Introduction
The category of accounting comprises services such as auditing of accounting records, designing financial and accounting systems, preparing financial statements, developing budgets, tax planning and preparation, processing payrolls, bookkeeping, and billing. In 2020, the United States had a $115 million trade deficit in accounting services with Canada. That fiscal year, U.S. exports to Canada in accounting services totaled $335 million and U.S. imports from Canada reached $450 million.
Canada is the second largest destination market for U.S. accounting services exports and the fourth largest source of imports of accounting services to the United States. In 2020, accounting services exports to Canada represented 9.9% of total U.S. accounting services exports and 7.1% of total U.S. accounting services imports.
This dashboard is interactive – click or hover on the graph to view additional data points and details.
Note: Unless otherwise specified, all currency values provided in this profile are in U.S. Dollars. This profile was compiled primarily by Daniel Nickson, intern for ITA’s Office of Supply Chain, Professional and Business Services in 2021.
Primary data source: Bureau of Economic Analysis, “International Data, International Services, Table 2.2. U.S. Trade in Services, by Type of Service and by Country or Affiliation,” Release Date: July 2, 2021.
Canadian Accounting Services Market
Canada is the second largest destination for United States accounting service exports and the third largest source of imports of accounting services to the United States. According to Statistics Canada, the operating revenue of the accounting, tax preparation, bookkeeping and payroll services industry in Canada increased by 5.2% to $21.4 billion in 2019.1 While overall revenue increased, the industry as a whole experienced a modest decline in profit margins year over year - from 27% to 26.8% - based on increases in operating expenses which rose 5.5% to $15.7 billion. The accounting industry in Canada is relatively concentrated, with the top 10 companies representing 47% of operating revenue across the industry. Regionally, the distribution of operating revenue across the industry is spread primarily between Ontario (43.5%), Quebec (19.4%), British Columbia (14.7%), and Alberta (13%).
According to the OECD’s Services Trade Restrictiveness Index (STRI), which measures certain countries’ trade restrictiveness by services sector on a scale of relative openness, Canada’s accounting sector is relatively more open to foreign service providers than the average of the 48 countries evaluated in the STRI.2 Canada’s STRI score on accounting services in 2020 was 0.22, on a zero to one scale (with zero representing an open market and one representing a market completely closed to foreign services providers).3 In 2019, a majority of trade barriers in Canada’s accounting sector were restrictions on foreign entry and restrictions to movement of people.4
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––-
1 Statistics Canada, “Top Ten Companies Drive Growth in the Accounting Services Industry in 2019,” November 30, 2021. Available: https://www150.statcan.gc.ca/n1/daily-quotidien/201130/dq201130e-eng.htm.
2 Organization for Economic Cooperation and Development, “OECD Services Trade Restrictiveness Index (STRI): STRI Sector Brief: Accounting Services 2020,” January 2021. Available: https://www.oecd.org/trade/topics/services-trade/documents/oecd-stri-sector-note-accounting.pdf.
3 Organization for Economic Cooperation and Development, “Compare Your Country: Services Trade Restrictiveness Index.” Available: http://www.compareyourcountry.org/service-trade-restrictions. Organization for Economic Cooperation and Development, “Services Trade Restrictiveness Index (STRI): Legal and Accounting Services,” November 4, 2014. Available: https://www.oecd-ilibrary.org/trade/services-trade-restrictiveness-index-stri-legal-and-accounting-services_5jxt4nkg9g24-en.
4 Organization for Economic Cooperation and Development, “OECD Services Trade Restrictiveness Index (STRI): Canada 2019,” December 2019. Available: https://www.oecd.org/trade/topics/services-trade/documents/oecd-stri-country-note-canada.pdf.
Challenges
The United States and Canada each have their own standards and requirements regarding accounting and each follow their own process for certifying professionals. The certified public accountant (CPA) in the United States is a comparable designation to the chartered professional accountant (also known as CPA) in Canada, but the designations cannot be used interchangeably. Subtle but significant differences in reporting standards and certification processes require accountants working across the United States and Canada to comply with state and provincial regulations that increase the friction for firms operating across the border. According to the Chartered Professional Accountants of Canada, the accounting profession in Canada is regulated at the provincial level, while the timing for integration and use of the CPA designation varies across regions.1 These provincial regulations on CPA certification take precedence over national practical experience requirements and vary across jurisdiction.2 Canada’s professional interest groups on accounting services exist at the national, provincial, and regional levels, which has remained an obstacle for forming a unified CPA body. Despite the friction, there are companies that routinely serve customers in both countries, and accounting services is generally well integrated across the United States and Canada.
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
1 Chartered Professional Accountants (CPA) Canada, “CPA Provincial and Regional Accounting Bodies,” 2021. Available: https://www.cpacanada.ca/en/the-cpa-profession/cpa-provincial-and-regional-accounting-bodies#:~:text=The%20professional%20interests%20of%20CPAs,is%20different%20across%20the%20regions
2 Chartered Professional Accountants (CPA) Canada, “U.S. CPAs Seeking Canadian CPA Designation,” 2021. Available: https://www.cpacanada.ca/en/become-a-cpa/international-credential-recognition/international-recognition-agreements/international-members-seeking-canadian-cpa/us-cpas-seeking-canadian-cpa
Opportunities
On November 1, 2017, the professional accounting bodies in the United States, Canada, and Mexico signed a trilateral mutual recognition agreement (MRA) that renewed a 2002 legacy agreement.1 This renewed agreement was signed between the Chartered Professional Accountants of Canada (CPA Canada), on behalf of the CPA provincial and territorial bodies; the International Qualifications Appraisal Board (IQAB) representing the National Association of State Boards of Accountancy (NASBA) and American Institute of Certified Public Accountants (AICPA); and two Mexican accounting bodies.
U.S. CPA candidates seeking the Canadian equivalent designation via this MRA must have at least 150 semester hours of college or university education along with State Board certification of a baccalaureate or higher degree, pass the Uniform CPA Examination, obtain 30 months of relevant practical experience, and comply with the Continuing Professional Education (CPE) requirements of the State Board in which the accountant was certified.2 Additional requirements and exclusions may apply, but the MRA has considerably simplified trade in accounting services between the United States and Canada. To obtain the CPA designation in Canada, accounting professionals from the United States must register with the appropriate provincial or regional body. This can be done by completing the International Candidate Application Form with the appropriate regulatory body from that region, along with paying any fees associated with the application, and completing Certification of Membership with a State Board, as well as confirmation of good standing with the relevant home institute. To maintain membership through the regional CPA body, applicants from the United States must complete the CPA Reciprocity Professional Development (CPARPD) course within two years of the membership admission date.
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
1 National Association of State Boards of Accountancy (NASBA), “Mutual Recognition Agreement,” 2017. Available: https://nasba.org/app/uploads/2017/12/MRA-between-IMPC-CPAC-COMPIC-NASBA-AICPA-11.1.17.pdf.
2 Chartered Professional Accountants (CPA) Canada, “U.S. CPAs Seeking Canadian CPA Designation,” 2021. Available: https://www.cpacanada.ca/en/become-a-cpa/international-credential-recognition/international-recognition-agreements/international-members-seeking-canadian-cpa/us-cpas-seeking-canadian-cpa
Contact Us
Are you a U.S. accountant or accounting firm seeking to provide services in Canada? Are you facing any problematic barriers in the Canadian market?
ITA’s Professional and Business Services team is ready to provide expertise and guidance on accounting services trade. ITA also has a network of trade promotion and policy professionals located in several U.S. Commercial Service offices across Canada to assist with additional exporting needs and questions.
Primary ITA Contact on Accounting Services:
Andrew O’Neil
Accounting, Legal, and Consulting Services
Andrew.O’Neil@trade.gov
202.617.5465
Return to Accounting Page
Return to Professional Services Markets: Canada
