What is CPA?
CPA stands for Certified Public Accountant. This qualification is an approved professional qualification from International Federation of Accountants (IFAC) which is the world wide apex body for controlling all the financial professional qualifications in the world.
In India, there are two such financial professional course which are approved by IFAC. One is Chartered Accountant (CA) by Institute of Chartered Accountants of India and the other is Certified Management Accountant (CMA) by Institute of Cost Accountants of India.
In the USA, there are two financial professional courses approved by IFAC. One is Certified Public Accountant (CPA) by Association of International Certified Professional Accountants (AICPA) and the other is Certified Management Accountant (CMA) by Institute of Management Accountants (IMA).
See the complete list of IFAC approve professional bodies here
Both CA and CPA US are called as Public Accounting courses. The advantage of a public accounting course is that you are eligible to do external audits and have the license to sign financial statements of companies which are accepted by the respective government bodies. This also means that after you get certified in these qualification, you may choose to open your own firm and need not necessarily work in any company.
Hence you can see, both USA and India have public accounting courses. However, the structure, exam pattern, evaluation strategy, recognition, job profile, pass ratio, duration, etc are completely different.
This blog is an attempt to educate the prospective finance professionals on which qualification to choose for and what are the benefits and advantages of both of these courses.
Recognition
The CA is recognized only in India. It has little or no value the moment you are outside Indian border. However doing a CA means that you have the license to operate in the complete country and is not specific to any state.
The CPA US is recognized globally across more than 50+ countries. Since the CPA US follows the US-GAPP accounting standard, any countries following the US-GAAP standard will need CPA(US) qualified professionals. In case you are operating in the USA, you will be able to operate in the state from where you apply for the license. Unlike India where the license if applicable for the complete country, in the USA, the license is applicable only for a particular state thru which you apply.
Exams & Pass Ratio
The CA has divided their course into 3 levels
- Foundation (4 papers)
- Intermediate (2 groups with 4 papers each)
- Final (2 groups with 4 papers each)
So, in total, a student will have to clear around 20 exams to be a qualified CA. In case the student is already a graduate, they will need to clear only the Intermediate and the Final which consists of 16 papers. The exams has to be given in sequence. Which means, you need to clear Foundation to be eligible for Intermediate and clear Intermediate to be eligible for Final. However, to move from Intermediate to Final, you will need to do a Article ship under a qualified CA for a certain duration as determined by the ICAI from time to time. Due to the large number of papers, the time taken to complete the CA is between 5 to 7 years.
The pass ratio becomes difficult with the level. The Foundation has the highest pass ratio which hovers between 50-60%. The Intermediate sees a pass ratio of 15-18%. Final exams maintain a pass ratio of 5-7% only. Hence the final pass rate of a CA is only 5-7%
The CPA USA exam on the other hand has a completely different structure. Their course has 4 subjects. There is one exam for each subject which means, you need to clear only 4 exams. Therefore, the time taken to become a CPA US qualified is between 15-20 months only. The exams are not inter dependent, which means you can take any exam first and there is no sequence to be followed. The four papers are as below
FAR – Financial Accounting & Reporting
AUD – Auditing & Attestation
REG – Regulation
BEC – Business Environment & Concepts
From 2024, the BEC will be removed and will be replaced with 3 papers from which you will need to choose any one paper. To read more about the changes by CLICKING HERE
The pass rate of CPA US is around 40-45% which is much higher than the Indian CA
Exam structure & Evaluation Strategy
CA exams consists of groups which has 4 papers each. In order to pass the group, you will need to appear for 4 exams. In each of the papers, you will need to score a minimum of 40% to pass. However, you will need to score an aggregate of 50% to pass the group. In case you fail in any of the above two conditions, you will have to re-appear in all the 4 papers in the group. This is the major reason that CA takes 5-7 years to pass and there are major dropout.
The exams for CA happens 2 times a year. June and in Dec. So in case you are repeating a group due to a fail, you will need to wait for 6 months to re-appear.
The CA exams are held manually and the question patters is descriptive in nature. This means that the date of the exam is fixed and you will need to go to the exam center for each and every paper and sit for the exam on that particular date.
CPA USA exam on the other hand consists of 4 exams only. Each exams are of 4 hour duration. There are various sections in the exam paper which consists of Multiple Choice Questions (MCQ) and Test Based Simulations (TBS). The total passing score is 72%.
There are no fixed date for the exam. The exams are held 365 days in a year. A student can choose their own date and time, based on availability to sit for the exam. The exams are computer based. To give the exam, you will need to first book your exam and then visit the Prometric Center to appear for the exam. All countries do not have exam center. However post Covid, the CPA exam centers are now available in India
Cost
The cost is the amount which you pay to ICAI or AICPA for registration and exam fees.
In case of CA, the total cost is around INR 2 lacs
In case of CPA USA, the total cost is around USD 2825 which is slightly higher than CA
Job opportunity
Since the recognition of CA is only in India, hence job opportunities are available in all Indian companies including Govt services. The starting salary for a fresher is around 6-8 lacs p.a.
CPA USA being globally recognized has more job opportunities. In India, CPA job opportunities lies with the Big4 companies viz. PWC, KPMG, Deloitte & E&Y. Top MNCs like TCS, Wipro, CTS, Infosys, Capgemini, etc also recruits US qualified professionals. The major reason being that most of these companies outsource 90% of their work from the USA. Hence they have more need of USA based qualified professionals rather than the Indian version.
Other than India, the major countries with job opportunities will be North America, Africa, Middle East and South East Asia. There are more than 50+ countries which will recognize this qualification.
MOU with other countries
There is another advantage of doing the CPA US.
Once you have the license, you will have the option to apply for CPA Canada without giving any additional exam. This means that clearing one exam will give you two qualifications
You can also apply for CPA Australia by giving only ONE paper which is the Taxation paper.
So by completing CPA US, you can get CPA Canada without any exams and CPA Australia by giving just one exam. 5 exams and 3 Globally recognized qualifications.
Which option now do you think is a wise decision?
