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CPA in India

  • 2019-12-26
  • In CPA USA
CPA in India

With globalization entering the Indian subcontinent, the CPA qualification has gained popularity in India. Indian companies that are publicly listed in the United States require CPA professionals who can comply with the U.S. financial and auditing standards. CPA is the highest professional accounting qualification in the U.S.A. and is recognized internationally, including India. The CPA qualification in the US is similar to the CA Qualification In India. The American Institute of Certified Public Accountants (AICPA) conducts Uniform CPA exam. CPA Professional have thorough and complete knowledge of Accounting principles of the U.S (US- GAAP). The services of US CPA are required in all areas of the business world.

A number of multinational companies are heading to India for its growing workforce, seeking people in the accounting domain with knowledge of U.S. GAAP (Generally Accepted Accounting Principles) and GAAS (Generally Accepted Auditing Standards). Indian corporates, due to listing requirements of U.S. Stock Exchanges, are increasingly requiring specialists with knowledge of the U.S CPAs.

Another reason which made CPA a lucrative career option is the emergence of India as an Information Technology (IT) and Business Process Outsourcing (BPO) hub. Since most of the Indian BPOs are carrying out accounting, taxation and other back office activities for US companies in India, the CPA designation could be a way to a rewarding career in public accounting.

There have been multinational companies entering India for regional expansion in the past decades. The reporting of the Indian regional office needs to be integrated with the global accounts, and this needs to be done in accordance to US GAAP (for US companies) or to IFRS.

In the past, these corporations rely on Indian CAs to do the work, and through on-the-job training, they were able to complete the accounts in US GAAP for financial and compliance reporting. It is understandable though that there were often errors and inconsistency in the work given the inadequate training and supervision. This has created issues with SEC and US regulatory bodies.

Therefore, there is an ever increasing demand for US CPAs stationed in India for US GAAP reporting and general controller role for US subsidiaries in India. At the same time, global Indian companies publicly listed in the US (e.g. Wipro) require US CPAs for quarterly and annual financials, Sarbane Oxley and other compliance reporting and documentation.

 

Basic Requirement

All CPA candidates are expected to fulfill the “3E” requirements: Education, Exam and Experience.

Each state board has slightly different rules, but in general, the steps are:

· Obtain a “standard” bachelor degree (in the US, this means 4 years or more), together with 150 credit hour of general higher education. Students typically get 30 credit hours in each academic year. This means state boards are looking for 5 years, but some of these can be from non-degree courses from US regionally accredited universities.

· Pass the CPA exam. There are 4 parts to be completed within 18 months

· Fulfill your experience requirement and get properly verified

1A. The 4-Year Bachelor Degree Rule

The tertiary degree system in India is different from that of the US – the bachelor program in India is 3 years, versus 4 years in the US. Because of this, Indian CPA candidates cannot fulfill the first requirement of obtaining a 4-year bachelor degree.In the past, there have been 3 solutions:

(a) Apply through Delaware

For years Delaware was the only state that recognizes “associate degree” including 3-year non-US bachelor degree. However, Delaware has changed its rules in August 2012.

Nowadays no state board allows associate degree or 3-year degree holders to get the CPA license.

(b) Apply through Colorado or Michigan

Colorado and Michigan used to recognize CA certificate as a prerequisite to sit for the exam, and many Indian candidates applied through them. However, they have since changed the interpretation of the rules in 2009 and 2012 respectively and it no longer works.

(c) Apply through a few states that recognize Indian Chartered Accountancy

It is a big challenge for B.COM with or without CA to pass this rule.If you have B.COM only and are serious about getting your CPA qualification, I suggest that you take a 2-year master’s degree in accounting, e.g. MCOM. At this stage I can’t see an easy way out. If you have B.COM + CA, it may work, but the process is complicated.

1B. The 150 Credit Hour Rule

One year of university typically equals to 90 credit hours. For a 3-year B.COM degree, you get 90 credit hours. In the past, a CA certificate gave you an additional of around 40 credit hours. With 90+40=130 credit hours you can get qualified for a few states. However, since 2012 chartered accountancy has been considered a “experience qualification” rather than an “academic qualification” and most state boards no longer grant credits towards the educational requirements.

Fortunately there are solutions to this rule. If you have:

(a) BCOM + related master’s (e.g. MCOM or Master’s in Accounting or tax), it is counted as 3+2 years = 5 years. You are fine and can start the application process.

(b) If you have BCOM + non-accounting master’s (e.g. MBA), you may need to take additional accounting courses to fulfill the minimum accounting requirements. To determine if this is necessary, get a credential evaluation report.

(c) If you are BCOM + Indian CA, explore whether it’s worth the effort to get the US CPA.

(d) 4-year degree or equivalent (e.g. BCOM + 1 year of master’s), you can make up for the remaining 30 credit hours with non-degree courses.

For (b), (c) and (d), there will be extra time, money and effort involved, but it is doable.

1C. Applying for the CPA Exam

If you are fine with 1A and 1B above, you should be able to find a state that you can qualify.Once a State Board is chosen, the next step is to send your Indian transcripts and marksheets to the foreign credential evaluation agency.Whether the evaluation is required depends on where you get the education, and not your nationality. For example, if you are an Indian international student graduated from a US university, no evaluation is needed. On the other hand, if you are a US citizen studying abroad for a year, then you need to submit an evaluation report for that year.

The evaluators will normally send the report directly to state board (please double check with them). For the portion of education you may have obtained in the US, please arrange the transcript to be sent directly from your school to the state board.

2. Taking the CPA Exam

(a) Getting the NTS: Once your application is approved, the state board will email/send out a Notice To Schedule(NTS) that allows you to schedule your exam at a chosen prometric center.

(b) Selecting a Testing Center : You can register in one state and physically take the exam in another. For example, the Virginia requirements is favorable for you and you register there, but you want to stay at relative’s house in San Francisco. You can certainly take the exam in California. Since September 2014, Indian citizens and permanent residents can sit for the exam in the Middle East. Please be aware of the certain restriction of taking exams outside of US jurisdiction.

(c)Preparing for the Exam :This is in fact an “easier” step for most international candidates, because, things are finally somewhat under your control

3. Experience Requirement

This is an important consideration for picking the right state BEFORE you apply for the exam. This is often another bottle neck for Indian and other international candidates. Most state boards only recognize “relevant” experience that is “properly verified”.

(a) Relevance: Most states are fine with general accounting experience, but a few states only recognize public accounting i.e. auditing or related work in a CPA firm. This means that corporate, non-profit organization and non-US government agencies your experience cannot be counted, or are discounted.

(b) Proper verification: For most states, experience must be verified by an actively licensed US CPA during the time you work(ed) for him/her. Most states require that this person to be your direct supervisor. Some states allow “CPA equivalent”, which usually means a Canadian CA or Australian CA, but for the exact definition you will have to check with your State Board.

For work experience in India, unless you work under a US CPA, your experience may not be counted. I know it is frustrating but we have to play by the rules.

 

 

About Simandhar education

Simandhar is official partners of Becker and AICPA , offices in Bangalore, Hyderabad, Delhi, Ahmedabad gurgaon,Kerala and mumbai

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