The UK has formalised an agreement for mutual recognition of audit qualifications with free trade partner New Zealand – signalling to other international markets that the Financial Reporting Council (FRC) is keen to diversify its talent pool and boost business.
This historic Memorandum of Understanding on Reciprocal Arrangements (MOURA) is a significant step forward that enables auditors to work with greater ease across both nations. The MOURA was signed on 27 September by the FRC and New Zealand’s Financial Markets Authority (FMA), both serving as the competent audit authorities for their respective countries.
The landmark agreement is a direct result of the free trade agreement signed between the UK and New Zealand in February 2022, which included provisions for recognising professional qualifications and encouraged regulators to establish streamlined pathways for qualification recognition to reduce cumbersome and costly requirements.
ICAEW Chief Executive Michael Izza believes this agreement is a positive step for chartered accountants in New Zealand and the UK, and a boost for UK audit firms that will not only improve the quality of the audit markets in both countries, but also enhance auditor mobility.
“This deal is the first of its kind and further reinforces the government’s commitment to recognise professional qualifications internationally. It is a significant move post-Brexit and hopefully the first of many similar deals to be agreed in the near future.
“However, while encouraging, it’s vital that the administration and operation of these deals don’t place a disproportionate burden on applicants or professional bodies, and we’re committed to working with the FRC to ensure the framework is properly introduced,” Izza says.
At a time when demand for financial expertise continues to grow, agreements of this kind could help to address immediate staffing challenges and also foster innovation and collaboration on a global scale, ultimately benefiting the entire industry.
Enabling greater mobility for auditors could also help to mitigate skills shortages in the industry. By fostering a more flexible and globally connected workforce, firms can tap into a broader talent pool and ensure that they have full access to suitably qualified professionals.
How to apply for mutual recognition
Under the MOURA, auditors holding professional qualifications in either the UK or New Zealand can apply for reciprocal recognition of their qualifications and audit privileges in the other country.
The agreement follows detailed analysis by both the FRC and the FMA to ensure the approved qualifications give an assurance of professional competence equivalent to that afforded by a recognised professional qualification. In some cases, applicants may need to complete aptitude tests or undergo an adaptation period.
Sarah Rapson, Acting CEO and Executive Director of Supervision at the FRC, says: “The FRC welcomes this first-of-its-kind agreement, which will attract auditors to the UK, strengthen audit relations between the UK and New Zealand, and support the government’s commitment to recognising professional qualifications internationally.
“It ensures a more efficient pathway for senior auditors to work in both countries, boosting access to a wider pool of auditors, while upholding the high professional standards expected of auditors.”
Samantha Barrass, CEO of the FMA, adds: “This agreement will provide an easier route for experienced UK auditors to work in New Zealand and help strengthen the local auditing industry. The FMA is committed to supporting greater alignment of the two countries’ auditor markets through mutual recognition of professional qualifications that set high consistent standards.”
The MOURA also promises to enhance the quality of the audit markets in both the UK and New Zealand by expanding the talent pool over time and aligns with the interests of accounting firms and professional bodies in both nations. Moreover, it will foster a more resilient audit market in both countries by promoting competition, offering choice and simplifying the process for skilled auditors to move seamlessly between the two countries.
The UK’s Small Business Minister, Kevin Hollinrake, welcomes the deal: “The UK is a services superpower, exporting more than £400bn of services a year. This agreement with New Zealand will open up even more exciting opportunities for UK qualified professionals so they secure new contracts and diversify their business.”
The FRC is actively exploring similar arrangements with other countries deemed vital markets for the UK, with the aim of further diversifying the talent pool. These potential agreements are subject to rigorous assessments of the qualifications involved.
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