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Open up the EU accountancy markets

Free movement, not more regulation, is what the English institute seeks from Brussels. Andrew Marshall reports
The European Union does not need a new set of accounting standards, duplicating those at national and international level, according to Roger Lawson, the president of the Institute of Chartered Accountants. Instead, it should concentrate on removing the barriers to trade in accounting services.

There are about 300,000 accountants in Europe, and a third of them are members of the institute. So when Mr Lawson comes to Brussels, he speaks with some authority. There is also a hidden army of British accountants in the EU, some 4,000, with about 300 in Brussels. Many are working for the Commission, often on secondment from their firms for a short period.

Mr Lawson made one of his regular visits to the EU's headquarters this month to see the Commission's financial services director-general, but also other senior officials dealing with everything from the mutual recognition of qualifications to questions of liability.

Mr Lawson is sceptical of the Commission's efforts to promote the idea of a set of pan-European accounting standards. "We'd be inclined not to support it," he says. There is already a European forum for discussion of accounting problems. "We feel that's a very helpful place for an exchange of views," he adds. He is keen to emphasise, though, that this is not outright opposition but part of a wider debate about how the EU should handle accounting services in the single market.

"In the UK, we have a long-established history of accounting standards through the Accounting Standards Board," Mr Lawson says. And the International Accounting Standards Committee plays a similar role internationally. Another layer of regulation would be cumbersome, he says. "There would be an element of duplication. It would be a third tier."

The ICA is promoting efforts to reduce barriers to the free movement of accounting services and accountants in the EU, and sees these as a higher priority. There is already a directive on the mutual recognition of services that allows accountants to work abroad without requalifying, and the ICA would like to see enforcement of that toughened. "The rules appear to exist, but people are not getting in," he says. In particular, Spain, Italy and Greece are difficult, he says.

"There are still problems for our members there," says Susan Humphry, the ICA's deputy director for international affairs.

But mutual recognition is only a small step. Indeed, so far lawyers have used it far more than accountants. There were only 15 applications to use it for accounting in 1993.

Instead, the ICA would like Brussels to go ahead with a directive covering the sector that would open markets in a more thorough way, including for cross-border services, and allowing mutual recognition for firms rather than individuals. There are still differences between the states about how they regulate their accountants, that hamper the expansion of British firms.

British accountants are highly regarded, though the profession is not as influential as it was 30 years ago when it shaped the development of the sector across Europe. The ICA tries to keep a high profile in Europe. Last year, it brought to Brussels an exhibition on Luca Pacioli, the Venetian who invented double-entry book-keeping five centuries ago and could be said to have started the whole business.

Some of its efforts are aimed at exchanging information on - and by extension, shaping - legislation. But it also tries to keep its members up to date on new developments.

The ICA maintains an office of three people in Brussels. They field inquiries from the institute's members in Britain and abroad on EU matters. The larger accounting firms will have little difficulty in keeping track of the EU, and many have offices in Brussels. "But we have a lot of small and medium-sized members," says Julian Paleson, head of European affairs for the institute in Brussels. "It is our responsibility to let them know what's going on."