RESTRICTED
WORLD TRADE S/WPPS/W/18
16July1997
ORGANIZATION
(97-2961)
Original: English Working Party onProfessional Services
COMMUNICATION FROM AUSTRALIA
Disciplines forLicensing Requirements andProcedures:
Accountancy Sector
ThefollowingcommunicationhasbeenreceivedfromthedelegationofAustraliawiththerequest
thatitbecirculated forconsideration byMembers atthemeeting tobeheldon24July1997.
_______________
Theaimofthisproposal istomove forward onthemandate oftheSingapore Ministerial
Declaration todevelop multilateral disciplines inrelation toaccountancy.
Thisproposal draws ontheproposals fordisciplines forlicensing requirements andprocedures
from theEU; Brazil, Chile, Colombia andMexico; theUS;andIFAC; anddraws from papers
submitted bytheWTO Secretariat. They are:
- Noteondraftdisciplines fortheaccountancy sector submitted bytheEuropean Communities
andtheirMember States, S/WPPS/W/17;
- Communication from Brazil, Chile, Colombia andMexico, S/WPPS/W/16;
- Elements ToBeAddressed inDeveloping Disciplines ForProfessional Services: Accountancy
Sector: Implementing GATS Article VI.4, United States, S/WPPS/W/15;
- Letter fromIFAC, totheChair oftheWorking Party onProfessional Services, ondomestic
licensing requirements andprocedures, dated 13May1997;
- Note bytheWTO Secretariat, Synthesis ofResponses toQuestionnaire onAccountancy,
S/WPPS/W/11;
- NotebytheWTO Secretariat, TheRelevance oftheDisciplines oftheAgreements onTechnical
Barriers toTrade andImport Licensing Procedures toArticle VI.4oftheGeneral Agreement
onTrade inServices, S/WPPS/W/9;
Theproposal isconsistent withthemandate inGATS Article VI.4thattheCouncil forTrade
inServices shall, through appropriate bodies itmayestablish, (i.e.theWorking Party onProfessional
Services),developanynecessarydisciplines.Assuch,theCouncilforTradeinServiceshastheauthority
todecide ondisciplines onlicensing requirements andprocedures asalegal instrument attached to
theGATS. These disciplines would apply toallGATS members inrelation totheaccountancy sector.S/WPPS/W/18
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LICENSING REQUIREMENTS AND PROCEDURES
INACCOUNTANCY: DISCIPLINES
1. SCOPE
Thedisciplines setoutbelow apply tolicensing requirements andprocedures intheprovision
ofaccountancy services. Inaccordance withArticle VI.4oftheGATS:
"Suchdisciplines shall aimtoensure thatsuchrequirements are,interalia:
(a) based onobjective andtransparent criteria, suchascompetence andtheability tosupply
theservice;
(b) notmore burdensome thannecessary toensure thequality oftheservice;
(c) inthecaseoflicensing procedures, notinthemselves arestriction onthesupply of
theservice ."
2. DEFINITIONS
(a) Alicence istherighttopractice prescribed regulated accountancy services.
(b) Alicensee istheperson orfirmwiththeright topractice prescribed regulated
accountancy services, hasmettherequirements inrelation toqualifications andother
licensing criteria, andhasagreed tocomply withthelicensing authority 'sregulations.
(c) Licensing covers thescope ofpractice, qualifications andother requirements foran
individual orafirm.
(d) Scopeofpracticeincludesregulatedactivitiessuchasaccounting,auditing,bookkeeping
andtaxation services assetoutintheUruguay Round, MTN.GNS/W/120 andalso
insolvency andliquidation.
(e) Licensingrequirements1aretherequirementswhichindividualsandfirmshavetocomply
withinorder toobtain alicence oranyother formofauthorisation topractice certain
regulated activities intheterritory oftheMember. They currently generally cover:
- qualifications requirements which include education, examinations, practical
training, experience andlanguage skills;
- other licensing requirements including, legal form ofcommercial presence;
nationality; citizenship; residence; membership ofaprofessional association;
bonding; liability insurance; evidence ofgoodcharacter andfinancial standing;
mandatory audits bygovernment agencies; prohibitions ontheuseof
international firmname; work permits; visas; employee quotas; absolute
limits onforeign accountants, anddiscretionary criteria.
1Document S/WPPS/W/2 contains alistofpossible general andspecific restrictions ontrade inaccountancy
services.SomeofthegeneralmeasuresaresubjecttodisciplinesundertheGATS.Anumberofspecificmeasures
arealsodealt withinsome articles oftheGATS (e.g. those relating tonationality), while others areapplied
onanon-discriminatory basis aspartoftheregulatory frameworks andareaimed atachieving general policy
objectives.S/WPPS/W/18
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(f) Licensing procedures include theadministrative forms andprocesses which leadto
theissuing ofalicence bythelicensing authority.
3. LICENSING REQUIREMENTS AND PROCEDURES
A. General provision ofinformation: transparency
3.1. Members shallpublish, including through thewebsite,journals andbrochures:
(a) licensing procedures anddetails ofthelicensing authority, whether theagent ofthe
government ortheregulatory professional association oraspecial adhocagency;
(b) thescope oftheregulated accountancy activities forwhich thelicence isgranted,
whether toanindividual orafirm;
(c) thescope ofthenon-regulated accountancy activities which unlicensed/uncertified
accountants canperform;
(d) thetitlealicensee isentitled touse;
(e) theconditions forgranting alicence, identifying allrequirements together withtheir
rationale;
(f) theobligations oflicensees;
(g) themonitoring arrangements forcompliance;
(h) through licensing authorities, anupdated listofalllicensed individuals andfirms;
(i) nationally, anyproposed introduction ofnewrequirements oramendments inadvance,
ensuring adequate timeforanycomments tobesubmitted byinterested parties;
(j) anysuchchanges andamendments.
3.2. Members shalladvise theWTO where Members canobtain thedetails setoutinSection 3.1.
B. Qualifications requirements andprocedures
Transparency
3.3. Members shallonqualifications requirements andprocedures ensure that:
(a) qualification requirements areclearandthatdetails ofthem arepublicly available so
thatforeign applicants canfamiliarise themselves withthedetails;
(b) therelevant authorities make information publicly available explaining where andhow
foreign applicants canobtain thenecessary qualifications.
(c) procedures toverify qualifications, competence andability ofprofessionals ofanyother
Member arepublicly available;S/WPPS/W/18
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(d) theapplicant isinformed ofthedecision relating totheapplication within areasonable
timeafterreceipt andatthelatest three months.
3.4. Members shallnotify theWTO ofSection 3.3(a),(b)and(c).
Objectivity
3.5. Members shallensure:
(a) qualifications requirements arenon-discriminatory inapplication andadministered in
afairandequitable manner;
(b) tothemaximum extent possible, foreign applicants aresubject tothesameexaminations
asdomestic applicants, orwhere different examinations areused, theoverall degree
ofdifficulty isnotgreater forforeign applicants thanfordomestic applicants;
(c) qualification requirements arenotlimited tohostcountry oruniversity orinstitution;
(d) levels ofminimum requirements forentry intotheaccountancy profession inMember
countries areestablished onthebasis ofcomparability ofeducation andexperience
acquired inother countries interms ofcontent andamount, andrelevance offunctions
performed;
(e) mutual recognition agreements ofprofessional qualifications arepromoted;
(f) optional assessment procedures, byMembers, areallowed, suchascompetency based
assessment,whicharedesignedtoestablishthesamelevelofcompetenceasfordomestic
applicants.
Notbemore burdensome thannecessary
3.6. Members shallensure:
(a) anyadditional ordifferent procedures inrelation toqualification requirements offoreign
applicants avoid establishing conditions orpreconditions thatclearly cannot bemet
byforeign applicants soastopreclude successful completion ofapplications;
(i) reasonable pathways, suchasdistance education, should bemade available
toforeign applicants required toundertake additional courses orsubjects.
(b) citizenship andresidency isnotrequired forsitting examinations:
(i) foreign applicants withextensive experience, equivalent tohostcountry, should
notberequired toobtain longperiods ofin-country experience before being
permitted tositforexaminations.
C. Other licensing requirements
Transparency
3.7. Members shallonother licensing requirements:S/WPPS/W/18
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(a) specify allother criteria applied ingranting alicence:
(i) identify thecriteria toprotect theconsumer;
(ii) specify thepurpose ofeachoftheremaining criteria.2
Objectivity
3.8. Members shallensure:
(a) other requirements arenon-discriminatory inapplication andadministered inafair
andequitably manner;
(b) hostandhome country authorities consult soastoclarify thenature oftheirauthority
toactonconsumer protection requirements, other thanresidency. Theclarification
toinclude thefollowing issues:
(i) home country regulator orprofessional association confirming non-resident 's
address orapplicant 'sstanding oritsability totakeaction against applicant
formalpractice inhostcountry;
(ii) non-residentlicenseecarryingthesamelevelofprofessionalindemnityinsurance
asthatofhostcountry licensees orposting acommensurate bond;
(iii) non-resident being subject tohostcountry quality control requirements;
(c) therearenodiscretionary ordiscriminatory elements ineligibility criteria foralicence,
suchas:
(i) anationality/citizenship requirement asitimposes aprecondition ontheforeign
supplier which isnotrelated tothesupply oftheservice; sucharequirement
amounts toadiscrimination against foreign suppliers andissubject tomarket
access andnational treatment provisions ofGATS Articles XVIandXVII
respectively;
(ii) theapplication being subject todiscretionary approval.
Notbemore burdensome thannecessary
3.9. Members shallonother licensing requirements ensure:
(a) requirements onlegal form ofcommercial presence shallbenon-discriminatory in
respect ofthefullrange ofstructures such ascompany, including branches and
subsidiaries; partnership; jointventure; andprofit sharing arrangements;
(b) requirements oncontrol andownership offirms arejustified onpublic interest grounds
toprotect theindependence, objectivity andintegrity ofthelicensee;
2Despite aforeign applicant fulfilling thequalifications requirements andmeeting therequirements ofthe
regulationsinrelationtolegitimatepolicyobjectives,suchasconsumerprotection,itdoesnotfollowautomatically
thattheapplicant isgranted alicence topractice asthere mayalsobe,forexample, adiscretionary element.S/WPPS/W/18
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(c) thesame requirements apply onprofessional firms, thatis,onshareholders, partners
ormanagers asimposed onindividuals;
(d) useoffirmname isallowed;
(e) employment offoreign accountants isnotsubject toabsolute limits;
(f) therange ofaccounting activities afforded byalicence isnotrestricted beyond the
licence.
D. Licensing procedures
Transparency
4.0. Members shallensure:
(a) receipt ofapplication isacknowledged promptly, andtheresult oftheapplication is
conveyed totheapplicant within areasonable timeandnolaterthanthree months;
(b) rejection ofanapplication, bythelicensing authority, mustinclude aclearstatement
ofthereasons fortherejection.
Objectivity
4.1. Members shallensure:
(a) proceduresarenon-discriminatoryinapplicationandadministeredinafairandequitable
manner;
(b) thelicensing authority informs anapplicant when itundertakes action toverify
information supplied bytheapplicant;
(c) thelicensing authority handles applications inthestrictest confidence, butthisisnot
topreclude making enquiries.
Notbemore burdensome thannecessary
4.2. Members shallensure:
(a) procedures areassimple andstraightforward aspossible:
(i) verification ofdocumentation from applicants should notinvolve original
documents orcopies thatrequire costly ortime-consuming authentication;
(ii) licensing authorities donotestablish onerous conditions orpreconditions that
would prevent successful completion byapplicants;
(iii) examinations aretobeheldregularly, atleastonceayear;S/WPPS/W/18
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(b) applications aremade toonlyonelicensing authority foraparticular service inthe
onejurisdiction;
(i) however, thiscould beimplemented byanumber ofagencies;
(c) where licensing authorities charge afee,itisbased onadministrative costs ofthe
licensing procedure.
Notbearestriction onthesupply oftheservice
4.3. Members shallensure:
(a) anindividual orfirmisfree,within reason, toresubmit applications forlicensing;
(b) membership ofaparticular professional association orother group isnotrequired of
applicants;
(c) alicence, once granted, canbeputintoeffect immediately, andisnotsubject to
additional constraints suchasexcessively restrictive visas.
E. Licensing appeals
4.4. Each Member, whose national legislation contains provisions onlicensing measures, shall:
(a) maintain judicial, arbitral oradministrative tribunals ofprocedures forthepurpose,
interalia,oftheprompt review ofadministrative actions tothefinaldeterminations
andreviews ofdeterminations onlicensing;
(b) ensure suchtribunals orprocedures areindependent oftheauthorities responsible for
thedetermination orreview oflicensing;
(c) specify theappeals body;
(d) publish details ofprocedures inlodging anappeal;
(e) ensure thatthetimelimitbetween lodging anappeal andtheresult ofanappeal iswithin
areasonable timeandnolaterthansixmonths.