to the CPA Credential in the International Marketplace
Michael C. Campbell and C. Randy Howard
MARCH 2008 -
Over the past 50 years, the financial and accounting world has been
facing new challenges and opportunities. Growing global trade and
a greater emphasis on worldwide investment opportunities have increased
demand for reliable accounting information that is comparable across
countries. This has led to more emphasis on international accounting
standards and a desire for an internationally recognized accounting
credential. Although these trends have caused demand for accountants
to soar and are generally positive for the accounting profession,
they create serious challenges for the U.S. CPA credential. For
example, at a time when the number of candidates for competing credentials
is increasing dramatically, the U.S. Uniform CPA Exam, until very
recently, has been experiencing a sharp decline in candidates. In
fact, it seems the CPA “brand” could lose some of its
stature in the worldwide marketplace if the U.S accounting profession
fails to address critical issues soon. Up to this point, few would
dispute that the U.S. CPA has been the credential of choice globally
for individual accountants, employers, and the global financial
community. Its status, however, is being challenged, both by the
move toward international accounting standards and by aggressive
competition from other credentialing organizations.
these issues will require support from the entire accounting community.
Support from individual CPAs through their state CPA societies
and state boards of accountancy will be critical. Input from the
American Accounting Association can provide helpful insight and
analysis of alternatives. Collective support from the National
Association of State Boards of Accountancy (NASBA) and by the
AICPA will be crucial. Developing and implementing appropriate
solutions will require the efforts of all the aforementioned groups.
is intended to shed light on what the authors see as an important
problem and to explore current challenges to the preeminent global
status of the U.S. CPA credential. The authors also suggest possible
strategies to preserve and enhance the stature of the U.S. CPA
credential. The CPA is a license issued by governmental licensing
jurisdictions to regulate the practice of the profession, an important
distinction between it and competing credentials issued by private-sector
organizations. At the same time, global trends that affect demand
for the U.S. CPA credential impact U.S. CPAs in ways not experienced
by other state-licensed professionals.
for Comparable Standards and International Recognition
global trade and investment drive demand for comparable accounting
standards and for professionals capable of implementing them.
Consider the following:
to world trade statistics by the International Monetary Fund
(IMF), between 1993 and 2003, world exports nearly doubled,
increasing from $4.7 trillion to $9.3 trillion.
to a presentation at NASBA’s 2004 annual meeting, approximately
1,200 non-U.S. companies were operating in U.S. financial markets
at that time.
to US-China Business Council reports, investment in China alone
by U.S. and European companies increased from $41 billion in
contracted investment in 1999 to $115 billion in 2003.
corporations see significant advantages to moving toward a single
set of accounting standards that promises to reduce reporting
costs, increase access to worldwide capital, and facilitate global
mergers and acquisitions. The interpretation of internal accounting
information would even be enhanced by convergence, as evidenced
by this quote from Thomas Jones, then CFO of Citigroup (Forbes,
July 22, 2002): “We had problems figuring out the financials
within our own company, as subsidiaries in 101 countries reported
under various standards.”
Toward International Standards
are initiating changes to bring about convergence of their national
accounting standards with International Financial Reporting Standards
(IFRS). More than 7,000 companies listed on European Union (EU)
stock exchanges were required to convert to IFRS as of January
1, 2005. Also in January 2005, the International Accounting Standards
Board (IASB) and Japan began a project to reduce differences between
Japanese accounting standards and IFRS.
In the United
States, both the New York Stock Exchange (NYSE) and Nasdaq have
been lobbying the SEC to allow foreign companies to submit their
financial reports using IFRS without having to reconcile results
to U.S. GAAP. In January 2008, the SEC began to take steps that
would eliminate a requirement for foreign companies to reconcile
their financial results with U.S. GAAP.
the IASB have agreed to work toward bringing U.S. GAAP and IFRS
into agreement. In September 2002, these organizations signed
the “Norwalk Agreement,” in which each body “pledged
to use their best efforts to (a) make their existing financial
reporting standards fully compatible as soon as practicable and
(b) to coordinate their future work programs to ensure that once
achieved, compatibility is maintained.”
Impacts on the U.S. CPA Credential
a financial world is evolving in which reporting standards will
be compatible around the globe. The question is: Who will be viewed
as the consummate accounting professional to ensure that these
reporting standards are followed? Because the U.S. CPA designation
has heretofore been viewed as the preeminent credential, why would
this special status not continue?
factors have the potential to relegate the U.S. CPA to lower status:
- The number
of U.S. CPAs is not growing, while other organizations’
memberships and numbers of credential-holders are increasing.
- The U.S.
CPA exam focuses on U.S. GAAP and GAAS at a time when much of
the rest of the world is moving toward IFRS.
CPAs are becoming more concentrated in the United States, while
other organizations increase their membership and number of
international accounting standards decisions are made largely
outside of the United States by individuals with little or no
knowledge of U.S. GAAP, U.S. CPAs’ input into these standards
danger to U.S. CPAs is that, as their number declines relative
to other credential holders, and as knowledge of U.S. GAAP declines
and U.S. GAAP is replaced by IFRS, the U.S. CPA credential may
lose its stature, and perhaps even its relevance. If other credentials
become accepted both worldwide and in the United States, they
may be accepted as alternatives to the U.S. CPA credential. Holders
of these alternative credentials could even possibly perform accounting
activities similar to those of U.S. CPAs and be regulated, not
by state boards of accountancy, but by some international body.
of Accounting Organizations and Examinations
For the U.S.
Uniform CPA Examination to be offered only in the United States
and its territories drastically limits access to the exam, and
thus to the U.S. CPA credential. Many other bodies have noted
the tremendous international demand for accounting credentialing
and have offered their exams internationally for many years. These
entities are essentially competitors with the U.S. CPA credential,
and their numbers are impressive. They include six U.K.-based
institutes, which together boasted a 2003 membership of nearly
330,000, comparable to the AICPA’s membership. While the
AICPA lost 2,000 members from 2000 to 2003, one of these organizations,
the Association of Chartered Certified Accountants (ACCA; www.accaglobal.com),
gained 37,000 members during the same period. In addition, as
reported by the U.K. Financial Reporting Council (“Key Facts
and Trends,” February 2005), international membership in
the ACCA increased from 29,543 in 1999 to more than 45,000 in
offers several certificates. The two most comparable to the U.S.
CPA are the Certificate in International Auditing (CIA) and the
Certificate in International Financial Accounting (CIFA), both
based on international standards. The ACCA operates more than
200 examination centers in more than 140 countries.
provide additional detail on relative membership growth for the
AICPA and several other organizations (Exhibit
1) and the percentage of international members in each organization
the AICPA is the only organization to have lost membership over
the period illustrated, and the AICPA has by far the lowest percentage
of international members—only 2%.
to the six U.K. entities, other organizations also offer exams
3 compares the Uniform CPA Exam with the examinations offered
by four other organizations, and Exhibit
4 illustrates the longer-term decline in number of candidates
sitting for the Uniform CPA Exam. For example, note that nearly
80% of all the candidates taking the Certified Internal Auditor
(CIA) exam (not to be confused with the aforementioned Certificate
in International Auditing offered by the ACCA) were international
candidates, even though the sponsor of the CIA exam, the Institute
of Internal Auditors (IIA; www.theiia.org), is a U.S.-based organization.
The IIA achieves this high level of international participation
by offering the CIA examination in dozens of countries around
for International Candidates
are reasons why offering the U.S. Uniform CPA Exam only in the
United States creates such a problem for foreign candidates:
expenses—including airfare, food, hotel, car rental, and
incidentals—frequently total more than $2,000 per trip.
computer-based testing has changed the exam-taking strategy
employed by most U.S. candidates, who now generally opt to study
for and take only one or two parts of the exam at each sitting.
Because of the significant costs in terms of money and time
away from jobs, most international candidates feel pressure
to take the entire exam in a single sitting, or at most in two
sittings. Of course, the reality is that candidates often do
not pass at least one part of the exam on their first attempt.
Consequently, the typical international candidate can expect
to make at least two to three trips to the U.S. to sit for various
sections of the exam, resulting in total travel costs of $4,000
- The number
of temporary visas issued for travel to the U.S. has plummeted
since the terror attacks of September 11, 2001, especially for
candidates from certain parts of the world. For many potential
candidates, this absolutely eliminates the possibility of taking
the Uniform CPA Exam. For others, the significant uncertainty
about the timing and likelihood of getting a visa means that
investing a significant amount of time and money studying and
preparing for the U.S. CPA Exam is a very high-risk proposition,
one that few are willing to undertake.
candidates must sacrifice vacation time, or take time off work,
to travel to the United States.
factors, such as jet lag and unfamiliar food and surroundings,
can negatively influence test scores for international candidates.
make it much more difficult and expensive for international candidates
to be successful on the Uniform CPA Exam, and also make other
credentials, available through exams offered closer to home, much
could be employed to address the challenges to the U.S. CPA credential.
Offering the Uniform CPA Exam internationally would be an excellent
related to offering the Uniform CPA Exam internationally include
concerns about exam security, the cost of administration, and
the ability to regulate CPAs in other countries. These challenges
can be effectively addressed.
security is less of an issue now that the computer-based
test (CBT) format has been successfully implemented for more than
two years. The relationship established with the Prometric testing
centers in the U.S. can be expanded to include international sites.
Prometric currently administers numerous “high stakes”
exams around the world. For example, the company internationally
administers the National Board of Medical Examiners’ licensing
exam to become a U.S. medical doctor. The Securities Investment
Institute and the Project Management Institute also use Prometric
to administer their exams internationally.
experiences of the many other accounting credentialing exams offered
internationally would be useful in planning the offering of the
Uniform CPA Exam internationally.
of administration is a serious consideration, but
offering the Uniform CPA Exam internationally will probably be
profitable in the long run. The large numbers of candidates taking
other exams indicates that demand for the Uniform CPA Exam will
be substantial. Exhibit 3 shows that between 56% and 78% of the
candidates sitting for each of the other U.S.-based accounting
credentialing exams are international candidates. Because the
CPA still is considered the most valuable “brand”
of accounting credential, a reasonable assumption is that 50%
of candidates could become international candidates. If 50% of
the candidates taking the U.S. CPA exam were international candidates,
the result could look like this:
substantial costs and barriers to international candidates, a
$1,000 surcharge for the privilege of taking the exam closer to
home would not be unreasonable. Assuming 90,000 international
candidates and a surcharge of $1,000, offering the exam internationally
would yield additional annual revenue of $90 million over and
above the regular exam fees.
revenue could be used to offset costs incurred by NASBA, the AICPA,
and individual state boards of accountancy, and also to reduce
regular exam fees for candidates. Increasing candidate numbers
by administering the U.S. CPA exam internationally should have
a snowball effect. First, Prometric likely will be able to reduce
the per-seat charge for all candidates, because more seats will
be filled. Second, the AICPA likely will be able to reduce its
fees, because the fixed costs of preparing exams, validating exam
questions, and creating the exam-taking software will be spread
over a larger number of candidates. Third, the revenue from the
international surcharge could be used to reduce exam fees for
CPAs practicing in other countries is complicated
by the fact that U.S. CPA certificates and licenses to practice
are issued by individual states, not by any national organization.
This highlights a major difference between the CPA and competing
credentials. The CPA certificate and license to practice are granted
by governmental bodies—the various states—that have
a legal responsibility to protect the public interest and the
legal power to sanction or revoke the licenses of CPAs who abuse
the public trust. In contrast, the most common competing accounting
credentials are issued by private-sector organizations, which
undoubtedly have an interest in policing their members but lack
the legal mandate and enforcement mechanisms held by the various
In the United
States, monitoring and regulation activities are conducted by
the individual state boards, which have the authority to revoke
a U.S. CPA’s license to practice, and by the AICPA, which
has the authority to revoke membership. Discussions among the
various state boards, NASBA, and the AICPA could lead to joint
solutions that would address various monitoring and regulation
issues. For example, the AICPA could establish chapters in other
countries. This approach has been used effectively by the ACCA.
These chapters would be similar to local U.S. chapters, but would
have added regulatory responsibilities, to be determined jointly
by the AICPA, NASBA, and individual state boards.
organizations have taken this approach, which aids in the monitoring
of local credential holders, facilitates recruitment of student
affiliate members, and allows the coordination of lobbying efforts
aimed at relevant accounting bodies in their respective countries.
These efforts would encourage a steady stream of CPA exam candidates,
and increase the stature and influence of the CPA credential in
the local area.
would be to develop a proof-of-passing (POP) document to verify
that a candidate has successfully completed the Uniform CPA Exam.
Candidates receiving a POP document would not be licensed to practice
as CPAs. Individual states would not need to issue a certificate
or a license to practice. This alternative would create a credential
based on knowledge of U.S. accounting and successful completion
of the Uniform CPA Exam, but without the risk that POP holders
could abuse the public trust, because they would not be licensed
to opine on financial statements. Assuming agreement could be
reached between the various state boards, the AICPA, and NASBA,
it may be possible to have the POP document distributed by NASBA.
This document probably would be useful to many different kinds
of candidates, but would be particularly helpful for international
candidates whose primary goal is not a license to practice but
simply proof of their knowledge of U.S. accounting. For most international
candidates, the POP document probably would be all they would
need. If discussions among the AICPA, NASBA, and the individual
state boards are successful, application for the U.S. CPA exam
by candidates who need only the POP document could be made directly
through NASBA, thus relieving a burden on the state boards.
would be to create a two-tiered credentialing system similar to
what exists in some states. Again, the reason many international
candidates take the U.S. CPA exam is so they can demonstrate a
substantial knowledge of U.S. accounting in order to obtain a
job with a U.S. company that has international operations or with
a local company that must issue financial reports in accordance
with U.S. GAAP—not to become a CPA licensed to practice
publicly and to sign audit reports. Such a two-tiered system could
provide for issuing a credential verifying successful completion
of the U.S. CPA exam for people who do not desire a license to
practice. Monitoring these individuals would be much less extensive,
perhaps even unnecessary. This process would be more similar to
a university granting a degree that indicates a certain level
of knowledge and training than to a state authority granting a
license to practice and monitoring license holders for compliance
possibilities assume that the various stakeholders are comfortable
adding a credential component to the CPA. Thus, when a state issues
a CPA certificate and a license to practice, the CPA retains its
original purpose as a license to practice, with the attendant
rights and responsibilities. However, when a candidate’s
intention is only to demonstrate knowledge of U.S. accounting,
a POP document could be issued, perhaps by NASBA rather than the
individual states, to indicate that the candidate had successfully
passed the Uniform CPA Exam.
Even if the
possible solutions offered by the authors were not able to be
implemented, the authors hope to draw the profession’s attention
to the important issues raised above. To this end, NASBA, at its
annual meeting in October 2006, formed a group to address the
possibility of offering the CPA exam internationally. The charge
to the committee is to “develop and implement a program
and process for the expansion of the administration of the Uniform
CPA Examination to international locations.”
one state board of accountancy is supportive of offering the CPA
exam internationally. The Illinois Board of Examiners had the
following to say in a July 26, 2005, letter from its chair, Kenneth
J. Hull, to John E. Katzenmeyer, chair of the NASBA Examinations
Board of Examiners would very much like the Examinations Committee
to consider administration of the Uniform CPA Examination at
secure Prometric testing centers in international locations…
that offering the CPA exam to international candidates at secure
Prometric sites in their home countries would expand the value
of the world’s most prestigious accounting and financial
credential. We believe the following issues should be considered
in making a decision about offering the CPA exam at international
- It is
[in] the best interest of all of us to promote the CPA designation
as the [premier] world standard of professional expertise.
- The more
people taking the Uniform CPA exam, the more we spread out the
capital costs of the computerized exam, while maintaining its
- The easier
we make it for foreign residents to take the CPA exam, the more
candidates we will encourage to seek the credential in lieu
of other professional credentials.
As the world
moves to a global economy, accountants are looking for a single
credential to serve as the international-standard credential for
the profession. Such a credential must be internationally accessible.
Currently, the U.S. CPA does not meet that criteria.
2004 annual report includes the following passage in describing
the organization’s objectives and strategy:
a professional accountancy body which awards internationally
respected qualifications. It regulates members, students and
public practices, and holds examinations in over 100 countries.
goal is for ACCA to be the leading global professional accountancy
body in size, influence and reputation. It therefore provides
opportunity and access to people of ability around the world
and supports members throughout their careers …
believes that ACCA must be competitive if it is to lead the
global profession. It recognizes that its presence and reputation
have been achieved, and will continue to be achieved, by consistent
and sustainable growth. ACCA will remain alert to new opportunities
and markets for its qualifications, recognizing that numerical
strength helps its case when negotiating professional and legal
addressing these issues does not fall on the shoulders of any
one group in the United States. Rather, it requires the involvement
of the entire accounting community. NASBA and the AICPA can provide
leadership and coordination, but only with the support of the
state boards of accountancy, state CPA societies, and individual
CPAs throughout the country. The authors hope that this article
will generate discussion and spark development of alternatives
to address this serious issue.
president and CEO of NASBA, commented:
to be increasing interest on the part of some of our member
boards of accountancy in pursuing the administration of the
CPA examination outside of the 54 states and jurisdictions.
NASBA will respond to the requests we’ve received from
our boards, including the consideration of establishing an appropriate
research group and studying the feasibility of implementing
an international strategy for the CPA examination. (correspondence
with authors, October 14, 2005)
2004/2005 chairman of the AICPA, had this to say:
boards of accounting are charged with protecting the public
interest by licensing and regulating CPAs in their states. There
is a significant risk that the tendency to adopt a literal and
provincial view of this mandate may cloud their vision of an
equally important, but less obvious need to ensure that the
certification behind the licenses they issue remains among the
most prestigious and respected in the world.
a major opportunity for state boards, NASBA and the AICPA to show
some leadership in this important area. However, it will require
a more global and long view of the CPA profession than seems currently
to be the case (correspondence with authors, June 26, 2005).
a Global Need
of opportunity is closing. If the professional community does
not act soon, then credentials offered by organizations like ACCA
are likely to usurp the position of the U.S. CPA credential. Surely
a decline internationally in the status of the CPA would not serve
the interests of the various state boards of accountancy, the
public they protect, or the CPA profession itself.
the U.S. CPA Exam internationally benefits key stakeholders in
a number of powerful ways:
and reinforcing the market’s perception of the U.S. CPA
as the world’s premier accounting credential;
to the needs of the global business community;
out to a broader talent pool of prospective U.S. CPAs;
the U.S. CPA’s relevance within the global accounting
U.S. CPAs with the opportunity to remain competitive in a global
an opportunity for state boards of accountancy, the AICPA, and
NASBA to capitalize economically on latent demand.
around the world are searching for a global-standard credential.
At the moment, there is a void to be filled, but this situation
is unlikely to last much longer. Already, competing organizations
are moving aggressively to fill the need. If the U.S. CPA credential
is to endure and flourish, immediate action is required. The most
important first step is to make the U.S. CPA credential internationally
accessible, which requires administering the U.S. CPA exam internationally
as soon as possible.
C. Campbell, CPA, and C. Randy Howard, CPA,
are professors of accounting at Montana State University–Billings.