of the Society of Management Accountants are not required to hold degrees. Com-
pletion of a qualifying examination is also common, but the content and rigor of the
examinations vary. The amount of experience required and the extent to which expe-
rience can be substituted for education also vary greatly. Germany, the United King-
dom, and Sweden, for example, have experience requirements of three to five years;
however, the United States requires only one or two years, and in some states it is pos-
sible to become certified without experience. Professional experience is recom-
mended but not required in Saudi Arabia. It is common for individuals in the United
States and Canada to become professional accountants in their early twenties, but in
Germany, the Netherlands, and Japan, many do not attain the position until their mid-
thirties. After receiving qualified status, auditors are required to pursue continuing
professional education in less than half the countries. The number of individuals who
become professional auditors also varies widely, from a few hundred in Saudi Arabia
to a few thousand in Germany to more than 350,000 in the United States.
(c) Reciprocity. The following paragraphs provide an update on the current status
of reciprocity in the European Community and the Americas and on the effect of the
General Agreement on Tariffs and Trade (GATT) and the General Agreement on
Trade of Service (GATS).^6
(i) European Community. The legal foundation for the philosophy of mutual recog-
nition was the 1957 Treaty of Rome, but it took a number of decades to develop the
necessary political will. This happened with the Single European Act of 1986, which
enshrined the philosophy of mutual recognition. The general system of mutual recog-
nition of diplomas seeks to permit professionals in the EC to be able to circulate more
freely and easily from one member state to another. This system concerns only indi-
viduals and ignores firms that may be part of the relevant profession. In addition, the
directive relates only to establishment-based provision of services, and does not ad-
dress the question of cross-border provision of services. The end result sought is the
right of the professional to practice his or her profession in the host member state or
provide services there under the same conditions as those to which professionals in
that country are subject. The progressive implementation of the first directive in
member states and the effective organization of local knowledge examinations for the
accountancy profession should result in a significant increase in the number of ac-
countants who benefit from the mutual recognition of diplomas.
(ii) Americas. The North American Free Trade Agreement (NAFTA) establishes
basic rules and obligations to facilitate cross-border trade in services. NAFTA, while
recognizing the need for regulation, encourages broader market access by providing
that licensing requirements must be based on objective and transparent criteria, such
as professional competence, and must be no more burdensome than is necessary to
ensure the quality of service provided.
In 1991, an agreement was entered into between the CICA, the AICPA, and the
National Association of State Boards of Accountancy (NASBA), which became ef-
fective in some, but not all, states in November 1993. A holder of one designation
may qualify for the other by passing local knowledge examinations and by meeting
15 • 14 TAXONOMY OF AUDITING STANDARDS(^6) “ Discussion Paper on Reciprocity,” International Federation of Accountants, 1994.