The objective of these transatlantic negotiations was to facilitate easier movement for auditors, particularly those working at major firms on the accounts of large financial institutions and dual-listed companies. Proponents believed a mutual recognition agreement would also attract talent to the City of London and create new career paths.

A pilot programme, initiated in 2018 between US professional bodies and the Institute of Chartered Accountants of Scotland (ICAS), allowed limited recognition of qualifications. However, this pilot, extended twice during ongoing negotiations, was allowed to lapse last year. Efforts to broaden the agreement to include England and Wales, and specifically to permit US accountants to perform statutory audit work in the UK, have faltered.

Key obstacles include difficulties in agreeing on how to verify that US auditors possess the skills required under UK regulations, which mandate specific extra work for an audit qualification needed to sign off company accounts. Bruce Cartwright, chief executive of ICAS, noted that while there was consensus that US audit experience could contribute towards the UK qualification, designing an effective oversight system proved contentious. The American Institute of Certified Public Accountants (AICPA) stated it expects reciprocal consideration for US CPAs, Financial Times reports.

Further complicating matters is the reported reluctance from the US side to include the Association of Chartered Certified Accountants (ACCA), one of the UK’s three main qualifying bodies, in the negotiations, which have primarily involved ICAS and the Institute of Chartered Accountants in England and Wales (ICAEW). The ACCA maintains that any agreement approved by the UK’s audit regulator, the Financial Reporting Council (FRC), should apply universally to all UK bodies.

Despite the suspension of talks – described by Mr Cartwright as “suspended, not ended” – there remains support for an agreement.

The UK government sees mutual recognition as a way to boost domestic audit skills and help UK firms secure international work, even proposing legislative changes to accommodate foreign experience. The Big Four accounting firms (Deloitte, EY, KPMG, and PwC) have also indicated their support, emphasising the importance of talent mobility for complex international audits. The FRC has expressed hope that discussions will resume to resolve this long-standing issue.