(1) ACCA welcomes the opportunity to comment on the above. ACCA is the largest and fastest-growing global professional accountancy body with 147,000 members and 424,000 students in 170 countries worldwide. ACCA has nearly 90,000 members in Europe, and over 112,000 students with 10 national offices throughout Europe.
(2) We aim to offer the first choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. ACCA works to achieve and promote the highest professional, ethical and governance standards and advance the public interest. As a global body ACCA has a vital interest in the mobility of its members across national borders.
(3) ACCA warmly welcomes the European Commission's Green Paper aimed at Modernising the Professional Qualifications Directive (hereafter 'PQD'). The PQD is well aligned with ACCA's mission to provide opportunity and mobility to our members and has our full support. It has been successful in helping the mobility of professionally qualified accountants by providing a system of recognition that has been particularly useful for individuals and competent authorities. While there are some obstacles to mobility that are outside the scope of the PQD, there are some areas where improvement is needed.
The PQD Directive works well for accountancy and audit.
(4) The PQD has been relatively successful for individuals within accountancy and audit. Evidence presented by the Commission that shows that only 1% of Accountants/Auditors move across borders is less convincing without more context provided. The evidence for such a lack of mobility is also misleading in light of the recent Eurobarometer report which stated that only 4% of individuals who apply for recognition are concerned about their qualification not being recognised. The fact that in a majority of Member States, most accountancy services are not regulated means there are no regulatory barriers and thus permit cross-border mobility. By way of example, please see Annex 1 for a breakdown by nationality in four Western European countries for ACCA members. There is no official pressure for harmonisation of education and training from the EU, regulators, or stakeholders.
(5) In the 2010 European Commission's SOLVIT report, 16% of cases (220 total cases) concerned recognition of professional accountancy qualifications, but only 11 cases were reported in the UK where the profession is unregulated. ACCA had 8 applications for Recognition of Professional Qualifications in 2010 that were non -Irish Certified Professional Accountants. There were more cases for Spain (29%) and Italy (13%), where there are differences in regulated activities. This is one of the challenges of the Directive to ensure Member States implement and adhere to the Directive and that Competent Authorities inform their members about the regulatory environment and recognition procedures. For such a small number of cases, solutions to mobility need to be considered that do not impose additional barriers or requirements that go beyond the Directive but do not allow circumvention of the Directive.
(6) Larger firms have reported they regularly move staff from one EU Member State to another without significant difficulty, especially those that deal with areas that have some harmonisation such as IFRS. Individual citizens also move with relative ease and enjoy the same rights whether they find employment in large or small firms. The Directive should be able address both types of firms and not disadvantage individuals or SMEs. We have no information that recognition of professional qualifications has effectively played a restrictive role on free movement in the accountancy sector.
(7) In a few instances when citizens, at large or small firms, decide to stay in an EU Member State after relocation and seek to obtain the local professional designation they would require national approval, registration, and an aptitude test usually in the areas of local tax and law and in the local business language. This has been the real barrier, but as it is in a small number of cases and it is a question of how significant these barriers to cross-border mobility really are.
(8) When individuals who have requested recognition from a Competent Authority realize the full national requirements of the aptitude test, many do not continue. The result is a miniscule number of aptitude tests per year for accountancy and audit in relation to the small number of applications for recognition. For example, in the UK in 2010 where the profession is unregulated, ACCA had three aptitude tests in 2010.
(9) The Commission has concluded that the aptitude test is not a barrier because it is accessible to qualified applicants who wish to take it, but that is not a wholly accurate reflection that captures why candidates choose not take it when they have access to it. A deep knowledge of national tax and law, and perhaps less so the national language, is the barrier and absolutely essential for practice of the profession.
(10) Accountants/Auditors are able to move around as we have established under the Directive, but when faced with learning new national content, they often choose 'avoidance' and choose not to practice, practice on a temporary basis, or choose positions where they do not require signing rights when they move to another MS. More research could confirm why accountants/auditors choose 'avoidance'.
(11) Common platforms have also failed in the past and will provide barriers in some professions even with some reshaping. In trying to overcome similar challenges across different professions, where regulated and unregulated activities are diverse, they end up being more restrictive than current arrangements and do not address the barriers above. Suggestions for:
- shifting to learning outcomes to align the Directive with EQF levels
- improving communication through contact points
- amelioration of the IMI system, and
- encouraging membership with competent authorities
all provide more positive means of improving how the Directive is used without adding extra restrictions.
(12) In the Commission's research, individual citizens stated that unclear procedures and identifying which competent authority to contact and how were their main obstacles, not access to or degree of harmonisation of their training and education. ACCA agrees with the Commission that there needs to be confidence that mechanisms are functioning properly and to recognize them per the Directive such as improving the IMI system or featuring contact points.
International benchmarks over common platforms
(13) In the field of accountancy services which are not usually regulated within Member States, the International Federation of Accountants (IFAC) International Education Standards for Professional Accountants (IES) provide a satisfactory benchmark for the profession which ACCA promotes, along with International Financial Reporting Standards and IFAC's code of ethics.
(14) The 8th Company Law Directive on Statutory Audit already provides a common benchmark or platform for auditors in the field of regulated activities.
(15) ACCA would consider any extra benchmarks unnecessary and therefore add a burden to bodies which could impede rather than facilitate movement. ACCA provides its students and members who are found in a majority of EU Member States with one common qualification that allows them to move from one country to another.
(16) Mutual recognition is clearer for auditors as a result of the 8th Directive which sets out minimum training requirements for Auditors. It also clearly defines the scope for an aptitude test. Aptitude tests will differ based on national content but they should not exceed the PQD Directive. The FEE Qualifications and Market Access working party had looked at doing a survey or mapping of Aptitude tests across Member States to see if a framework could be derived which FEE should be encouraged to prioritize above common platforms as it would provide clarity and a level playing field.
(17) However, the large number of professions covered by the Professional Qualifications Directive is a challenge in itself for simplification. There is a need to be a realistic about how simplistic the recognition of professional qualifications could and should be, also taking into account the aspects of consumer protection and trust. The maintenance of professional competences is important within different professions and to simplify and embed these within the Directive could prove challenging - particular attention might need to be given to liberal professions, who are in many cases self-regulated.
ANSWERS TO QUESTIONS
Question 1: Do you have any comments on the respective roles of the competent authorities in the Member State of departure and the receiving Member State?
(18) A1: There are benefits to having a professional passport or card and ACCA agrees with the Commissions approach that new technologies could make this an effective tool in the future to provide fast and safe information, for example confirming certified copies of documentation by Competent Authorities. Issues around administration and cost will present obstacles to the implementation of this but in non-regulated MS of departure, designating a competent public authority, such as UK NARIC, (a National Agency responsible for providing information, advice and expert opinion on vocational, academic and professional skills and qualifications from over 180 countries worldwide) to issue the cards, could increase their feasibility.
(19) There is also an issue centred on integrity of information over time that will need solutions to make it an effective tool for integrating professions. Many members of professional bodies, such as ACCA, have a certificate of membership that provides the same information..
(20) For sectoral professions that benefit from automatic recognition, identifying the Competent Authority is straightforward. The difficulty has been in the case of the General System professions, where there are regulated and non-regulated professions and it is different across Member States. Perhaps the card could indicate if the profession is regulated as the Commission has identified this as an area of confusion by individuals and Competent Authorities.
(21) The Commission has said that these issues have been explored and that questions of content and format will be addressed at the Single Market Forum in Poland in October.
(22) The appropriate physical or virtual format of a professional 'card' should be subject to the latest developments of technology.
a) Temporary Mobility
Option 1: the card would make any declaration which Member States can currently require under Article 7 of the Directive redundant.
(23) A2a1: Member states have the option to require a declaration. If it is redundant then it should be removed. This would simplify the procedure.
Option 2: the declaration regime is maintained but the card could be presented in place of any accompanying documents.
(24) A2a2: If the card is limited to demonstrating that a Competent Authority has verified documents for entry, and is not commenting on their status as a member which needs to be updated regularly (i.e. complied with CPD), then the card could complement the declaration.
b) The card holder seeks automatic recognition of his qualifications: presentation of the card would accelerate the recognition procedure (receiving Member State should take a decision within two weeks instead of three months).
(25) A2b: In cases of Automatic Recognition the Competent Authority is easily identifiable in receiving and Member State of Departure and both have access rights to IMI so there may be question to the benefits the card could provide.
(26) The Statutory Audit Directive requires entry into a public register, electronically accessible to the public, so there does not seem sufficient need for a card.
c) The card holder seeks recognition of his qualifications which are not subject to automatic recognition (the general system): presentation of the card would accelerate the recognition procedure (receiving Member State would have to take a decision within one month instead of four months).
(27) A2c: This could reduce the amount of time for a decision, although integrating new principles such as partial access or common platforms could lengthen the process especially for those from non-participating Member States. The issue in the past for recognition of qualifications has been identifying the appropriate Competent Authority and the comparability between regulated and unregulated areas of activity so this is the challenge for such a card. It may identify Competent Authorities and speed recognition of documents required for recognition. It will not likely help citizens to understand the differences in their title and the requirement for an aptitude test in the local language which has been the main point of confusion.
Question 3: Do you agree that there would be important advantages to inserting the principle of partial access and specific criteria for its application into the Directive? (Please provide specific reasons for any derogation from the principle.)
(28) A3: This principle attempts to recognize areas of activity and training for a qualified person where there is overlap in the scope of activities between professions especially when one is regulated and the other isn't. ACCA agrees with this principle and it seems a much more effective means to identify common areas of minimum training requirements than common platforms. However, how partial access could work in practice is the challenge so as to not add more confusion to the market and consumers.
(29) The Commission suggests a 'criteria-based approach' to which the principle would apply. It must be possible to separate it says, the economic activity which the professional wishes to pursue in the receiving Member State from the rest of the activities covered by a profession in that Member State. Language has been an obstacle to the comparability and assessment of qualifications by competent authorities so it could create more of a burden for citizens or competent authorities who must translate their syllabus and maintain it in translated form.
(30) The European Commission asks whether the case-law on partial access should be included into the Professional Qualifications Directive. When analysing the Court decision, questions were raised on how such partial access could work in practice. As far as the accountancy profession is concerned, the application of such rules on partial recognition would most likely arise in exceptional cases, because many activities are not regulated.
Question 4: Do you support lowering the current threshold of two-thirds of the Member States to one-third (i.e. nine out of twenty seven Member States) as a condition for the creation of a common platform? Do you agree on the need for an Internal Market test (based on the proportionality principle) to ensure a common platform does not constitute a barrier for service providers from non-participating Member States? (Please give specific arguments for or against this approach.)
(31) A4: ACCA does not support the concept of common platforms and does not advocate a lowering of the number of member states as a way to increase chances of approval. The main issue with common platforms has been the concept itself, and as assessed in the European Commission's report and highlighted in the MEP McClarkin's draft report on the Green Paper, it is largely recognized that the common platform system has failed, amongst others reasons because it proved difficult to agree among Member States on the detail and even more difficult in countries where several competent authorities exist. Reaching a quorum of nine Member States seems to be highly questionable as a basis for a 'minimum harmonisation' in the Internal Market and leaves open the question of Members not on the platform.
(32) Common platforms, have proven overly burdensome to create and maintain and do not necessarily provide any benefit not already provided by the Directive on Statutory Audit in the case of auditors and the Professional Qualifications Directive in the accountancy sector which is largely unregulated in Member States. Nor do they solve the obstacles identified in accountancy and audit, which were related to differences in regulatory environment, language and nationally set criteria.
(33) There is no incentive for many EU bodies to join when there is no legal or market motivation as to the benefit. Having an optional or partial common platform at least in the accountancy profession, will not help to reduce compensation measures which are based on the national tax and law and will actually create new barriers to movement across national borders.
(34) , The 'Common Content Project', which sees nine of Europe's accountancy Institutes working together to bring their professional qualifications closer together is an example of a partial platform or common initiative, but it is a private initiative and outside the scope of the Directive. It has not added any new members other than the founding nine since it was created despite advertising being open to new members, which would indicate the lack of incentive by other bodies or the burden a body would undertake to map to their qualifications. There may also be objection by other bodies to benchmarking to a standard that was not set by them. ACCA already provides its students and members who are found in a majority of EU Member States, with one common qualification that allows them to move from one country to another.
Reshaping common platforms
(35) In the past the Commission has ruled that it is up to employers to make the decision if they hire a professional who is qualified and a member of a professional body, especially in unregulated activities. ACCA agrees with the Commission on this point and promotion of the Directives and membership to professional bodies would provide a better solution than a common platform.
(36) An Internal Market test as a safe-guard is not satisfactory to justify the creation of a common platform in the first instance and is a long way from appeasing concerns from other bodies about the danger that a common platform could create a cartel of participating member states that exclude many able people because of the time and resource it would require to 'join' the club when there is not a market-driven need.
(37) Promoting of the European Qualifications Framework, and a system of levels based on learning outcomes, is more in line with educational practices and could inject more confidence into the recognition procedure. It could prove a more effective tool for information exchange and qualification recognition. Professional and Academic institutions should be encouraged to refer to the levels and to understand how their learning outcomes fit with the EQF so that it can be used as the translation device between MS and qualifications as originally conceived. As a recommendation, it seems bodies are slow to pick this up but also many organizations are converting from input to output methods so this could also contribute to the slow alignment and use of the framework. Any common platforms in other professions should also be able to present their learning outcomes in a complementary way to the EQF to maximise use of tools that already exist.
Question 5: Do you know any regulated professions where EU citizens might effectively face such situations? Please explain the profession, the qualifications and for which reasons these situations would not be justifiable.
(38) A5: This question relates to cases where full retraining is required as a compensation measure, even from a professional who has been working satisfactorily in his home Member State.
Question 6: Would you support an obligation for Member States to ensure that information on the competent authorities and the required documents for the recognition of professional qualifications is available through a central on line access point in each Member State? Would you support an obligation to enable online completion of recognition procedures for all professionals? (Please give specific arguments for or against this approach).
(39) A6: Yes, ACCA supports central access points and sharing information among Competent Authorities to verify status of its Members. ACCA also supports new technologies and their future use for recognition procedures providing the data security and integrity are maintained.
(40) The NCPs should provide links to all Competent Authorities and links to all regulated professions in that Member State.
(41) As the points of single contact under the Services Directive appear to be already equipped to provide service providers online with any relevant information relating to their activities (regulations, procedures, deadline) and allow service providers to complete electronically all the administrative procedures necessary for the access to and exercise of a service activity, including the procedures for the recognition of qualifications, it appears reasonable to use those points of single contact also for Professional Qualifications Directive.
Question 7: Do you agree that the requirement of two years' professional experience in the case of a professional coming from a non-regulating Member State should be lifted in case of consumers crossing borders and not choosing a local professional in the host Member State? Should the host Member State still be entitled to require a prior declaration in this case? (Please give specific arguments for or against this approach.)
(42) A7: The Statutory Audit Directive already requires a minimum of three years practical experience, and many professional accountancy qualifications including ACCA, also require three years based upon International Education Standard 5 (IES5) issued by the International Accounting Education Standards Board (IAESB).
(43) It is up to the receiving Member State if they want to require a declaration. Two years professional experience is a minimum as some Member States require more. The Commission would eliminate this if it deletes Article 11 of the Directive which it has suggested. It asks why professionals with less experience than 2 years should be excluded from the 'General System' and ACCA agrees there is a point here.
(44) As mentioned in the response to Question 2, we suggest that the declaration regime is maintained but the card could be presented instead of any accompanying documents.
Question 8: Do you agree that the notion of 'regulated education and training' could encompass all training recognised by a Member State which is relevant to a profession and not only the training which is explicitly geared towards a specific profession? (Please give specific arguments for or against this approach.)
(45) A8: In principle the approach outlined in the Green Paper could be plausible. However it is of less relevance to the accountancy profession because the type of general 'transferable' skills mentioned covers only a small subset of skills required for the profession because technical knowledge and competence are seminal for delivery of quality services in this area.
Question 9: Would you support the deletion of the classification outlined in Article 11 (including Annex II)? (Please give specific arguments for or against this approach).
(46) A9: Yes, delete the five levels per Article 11 but they must be replaced with some other system of levels, for example the EQF levels. There needs to be a way to map the intellectual level of the professional work to a commonly accepted framework.
(47) We are not in favour of deleting Article 11, because it lays down the different levels of professional qualifications for applying the conditions for recognition (Article 13), although the accountancy profession is not concerned by Annex II (List of courses having a special structure referred to in Article 11 such as paramedical and childcare, master craftsman, seafaring and technical sector).
(48) There needs to be a way to map the intellectual level of the professional qualification to a commonly accepted framework. Although we support simplification, we cannot support measures that might dilute qualifications. There is a need to be a realistic about how simplistic the recognition of professional qualifications could and should be, also taking into account the aspects of consumer protection and trust. The maintenance of professional competences is important within different professions and to simplify and embed these within the Directive is challenging. For Statutory audit, the 8th Directive prevails in the case of Continuing Professional Development.
(49) A system without Article 11 could prove to become extremely complex and might also have some potential to involve additional cost for professionals and competent authorities.
Question 10: If Article 11 of the Directive is deleted, should the four steps outlined above be implemented in a modernised Directive? If you do not support the implementation of all four steps, would any of them be acceptable to you? (Please give specific arguments for or against all or each of the steps.)
(50) A10: We do not recommend the deletion of Article 11
As outlined in the response to question 9, we do not recommend the deletion of Article 11, at least not without an alternative set of levels (possibly EQF) to use as reference.
(51) As far as possible excessive compensation measures are concerned, harmonisation of the administrative aspects of the aptitude test (duration, frequency, form etc.) could help. Full implementation of the Directive and adherence could improve the situation. A common platform would be an overly complex way to achieve this especially when aptitude tests are based on nationally set criteria.
Question 11: Would you support extending the benefits of the Directive to graduates from academic training who wish to complete a period of remunerated supervised practical experience in the profession abroad? (Please give specific arguments for or against this approach.)
(52) A11: The Directive would like to provide a chance to recognize professionals who have completed their studies but who are not fully qualified and ACCA agrees it is important to facilitate mobility for graduates who are not yet fully qualified professionals because they have not completed their term of required professional experience and who seek to obtain required experience in another Member State. As accountancy is unregulated in most Member States, this has not been a barrier.
(53) ACCA has students who have completed their theoretical requirement for Membership but who are working towards their experience requirements, are able to do this in any European Member State. ACCA requires three years of experiential learning in the workplace, in a relevant role, supervised by a qualified mentor.
There is no barrier from the Directive unless they are seeking audit experience in which case it is regulated differently by the Public Oversight Board in the UK which recognizes experience in some Member States and not others. The Commision could encourage cooperation between POBs to set criteria or a framework for audit experience to improve mobility.
(54) The existing legal framework allows mobility of trainees. As stated in the Statutory Audit Directive, at least two thirds of the three years' practical training shall be completed with a statutory auditor or audit firm approved in any Member State. Two years training can therefore explicitly be completed in another Member State. The Statutory Audit Directive does not indicate where and with whom the third year has to be completed. As a consequence, it could be allowed with another employer (who does not need to be statutory auditor) in any Member State. Therefore, even the whole training period could be followed in another Member State.
(55) In a precedent case, the Morgenbesser case it should be possible for citizens to undertake a period of remunerated supervised practice, especially if it is offered in the home Member State. As far as professionals providing accountancy services other than statutory audit are concerned, the principles of the Morgenbesser ruling (graduates from academic training to be allowed completing a period of remunerated supervised practical experience in the profession abroad and the Member State of departure would have to recognise the traineeship) could be applicable where the profession is regulated in the relevant Member States.
Question 24: Do you consider it necessary to make adjustments to the treatment of EU citizens holding third country qualifications under the Directive, for example by reducing the three years rule in Article 3 (3)? Would you welcome such adjustment also for third country nationals, including those falling under the European Neighbourhood Policy, who benefit from an equal treatment clause under relevant European legislation? (Please give specific arguments for or against this approach.)
(56) A26: Regarding statutory audit services, the requirements laid down in the Statutory Audit Directive prevail.