Regulation and Competition in Professional Services: Accounting Services

Transcription

1 2008/SOM3/GOS/CONF/002 Regulation and Competition in Professional Services: Accounting Services Submitted by: Australia APEC-IDRC Conference on Competition Policy Issues in Services Sectors Lima, Peru 17 August 2008

2 Regulation and Competition in Professional Services: Accounting services Structure of Presentation Australia s approach to competition policy Accounting services trade Australia s trade objectives in accounting Australia s accounting profession self regulation competition challenges 1

3 Approach to competition policy World Trade Organization Australia supported work on trade and competition in the WTO However, negotiations dropped at Cancun Ministerial (2003) APEC Acknowledge work of the Competition Policy and Deregulation Group Free Trade Agreement agenda Australia includes competition policy chapters in its Free Trade Agreements objective is to forbid anticompetitive business conduct and to take action where such conduct occurs Australian Competition and Consumer Commission Accounting services trade Accounting is one of the most global services global accounting firms international accounting standards A strong accounting profession underpins an economy s international competitiveness Sensitive sector for some trading partners Barriers still need to be removed in regional markets 2

4 Australia s trade objectives for accounting services Allow Australian accounting service providers to form partnerships or other forms of commercial association with domestic accounting firms Allow Australian accounting firms to hold majority ownership Allow use of name No nationality requirement for accountants Allow cross-border (Mode 1) provision of accounting services without requiring commercial presence Australia s accounting profession Professional organisations: CPA Australia 117,000 members Institute of Chartered Accountants in Australia 43,000 members National Institute of Accountants 20,000 members 3

5 Services beyond accounting Auditing Insolvency and liquidation Taxation advice Management consulting Financial management Investment advice Human resources General consulting Australia has 3 segments in its accounting provider market Big 4 Global firms PwC, KPMG, EY, Deloitte Second tier 15 next largest firms operate medium to large partnerships and have international affiliations Third tier Small accounting practices, including small partnerships and sole proprietors 4

6 Self-regulation Accountants do not need to be registered or licensed However, in practice, most accountants are members of one of the three accounting professional organisations Self regulation is achieved by market acceptance of professional organisation membership as a marker of quality professional codes of conduct administered by those organisations There are no additional requirements for foreign accountants Exceptions to self-regulation Company auditors and liquidators must register with the Australian Securities and Investments Commission (ASIC) Providers of a financial service (for example, financial product advice) require a licence from ASIC Tax agents must register with the Tax Agents Board 5

7 Operational requirements Accounting standards International Financial Reporting Standards required for Australian corporate financial statements by the Corporations Act 2001 WTO accounting disciplines In 1998, the WTO s Council for Trade in Services adopted disciplines for the accounting sector These disciplines attempt to ensure that rules on qualification requirements, technical standards and licensing requirements do not constitute barriers to trade in services Accounting is the only professional service where the WTO has adopted disciplines These disciplines will be legally binding following conclusion of the Doha Round 6

8 Competition in Accounting Very competitive industry Competition between professional organisations Competition between service providers within the profession Market failures In a self-regulated and competitive market, some accountants may provide poor quality services Poor quality services may lead to inaccurate financial reporting which limits financial transparency for stakeholders Addressing market failures 1. Licensing under legislation tried and rejected in the 1980s 2. Strong code of conduct 3. Differentiate between accounting services accounting professional organisations have attempted to specialise in different target markets CPA for corporate accountants Institute for accountants that work within firms Strategies 2 and 3 are adopted by Australian accountants to ensure lively competitive environment 7

9 Conclusion Australia believes competition policy is an important enabler of global trade Australia seeks greater openness in accounting trade Australia s experience is a successful example of a self-regulated accounting profession Australia also possesses a very competitive accounting industry 8