UK and Australian auditors will be able to work more easily between each other’s countries, following a major new agreement.

The Memorandum of Understanding on Reciprocal Arrangements (MOURA) was announced on 28 March following talks between the UK’s Financial Reporting Council (FRC) and the Australian Securities and Investment Commission.

The deal smooths the way for qualified, statutory auditors in either the UK or Australia to apply for recognition of their qualification and audit rights in the other country. 

The FRC says the agreement will boost the quality of the UK audit market by raising the number of skilled, statutory auditors in the nation’s talent pool. In tandem, the deal will make it easier for UK audit firms to export their services to Australia.

According to FRC analysis, the accounting activities sector, including audit, represents a significant part of the UK economy. In 2023 it generated revenues of £44bn, and in 2022 supported more than half a million jobs and accounted for almost £4bn of exports.

Funding from the UK Recognition Arrangements Grant Programme – sponsored by the Department for Business and Trade (DBT) – helped to spur progress towards the deal. The funds supported an independent expert’s analysis of equivalence between Australian audit qualifications and relevant UK credentials.

Strong affinity

FRC Executive Director of Supervision, Sarah Rapson, says the agreement strengthens the UK’s close relationship with a key trading partner and opens up new opportunities for audit firms and UK businesses to grow and expand. 

“It is a positive boost for the UK audit market, widening the pool of talent available to UK audit firms and further enabling firms to export their audit services and improve the quality of their audits.”

Trade Policy Minister Greg Hands adds that the UK is the world’s second-largest services exporter for a reason. “Countries around the world want excellent British services, so it is vital that we make it as easy as possible for UK professionals to sell those services around the world. 

“I am delighted that our trade deal with Australia and the department’s grant programme have supported the FRC in making this arrangement, helping British audit professionals to access the lucrative Australian market.”

Meanwhile, ICAEW Chief Executive Alan Vallance says the “landmark agreement” resonates with his own career path. “Speaking as someone who has qualified and worked in both jurisdictions, I can personally attest to the strong affinity that has always existed between the accountancy professions in the two countries.

“I hope that more of our firms and individual members will now seek opportunities in the Australian market. In return, the current capacity pressure in the UK audit sector can only be eased by the better availability of high-quality statutory auditors from Australia. We look forward to hearing how this will operate in practice,” he adds.

Quality and quantity

Jonathan Jones, ICAEW Director, Policy and Strategy, says that deals like this help to address a “significant problem” with foreign-qualified auditors’ ability to work in the UK. Under the 2006 Companies Act, auditors are required to hold an approved audit qualification to gain UK signing rights. But so far, only a very few overseas qualifications are approved.

Brexit has created additional challenges, Jones says: when the UK was in the EU, mutual recognition was part and parcel of that arrangement. However, EU auditors now fall under the same category as those from further afield.

“This lack of qualification recognition in the UK means that a foreign-qualified auditor – who may be both highly experienced and senior – will have to spend time and effort gaining further, approved UK experience and passing exams here before they can acquire the UK audit qualification,” Jones explains.

It’s a process that takes at least two years and as long as three, Jones explains. “That can be a challenge for UK audit firms and the individuals concerned. “From an employer perspective, the individuals may already possess the same quality and quantity of experience as UK auditors. Qualification recognition deals such as this are a welcome step to improving the situation.”

In the past six months, the FRC has signed similar deals with New Zealand and Switzerland, and is eyeing further agreements “subject to rigorous qualification standards being met”.