfer know-how or manage a foreign permanent presence, so the
inability to do so is a severe impediment.
- Impediments to technology and information transfer
As much accountancy firm know-how is proprietary, and is frequently materialized in
documentary or software form, firms may be  reluctant to transfer such know-how to
jurisdictions without adequate copyright and other intellectual property protectionprovisions.  Restrictions on information transfer, which often arise from data
protection and personal privacy provisions, may require processing of information to
take place locally, even when it could be done more efficiently elsewhere.  Some
countries even prohibit the removal of audit and other working papers from their
national jurisdiction, which constitutes an obligation to establish a permanentpresence, even when cross-border activity may be the preferred means of service
delivery.
- "Buy National" public procurement practices
Many national and sub-national governmental authorities and public sector
organizations purchase goods and services from local providers only.  In some cases,local branches, subsidiaries or affiliates of foreign firms are not eligible for public
procurement purchases.  As a minimum, this excludes cross-border provision of
services and requires a local permanent presence, but it may further exclude a foreign
provider totally from a significant market, irrespective of the mode of delivery
chosen.
- Differential taxation treatment/double taxation
Explicitly and intentionally discriminatory taxation provisions may disadvantage
foreign or foreign-associated services providers in favour of local competitors, andthe absence of sufficient relief may lead to double taxation in different jurisdictions of
the same revenues, profits or interest and royalty payments.S/C/W/73
Page 21
- Monopolies
Where certain services are provided by a single monopoly, access to that market is
not possible by foreign providers.
- Subsidies
Governments may award selective or for-nationals-only subsidies, which place
foreign services providers at an insurmountable or substantial disadvantage.
B. SPECIFIC IMPEDIMENTS
- Nationality requirements
Many accountancy services are regulated in different jurisdictions in a manner
whereby only certain authorized persons may provide them.  Where nationality
requirements must be met, foreigners are thereby excluded.
- Residence/establishment requirements
Although less restrictive than a nationality requirement, the obligation to be
established or resident in the jurisdiction where the service is provided excludes the
possibility of serving a market on a cross-border basis.
- Professional certification/entry requirements
Even in the absence of associated nationality and/or residence/establishment
requirements, the obligation to hold a specific authorization to provide certainservices, although in itself justifiable, can operate in a manner which discriminates,
de facto, against foreign services providers who in fact possess all or most of the
competence and ability required.  Permission to sit the relevant examinations may not
be available when desired, it may be subject to unreasonable prior conditions, or
inadequate or no credit may be given for the competence and experience evidencedby the possession of foreign academic or professional qualifications.
- Compartmentalization/scope of practice limitations/incompatibilities
Because of differences in regulatory approach between countries, an accountant or
accountancy firm may not be able to provide in other jurisdictions the entire range of
services they provide in their home country.  Non-regulated services in one countrymay be regulated in another, requiring compliance with additional regulatory
burdens.  Services provided by accountants in one country may be reserved to other
professions in other countries.  Certain combinations of services, either in general or
in the case of specific clients, may be prohibited in some jurisdictions yet permitted in
others.  A uniform service range may often not be offered across several markets as aresult, and firms from narrow-scope countries may find themselves at a disadvantage
in broad-scope markets and against broad-scope competitors.S/C/W/73
Page 22
- Restrictions on advertising, solicitation and fee-setting
When seeking to enter new markets, foreign service providers may consider
themselves handicapped if they cannot advertise and otherwise attract new clients, or
if they are prohibited from competing on the basis of price.
- Quantitative restrictions on the provision of services
Some countries place limitations on the volume of services which may be provided
by professional firms, usually by reference to the number of partners or professional
staff in the firm.  Arguments of quality control are used to justify such restrictions,
but they may unreasonably penalize firms which, by virtue of superior organization or
methodology, may in fact be capable of providing quality services in a higher volumethan foreseen by the regulations.
- Differences in accounting, auditing and other standards
These differences impede the transfer of personnel and know-how, and lead to
services "produced" in one jurisdiction not being accepted for "consumption" in
another, e.g. financial statements and audit reports for regulatory purposes.
- Restrictions on business structures
Accountants are frequently constrained as to the business structures through which
they provide their services.  Unlike other businesses, they may be prohibited from
using certain legal forms and, even when permitted to use certain types of legal
entities, they may be subject to special restrictions, e.g. number of partners, unlimited
liability in certain or all circumstances, ownership, management, control, etc.  Thiscan have negative implications with respect to size, management structure, risk
management and diversification, the raising of external capital, transferability of
ownership, taxation, multidisciplinary practice, the ability to acquire or be acquired
by other firms, etc.
- Restrictions on international relationships/use of firm name
In some jurisdictions, firms are not permitted to call themselves by the name of the
international network with which they are associated.  This can prevent the operation
of the reputation effect and restrict the firm's marketing capacity.  Some countries
explicitly prevent relationships between local firms and international networks.  In
most countries, all or a majority of the ownership, management and control of a firmmust be in the hands of nationals or locally qualified professionals, which prevents
foreign firms from having branches or subsidiaries in that country.
Source:  S/WPPS/W/2. pp. 20-22.S/C/W/73
Page 23
Table 5: Summary of Specific Commitments (Professional Services)
Countries 01.A.a. 01.A.b. 01.A.c 01.A.d. 01.A.e. 01.A.f. 01.A.g. 01.A.h. 01.A.i. 01.A.j 01.A.k. Total
Antigua and Barbuda X X XXX X 6
Argentina X X XX 4
Australia X X XXXXXXX 9
Austria X X XXXXXXXXX 1 1
Barbados X X2
Belize X1
Botswana XXX XXX 6
Brazil X XX X 4
Brunei Darussalam X X2
Bulgaria X X XXX XX 7
Burundi XX 2
Canada X X XXXXX 7
Chile X X XX 4
Colombia X X X 3
Congo R.P XX 2
Costa Rica X1
Côte d’Ivoire X1
Cuba X X X3
Cyprus X X 2
Czech Re public X X XXXXXXX 9
Djibouti X1
Dominican Republic X X XXXXXX 8
Ecuador X X XXX X 6
El Salvador X X XXX 5
European Community X X XXXXXXXX 1 0
Finland X X XXXXX XX 9
Gambia X X XXXXXXXX 1 0
Guinea X1
Guyana X X XX X 5
Haiti X1
Hong Kong X X 2
Hungary X X XXXXXX 8
Iceland X X XXXXX X X9
India X1
Indonesia XXXX 4
Israel X X XXXX 6
Jamaica X X XXX XX X 8
Japan X X XXXXX 7
Korea, Republic of X XXXXX 6
Kuwait XXXX 4
Lesotho X X XXXXXXXX 1 0
Liechtenstein X X XXXXX 7
Malawi X XX3
Malaysia X X XXXXXX 8
Maldives X 1
Mexico X XX X X 5
Mongolia X X2
Morocco X X2
New Zealand X X XXX X 6
Norway X X XXXXXXXX 1 0
Pakistan XX X 3
Panama X X XXXXX 7
Papua New Guinea X X XX 4
Peru X XX X4
Poland X X X XXX 6
Qatar X XX XX 5
Romania X XX X 4
Rwanda X X2S/C/W/73
Page 24
Countries 01.A.a. 01.A.b. 01.A.c 01.A.d. 01.A.e. 01.A.f. 01.A.g. 01.A.h. 01.A.i. 01.A.j 01.A.k. Total
Senegal XX X 3
Sierra Leone X X XXXXXXXXX 1 1
Singapore X XXX XX X7
Slovak Republic X X XXXXXXX 9
Slovenia X X XXX X 6
Solomon Islands X X XX 4
South Africa X X XXXXXXXX 1 0
Swaziland XX X 3
Sweden X X XXXXXXXX 1 0
Switzerland X X XXXXXXX 9
Thailand X X XX X 5
Trinidad and Tobago X XX X4
Turkey X X XX 4
United Arab Emirates X X X XXX 6
USA X X XXXXX 7
Venezuela X X XXXX 6
Zambia X XX3
Total 45 56 34 50 58 32 33 38 26 15 6 393
Legend:
01.A.a. Legal Services
01.A.b. Accounting, Auditing and Bookkeeping Services
01.A.c. Taxation Services
01.A.d. Architectural Services
01.A.e. Engineering Services01.A.f. Integrated Engineering Services
01.A.g. Urban Planning and Landscape Architectural Services
01.A.h. Medical and Dental Services
01.A.i. Veterinary Services
01.A.j. Services Provided by Midwives, Nurses, Physiotherapists
01.A.k. Other
Source:  WTO Secretariat.S/C/W/73
Page 25Table 6: Percentage by Sector and Mode of Supply (Professional Services)
(Percentages in each activity)
I. MARKET ACCESS Cross-border Consumption  Abroad Co mmercial Presence Natural Persons
Full Partial No. Full Partia lN o . F u l l Partial No. Full Partial No.
 Legal Services 18% 67% 16% 24% 67%  9%  4% 87%  9%  2% 91%  7%
 Accounting, Auditing and Bookkeeping Services 29% 41% 30% 41% 45% 14%  9% 89%  2%  2% 86% 13%
 Taxation Services 44% 44% 12% 53% 44%  3% 15% 82%  3%  0% 88% 12%
 Architectural Services 52% 26% 22% 68% 20% 12% 24% 72%  4%  0% 92%  8%
 Engineering Services 50% 28% 22% 55% 28% 17% 24% 72%  3%  0% 85%  5%
 Integrated Engineering Services 59% 22% 19% 66% 22% 13% 31% 59%  9%  0% 94%  6%
 Urban Planning and Landscape Architectural Services 45% 36% 18% 52% 36% 12% 24% 73%  3%  0% 97%  3%
 Medical and Dental Services 34% 29% 37% 61% 34%  5% 21% 68% 11%  0% 87% 13%
 Veterinary Services 54% 19% 27% 69% 23%  8% 31% 58% 12%  4% 81% 15%
 Services provided by Midwives, Nurses, Physiotherapists 33% 33% 33% 47% 53%  0% 20% 80%  0%  0% 93%  7%
 Other 33% 67%  0% 33% 67%  0%  0% 100%  0%  0% 100%  0%
II.  NATIONAL TREATMENT Cross-border Consumption Abroad Co mmercial Presence Natural Persons
Full  Partial No. Full Partial No. Full Partial No. Full Partial No.
 Legal Services 22% 60% 18% 31% 58% 11% 16% 76%  9%  2% 91%  7%
 Accounting, Auditing and Bookkeeping Services 34% 36% 30% 50% 36% 14% 32% 64%  4%  4% 80% 16%
 Taxation Services 41% 41% 18% 56% 35%  9% 35% 56%  9% 12% 71% 18%
 Architectural services 52% 30% 18% 64% 22% 14% 56% 38%  6%  8% 80% 12%
 Engineering Services 45% 31% 24% 60% 21% 19% 52% 43%  5%  9% 79% 12%
 Integrated Engineering Services 63% 19% 19% 72% 13% 16% 72% 13% 16%  9% 78% 13%
 Urban Planning and Landscape Architectural Services 52% 30% 18% 61% 24% 15% 58% 33%  9%  9% 85%  6%
 Medical and Dental Services 47% 18% 34% 66% 24% 11% 45% 45% 11%  3% 87% 11%
 Veterinary Services 62% 12% 27% 81%  8% 12% 58% 35%  8%  8% 77% 15%
 Services provided by Midwives, Nurses, Physiotherapists 40% 27% 33% 53% 47%  0% 53% 47%  0%  0% 93%  7%
 Other 33% 50% 17% 33% 50% 17% 33% 67%  0% 17% 67% 17%
Note:  Full = Full commitment (indicated by "None" in the ma rket access or national treatment column of the Schedule)
Partial = Partial commitment (limitations are inscribed in the market access or national treatment column of the Schedule)No = No commitment (indicated by "Unbound" in the market access or national treatment column of the Schedule)
Percentages may not add up to 100 due to rounding.  Basis of total is listed sectors.
Source:  WTO Secretariat.S/C/W/73
Page 26
Table 7: Summary of Specific Commitments in Accountancy
The following table indicates for each of  the three sub-sectors of the accountancy
sector, i.e. accounting, auditing and bookkeeping, the countries which have
scheduled a specific commitment.
 Countries Accounting Auditing Bookkeeping Total
 Antigua and Barbuda X X X 3
 Argentina X X X 3
 Australia X X X 3
 Austria X X X 3
 Brazil X X X 3
 Brunei Darussalam X 1
 Bulgaria X X 2
 Canada X X X 3
 Chile X 1
 Colombia X X 2
 Cuba X X 2
 Cyprus X X X 3
 Czech Republic X X X 3
 Dominican Republic X X 2
 Ecuador X X X 3
 El Salvador X X 2
 European Community X X X 3
 Finland X 1
 Gambia X X X 3
 Guyana X X X 3
 Hong Kong X X X 3
 Hungary X X X 3
 Iceland X X X 3
 Israel X 1
 Jamaica X X X 3
 Japan X X X 3
 Korea, Republic of X X X 3
 Lesotho X 1
 Liechtenstein X X X 3
 Malawi X X 2
 Malaysia X X X 3
 Maldives X X X 3
 Mexico X X X 3
 Mongolia X 1
 Morocco X X X 3
 New Zealand X X X 3
 Norway X X X 3
 Panama X 1
 Papua New Guinea X X X 3
 Peru X X X 3
 Poland X X X 3
 Qatar X X X 3
 Sierra Leone X X X 3
 Singapore X X 2
 Slovak Republic X X X 3S/C/W/73
Page 27
 Countries Accounting Auditing Bookkeeping Total
 Slovenia X X X 3
 Solomon Islands X X X 3
 South Africa X 1
 Sweden X X 2
 Switzerland X X X 3
 Thailand X X X 3
 Turkey X X X 3
 United Arab Emirates X X X 3
 USA X X X 3
 Venezuela X X 2
 Zambia X X X 3
                                 Total 51 50 42
Source:  WTO Secretariat.S/C/W/73
Page 28
Table 8 (i): Analysis of the Types of Measures (Number of Measures in Accountancy
Services,  Market Access)
ModeType of Limitation1234
Number of Suppliers - - 2 -
Value of Transactions or Assets - - 12 1
Number of Operations - - - -
Number of Natural Persons 1 1 3 31
Type of Legal Entity 4 2 22 1
Participation of Foreign Capital - - 17 1
Other Measures, n.e.c. 4 4 19 2
Table 8 (ii): Analysis of the Types of Measures (Number of Measures in Accountancy
Services,  National Treatment)
ModeType of Limitation1234
Tax Measures, Subsidies, Grants and Other
Financial Measures----
Nationality Requirements 1 1 7 6
Residency Requirements 4 2 11 8
Licensing, Standards, Qualifications 6 4 16 12
Registration Requirements 2 2 6 2
Authorization Requirement 3 1 5 2
Performance Requirements - - - -
Technology Transfer Requirements - - 1 -
Local Content, Training Requirements - - 1 -
Other Measures, n.e.c. 1 - 4 3
Note: The number of "Other Measures, n.e.c." in (i) is large because a number of entries in the
Schedules could not be classified into one or the other of the distinct categories of limitations.  Insome cases, this was due to a lack of specificity in the description of the measure, while in others, it
was because the measure itself did not correspond to any of the categories.
Source:  WTO Secretariat.
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