Accounting for International Trade and Investment

University of Mississippi eGrove

American Institute of Certified Public Guides, Handbooks and Manuals Accountants (AICPA) Historical Collection

1954

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 in ternational trade and investment. The following language has been included in a number of recent treaties between the United States and other countries: ACCOUNTING “Nationals and companies of either party shall be permitted to engage within the terri tories of the other party, accountants and other for technical experts, executive personnel, attor neys, agents, and other specialists of their choice. Moreover, such nationals and companies shall INTERNATIONAL be permitted to engage accountants and other technical experts regardless of the extent to which they may have qualified for the practice TRADE of a profession within the territories of such other party for the particular purpose of making examinations, audits and technical investigations and for, and rendering reports to, such nationals and companies in connection with the planning and operation of their enterprises, and the enter INVESTMENT prises in which they have a financial interest within such territories.” Businessmen should support the inclusion of similar clauses in treaties with all coun tries 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 contri bution to expansion of commerce among friendly nations, and to the international Prepared by the flow of capital. It can do much to increase COMMITTEE ON FOREIGN AFFAIRS the security of businessmen and investors OF THE countries other than with interests in their AMERICAN INSTITUTE OF ACCOUNTANTS own. 270 Madison Avenue, New York 16 ACCOUNTING FOR INTERNATIONAL national investment, a number of leading States accounting firms are not primarily in TRADE AND INVESTMENT accounting firms, particularly those with terested in serving local business interests home offices in Great Britain and the United in the countries where they have been estab States, have established branches in other lished. They are not much bothered by United States investors countries. restrictions which specify merely that certi generally take it for granted that the com In addition to providing needed services, fication of financial statements required by panies in which they put their money will be these branch offices have also stimulated de the laws of the country for local purposes audited by independent certified public ac velopment of the accounting profession in must be made by accountants who are na countants. Their willingness to make foreign the countries where they are located. As a tionals of the country. investments can be increased by similar in matter of fact, the early growth of profes They do, however, find it difficult or im dependent audits. sional accounting in the United States was possible to operate under the restrictions of Nationalistic restrictions on the practice due in considerable measure to the English some countries which require that all prin of accounting may constitute a real barrier and Scottish accountants who came to the cipals and employees of the branch office to international trade and investment. country in the nineteenth century primarily be nationals of the country where the branch While progress has been made toward in the interests of British investors. is located, or members of the professional common standards of accounting, auditing, Accounting firms which establish branches accountants’ organization in the country. financial reporting and disclosure which in foreign countries generally employ and Such membership is often impracticable for should ultimately provide a universal lan train nationals of the country in which the foreigners due to local regulations. guage of international finance, this goal has branch is located. It is to be expected, how The basic responsibility of independent not yet been achieved. ever, that in most cases the manager and part accounting firms is to provide accounting Businessmen and investors with interests of the staff should come from the home office. and auditing services which will meet the abroad, as well as those who are now con needs of the businessmen and investors who sidering foreign investments, therefore wish BARRIERS TO are their clients. They cannot operate under to be free to employ accountants and audi INTERNATIONAL ACCOUNTING restrictions which would prevent this. In tors of their own choosing. Often they will In recent years, unfortunately, a number of most cases, it is not possible to provide ade prefer to use accountants of their own na countries have adopted or proposed drastic quate auditing service merely by sending tionality to examine their accounts. restrictions on foreign accountants. accountants to foreign countries for specific Freedom of professionally trained ac It is natural that every nation should wish engagements, without maintaining branch countants to cross national boundaries with to build up its own accounting profession offices, because auditing services have de out unreasonable restrictions is therefore a as rapidly as possible. But the restrictions veloped so that clients now require services vital factor in the further development of are short-sighted even as a means of accom and advice from their accountants through international trade and a freer flow of private plishing this purpose. The need for account out the year. capital across national boundaries. ing service in all countries is so great that the example of a well-known, established REMOVING THE BARRIERS INTERNATIONAL ACCOUNTING FIRMS firm actually increases the opportunities for The United States Department of State has To fill the demand for accounting and audit all other firms. recognized the importance of a free choice ing services which has been created by inter Moreover, foreign branches of United of accounting services to the improvement of