Talks to allow US accountants to practise in the UK and vice versa have stalled following disputes including over how to judge the quality of American audit training.
Accounting profession leaders on both sides of the Atlantic had hoped a deal would make it easier for auditors at top firms to move freely when working on the accounts of large banks and dual-listed companies.
Supporters of the idea also believe it would attract talent to the City of London and open up new career opportunities for tens of thousands of people.
Professional bodies in the US and Scotland agreed a pilot programme in 2018 that allowed limited recognition of each other’s accounting qualifications.
But an attempt to extend the deal to people qualified in England and Wales and to allow Americans to do audit work in the UK has foundered, according to people involved in the talks.
The pilot, which had been twice extended while negotiations continued, was quietly allowed to lapse last year.
“I would describe the process as suspended, not ended,” said Bruce Cartwright, chief executive of the Institute of Chartered Accountants of Scotland.
The UK government has said mutual recognition agreements could boost audit skills in Britain and help domestic firms to win work overseas. It has proposed amending the Companies Act to allow professional bodies to count auditors’ foreign audit experience towards qualifications in the UK.
The Big Four accounting firms — Deloitte, EY, KPMG and PwC — have also expressed their support to regulators and professional bodies on both sides of the Atlantic, according to people familiar with the conversations.
One Big Four executive in the UK said free movement of accountants was important for the smooth running of complex audits, particularly where clients had dual listings.
Cartwright said: “We shouldn’t underestimate the complexity of these big financial institutions. If there is senior audit expertise available in the US that could be brought to London and vice versa, then that would be good for everybody. ”
One sticking point in the talks has been the requirement for accountants in the UK to complete extra work before being able to add an audit qualification, which is needed to sign off on companies’ financial accounts.
Cartwright told the Financial Times that, while there was agreement that US audit experience could count towards the UK qualification, it had not been possible to design an oversight system to ensure American auditors had learned the required skills. “We couldn’t get to an agreement on what hurdles we would need,” he said.
The US has less specific experience requirements. The American Institute of Certified Public Accountants (AICPA), the US professional body, said: “As a general rule, we expect the same consideration for US CPAs that we offer to licensed accountants from other countries. ”
A further hurdle, according to British professionals, has been the US unwillingness to include one of three major bodies that provide audit qualifications in the UK.
The AICPA has been negotiating with two professional bodies — ICAS and the Institute of Chartered Accountants in England and Wales (ICAEW) — but not the Association of Chartered Certified Accountants, which has the second-largest number of members in the UK.
The ACCA said the Financial Reporting Council, which regulates UK auditors, had final say on mutual recognition agreements and “any arrangement agreed by the FRC will apply to all UK bodies”. The ICAEW declined to comment.
The FRC said it hoped all parties would “continue to work together to conclude this long-running matter”.