CA syllabus change brings in drastic reforms to ICAI-organised exams

The Institute of Chartered Accountants of India (ICAI) has come up with a new scheme of preparation and examinations for chartered accountants.

The syllabus reforms which has been in the works for over a year come in the wake of the thrust by the government to set up Indian Institutes of Accounting (IIAs) and have exams on the lines of the IAS, IPS, to introduce competition in the race and bring out the best of the lot.

In doing so, the tests are set to get tougher and make it harder for candidates to clear the exams.

CA Foundation syllabus

A significant portion of the CA Intermediate subjects such as accounting, laws and economics have been moved to the CA Foundation level, making it more tougher.

In Paper 1, accounting is likely to undergo changes. Paper 2 will focus on laws that may probably include the Contract Act and other business laws that were part of CA Inter earlier. Experts believe this is a good move as it lays the foundation for CA candidates.

While there are no changes in Paper 3, Paper 4 could see the business and commercial knowledge sections go. All of economics (micro and macro) will be combined to one place.

The major change in the CA Foundation course is the raising of passing marks. Earlier, students needed to score a minimum of 40% in each subject and have an average of 50% to clear the Foundation. Now they will have to score a minimum of 50% in each subject.

Some experts believe that this will improve the standards of CAs and help cull out the unqualified early in the race.

CA Intermediate syllabus

The CA Intermediate syllabus will go back to pre-2010 times in terms of the subject count — back to six from eight — but they are going to get really tougher.

Paper 1 on accounting and Paper 5 on advanced accounting have been merged into Paper 1. This would see some topics being removed and some being moved to Foundation. This is however going to be tougher for students as the ICAI has mentioned that depth of content will not be compromised.

Paper 2 will see a major change as Corporate Law has been moved from CA Final to Intermediate. Experts believe that this will make it really tough for students as they would not be having the adequate knowledge or experience that comes with articleship which is done after the Inter and before Final. This is a significant change as students will find it difficult to understand the complicated law concepts and their adaptations.

The paper on enterprise information systems, EIS, which deals with information technology has been removed completely as the institute felt the content was not in tune with the times. However, experts noted that there is a need to incorporate latest tech-related subjects in the course, failing which students will lose out.

Paper 8A on financial management and Paper 7B on strategic management have been combined into Paper 6. Paper 8B on economics for finance (largely macroeconomics) has now moved to CA Foundation.

Another significant change in the CA Inter exams is that all subjects will have multiple-choice questions (MCQs) with negative markings. This will continue in the Finals too.

As much as 30% of marks would be for MCQs with 25% negative marking, which is styled on international standards. There is a possibility that the ICAI will increase the weightage of MCQs in later years.

Online modules, the new CA scheme

The ICAI has introduced a new scheme of online modules to be completed at one’s own pace. The modules are to be done after Inter when one registers for practical training, also known as articleship, before the Final.

Economics and other laws: This is one paper that has been moved from the Final to the self-paced online module. laws like FEMA, IBC, SARFESI, PMLA, SCRA, SEBI Act, FCRA, Arbitration and Conciliation Act that were part of the Final paper would be done here.

However, experts feel that the students would miss out on the rigour of preparing for the Final paper while doing the online module in a self-paced manner. Preparing for the full length exam usually prepares students better for the industry, they feel.

Strategic cost management and performance evaluation (SCMPE): This is another of the online module, and was also part of the Final exam like the economics laws paper.

Electives based on core subjects: This online module requires students to pick one subject out of 10 options corresponding to their core subject. Earlier there were only six electives. The 10 subjects widen the option and narrow the focus on the core subjects.

Multidisciplinary traits: The last of the online modules also requires students to pick one elective out of five options — Indian Constitution, psychology, entrepreneurship, communication and philosophy. However, these are quite out of the box for a CA. Experts feel it would have been better if ICAI had added subjects like behavioural economics, data analytics, and block-chain which are more relevant to an accounting professional.

CA Final syllabus

CA Final syllabus too will see a reduction in subject count from eight to six. The papers on corporate and economic laws, SCMPE and electives have been moved to the online module.

Interestingly, one multidisciplinary subject has been added and made compulsory here, and this will help students interlink concepts and aid employers at work. Here too one would find multiple choice questions (MCQ) being given 30% share as in the Inter.

But the most significant change in the CA Final is that it has been made open book or restricted open book exams. Open book exams however come with greater complexity of questions which would leave the students stumped.

Group exams: Earlier the exams required students to clear a group of papers (comprising 3-4 papers) in one set, failing which they had to write all the papers again. To pass, they had to score a minimum of 40 marks in each subject and average of 50 marks in all subjects in a group.

Students were exempt from appearing in one subject if he or she secured more than 60 marks in that subject for the next three attempts. They still had to secure an average of 50 marks across all subjects in the group in those three attempts itself.

Now, students can carry forward this exemption paper to more attempts, but will now have to score an average of 50 marks in remaining subjects in the group.

Course duration, articleship

Another major change in the CA exams is the change in articleship or practical training. The stipend has been doubled but the period of articleship has been reduced from three years to two.

Articleship can be done only after completing CA Inter. Also, CA Final can be taken only six months after completion of the articleship.

Earlier, graduates or postgraduates could directly enrol in articleship through a direct entry method and write CA Inter after nine months of PT. Now these students can enrol for Inter in the last year of graduation and start their articleship immediately.

Whether a student is through Foundation route or direct-entry route, they need to complete eight months of study once they enrol in CA Inter before they can appear for the CA Inter exams.

Very significantly the period of leave for those undergoing industrial training has been reduced to a total of 24 days in 2 years from one-seventh of the articleship period earlier, which typically worked out to about 156 days.

Also, students desirous of obtaining a certificate of practice (CoP) must undergo an additional one year of articleship beyond the two years already completed during their study.

All these changes are at the proposal stage, with the ICAI asking for opinions and responses from the experts and the public. The concrete changes will take time to be put out in the public space. Till then, keep your fingers crossed.