Since accountants keep or organize financial information, individuals and businesses will often hire them to assist with tax returns, financial statements or lending agreements. Different types of accountants have varying requirements for education, testing and certifications. If you are interested in becoming an accountant, you may need to decide which accounting certification to pursue for your career path. In this article, we explore the differences between a chartered accountant and a certified public accountant.
What is an accountant?
An accountant inspects and maintains financial and tax documents. They may record financial transactions, identify trends and organize data to create reports. If you wish to be an accountant, there are several types of accounting certifications you can get.
A chartered accountant is a worldwide credential that qualifies an individual to offer financial consultation and keep financial records, and a certified public accountant is an accounting professional who has completed the necessary education and training to become a public accountant in the United States.
Both types of accountants complete similar tasks in the financial industry. They both offer the same job opportunities and salary expectations. There are different paths to the same type of position, so you probably don’t need to earn both certifications.
If you live in a country outside of the U.S. or you have already completed an undergraduate degree in an industry other than accounting, then you might consider a chartered accountant certification. If you are living in the U.S. and have already completed an undergraduate degree in accounting, then you might consider becoming a certified public accountant.
CA versus CPA qualifications
Consider the following differences when deciding which certification is right for you:
1. Governing boards
Different regulatory boards oversee two accounting certifications. Many of these boards have a reciprocity agreement, meaning that if you become certified as a CA in another country and have the document to identify that, then you can work as an accountant in the U.S. CPAs fall under the jurisdiction of the American Institute of Certified Public Accountants governs. Only individuals in the U.S. are eligible to be a CPA.
Chartered accountants are governed by different organizations depending on the location of the individual. A few of these boards include the Chartered Accountants of Scotland, the Institute of Chartered Accountants of India and the Canadian Institute of Chartered Accountants. Many of the CA regulatory boards are in other countries, so you will often find more CPAs than CAs in the U.S.
2. Educational requirements
The required education for each certification also differs. CPA educational requirements tend to be more strict because there is one board regulating the industry. The educational requirements for the CA certification will vary by location and regulatory board. In order to become a CPA, an applicant must meet the following requirements:
- Be at least 18 years of age
- Be a U.S. citizen with a valid social security number
- Hold a minimum of a bachelor’s degree or have at least 120 hours of undergraduate completed coursework
It is also important to note that educational requirements for a CPA may vary by state. Some states might require that you have more than the minimum 120 hours of completed coursework. Other states require that those credits be in specific classes.
The path to a CPA, on average, takes approximately five years of education followed by one to two years of work experience, then 18 months of exams. Because the governing body and regulations of the chartered accountant differ by location, so do the educational requirements. In order to become a CA, the applicant must:
- Have completed an undergraduate degree (the CA program is a post-graduate program)
- Have educational or professional experience (some boards allow individuals to take on-the-job training instead of formal education)
To be eligible for the CA exam, you must have between three and five years of experience with an accounting employer that a governing body approved. The path to a CA varies, but it often takes five years of education and two to three years for licensing. In some cases, you can substitute prior accounting experience to shorten your educational requirements.
Related: Accountant Cover Letter
3. Exam requirements
Most institutes require an exam to test your knowledge of coursework and workplace experience. The exam requirements vary depending on the type of certification. Certified public accountants need to pass a CPA exam. CA exams tend to be more educational.
The CPA exam includes four different sections on the following topics:
- Auditing and attestation: This section focuses on financial statements, compliance and processes. It includes test questions about auditing and internal control practices.
- Business environment and concepts: This section includes business concepts as well as the professional duties and expectations of a certified accountant. It includes corporate governance, economic concepts and overall analysis.
- Financial accounting and reporting: This section tests knowledge on concepts and standards of financial statements, types of transactions and accounting events, government reporting and accounting, and nonprofit accounting.
- Regulation: This section of the exam includes topics of business law, ethics and federal taxation.
In order to pass the CPA exam, you must pass all four sections with a score of at least 75 out of 90.
The chartered accountant exam has three levels of testing:
- Certificate level: This level includes six online tests which contain accounting, assurance, business technology, law, management information and principles of taxation.
- Professional stage: This level includes six written papers on various accounting topics.
- Advanced stage: This level includes two integral papers and a completed case study that explains relevant work experience in the industry.
4. Continuing education requirements
Many industries require that you stay informed with the latest practices and techniques through continuing education courses. The specific requirements often vary by state, but both certifications request it. Many employers are willing to pay for the costs of continuing education for the accountants they employ.
A CPA must complete 40 hours of continuing education each year. A minimum of four hours must include professional ethics. The requirements for a CA vary depending on the rules established by the board you follow.