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American Institute of Accountants. Committee on Foreign Affairs

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eGrove (Univ. of Mississippi)

University of Mississippi eGrove Guides, Handbooks and Manuals American Institute of Certified Public Accountants (AICPA) Historical Collection 1954 Accounting for International Trade and Investment American Institute of Accountants. Committee on Foreign Affairs Follow this and additional works at: https://egrove.olemiss.edu/aicpa_guides  Part of the Accounting Commons, and the Taxation Commons international relations through increased in­ternational trade and investment.The following language has been included in a number of recent treaties between the United States and other countries:“Nationals and companies of either party shall be permitted to engage within the terri­tories of the other party, accountants and other technical experts, executive personnel, attor­neys, agents, and other specialists of their choice. Moreover, such nationals and companies shall be permitted to engage accountants and other technical experts regardless of the extent to which they may have qualified for the practice of a profession within the territories of such other party for the particular purpose of making examinations, audits and technical investigations for, and rendering reports to, such nationals and companies in connection with the planning and operation of their enterprises, and the enter­prises in which they have a financial interest within such territories.”Businessmen should support the inclusion of similar clauses in treaties with all coun­tries in which citizens of the United States have commercial and financial interests. In the meantime, the growth of international trade and investment will be facilitated if all countries follow the spirit of this treaty provision.Freedom of practice by accountants across national boundaries can make a real contri­bution to expansion of commerce among friendly nations, and to the international flow of capital. It can do much to increase the security of businessmen and investors with interests in countries other than theirACCOUNTINGforINTERNATIONALTRADEandINVESTMENTown.Prepared by the COMMITTEE ON FOREIGN AFFAIRS OF THE AMERICAN INSTITUTE OF ACCOUNTANTS 270 Madison Avenue, New York 16ACCOUNTING FOR INTERNATIONAL TRADE AND INVESTMENTUnited States investors generally take it for granted that the com­panies in which they put their money will be audited by independent certified public ac­countants. Their willingness to make foreign investments can be increased by similar in­dependent audits.Nationalistic restrictions on the practice of accounting may constitute a real barrier to international trade and investment.While progress has been made toward common standards of accounting, auditing, financial reporting and disclosure which should ultimately provide a universal lan­guage of international finance, this goal has not yet been achieved.Businessmen and investors with interests abroad, as well as those who are now con­sidering foreign investments, therefore wish to be free to employ accountants and audi­tors of their own choosing. Often they will prefer to use accountants of their own na­tionality to examine their accounts.Freedom of professionally trained ac­countants to cross national boundaries with­out unreasonable restrictions is therefore a vital factor in the further development of international trade and a freer flow of private capital across national boundaries.INTERNATIONAL ACCOUNTING FIRMS To fill the demand for accounting and audit­ing services which has been created by inter­national investment, a number of leading accounting firms, particularly those with home offices in Great Britain and the United States, have established branches in other countries.In addition to providing needed services, these branch offices have also stimulated de­velopment of the accounting profession in the countries where they are located. As a matter of fact, the early growth of profes­sional accounting in the United States was due in considerable measure to the English and Scottish accountants who came to the country in the nineteenth century primarily in the interests of British investors.Accounting firms which establish branches in foreign countries generally employ and train nationals of the country in which the branch is located. It is to be expected, how­ever, that in most cases the manager and part of the staff should come from the home office.BARRIERS TOINTERNATIONAL ACCOUNTINGIn recent years, unfortunately, a number of countries have adopted or proposed drastic restrictions on foreign accountants.It is natural that every nation should wish to build up its own accounting profession as rapidly as possible. But the restrictions are short-sighted even as a means of accom­plishing this purpose. The need for account­ing service in all countries is so great that the example of a well-known, established firm actually increases the opportunities for all other firms.Moreover, foreign branches of United States accounting firms are not primarily in­terested in serving local business interests in the countries where they have been estab­lished. They are not much bothered by restrictions which specify merely that certi­fication of financial statements required by the laws of the country for local purposes must be made by accountants who are na­tionals of the country.They do, however, find it difficult or im­possible to operate under the restrictions of some countries which require that all prin­cipals and employees of the branch office be nationals of the country where the branch is located, or members of the professional accountants’ organization in the country. Such membership is often impracticable for foreigners due to local regulations.The basic responsibility of independent accounting firms is to provide accounting and auditing services which will meet the needs of the businessmen and investors who are their clients. They cannot operate under restrictions which would prevent this. In most cases, it is not possible to provide ade­quate auditing service merely by sending accountants to foreign countries for specific engagements, without maintaining branch offices, because auditing services have de­veloped so that clients now require services and advice from their accountants through­out the year.REMOVING THE BARRIERSThe United States Department of State has recognized the importance of a free choice of accounting services to the improvement ofCopyrighted 1954 by American Institute of Accountants

Accounting for International Trade and Investment

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Accounting for International Trade and Investment

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