CPA vs. CMA: What’s best for you?

Are you a current or future accountant looking to understand the difference between the Certified Public Accountant (CPA) and Certified Management Accountant (CMA) certifications? If so, you’ve come to the right place. In this article we’ll break down the main differences and present key factors to help you decide between the two designations. Without further ado, let’s get started.

What are the Main Differences Between the CPA and CMA?

In a nutshell, CPAs provide information about a company’s operations to outside parties, such as the IRS, bankers, and creditors. Standardized reporting and regulatory compliance activities are at the center of their work. CPAs are often occupied with audits, income taxes for individuals and companies, and financial reporting. Also, CPAs may have the opportunity to gain wide exposure across many companies and industries around the world.

For their part, CMAs utilize their understanding of financial accounting and strategic management to inform decision-makers within one particular company. The management capabilities that CMAs bring to the table enable them to help solve day-to-day problems. CMAs focus on cost accounting, management reporting, and financial planning and analysis. Corporate finance managers, CFOs, and controllers are well served by the CMA certification. According to CMAcoach.com, the CMA is a much better alternative than getting an MBA, as the skills you learn better prepare you for becoming a CFO.

What Factors Should I Consider When Deciding Between Them?

Name recognition

The CPA designation was established in New York in 1896 and is widely known in the U.S. and throughout the world. So while your grandparents and great-grandparents will likely recognize the CPA, they may not have heard about the CMA. And for that matter, neither will some potential employers. Unlike the CPA, which can travel with you to public or non-public accounting positions, the CMA is useful primarily for those who work for corporations.

Barriers to entry

The CPA is likely to require more work on your part to obtain. You’ll need to address requirements in education, examination, and experience, collectively known as the “3Es.” To sit for the Uniform CPA Exam, you’ll first need to complete 150 college credit hours of education (unless you live in the U.S. Virgin islands, where this requirement doesn’t kick in until 2020). This often translates to having an undergraduate degree in accounting plus additional graduate-level courses. After passing the four-part exam, you won’t get your license until you have one to two years of verified experience under your belt, signed off on by an active CPA license holder. You can learn more about barriers to entry in becoming a CPA from Bryce Welker, CPA.

Potential CMAs will also need to pass an exam and meet education and experience requirements but these are not considered as onerous as those for CPAs. Specifically, to become certified you’ll need to have a Bachelor’s degree in any discipline and pass a two-part (four hours each) exam. You’ll also need to join the Institute of Management Accountants (IMA) and have two years of continuous professional experience using management accounting and financial management principles. Importantly, while there may be fewer requirements, the CMA certification is no cakewalk. The examination is rigorous and worldwide pass rates are low. For the nine-month period from September 1, 2015 through June 30, 2016, 35 percent of takers passed Part 1 and 50 percent passed Part 2.

Prestige and salary

With higher name recognition and greater barriers to entry, the CPA wins on the side of overall prestige. And that prestige may come with a slightly higher salary. The average top compensation in the U.S. for CMAs was $122,000 (2016 estimate) versus approximately $124,000 for CPAs (2012 estimate).

Practicality

In some ways the CMA is a more practical certification. A high percentage of professional accountants will ultimately find themselves working in the corporate world where they’ll need to have a deep management accounting toolkit. By comparison, in this environment the skills required for the CPA may be too theoretical and less immediately useful in the daily grind.

Cost and time

The CMA has the CPA beat here, too. It will cost you slightly less to sit for the CMA ($1,000 to $2,000) compared to the CPA ($2,000 to $3,000). And with fewer parts to cover, the CMA likely requires less time holed up at your desk. You can also take the CMA before you graduate while your mind is fresh and brimming with accounting know-how. But you’ll still need those two years of continuous work experience before you can be certified. Finally, the CMA requires 30 hours of continuing professional education (CPE) each year versus 40 hours for the CPA.

What’s on the exams?

The CPA exam has four parts and covers Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). Each section includes the following topic areas:

AUD

  • Ethics, Professional Responsibilities and General Principles (15-25%)
  • Assessing Risk and Developing a Planned Response (20-30%)
  • Performing Further Procedures and Obtaining Evidence (30-40%)
  • Forming Conclusions and Reporting (15-25%)

BEC

  • Ethics, Professional Responsibilities, and General Principles (15-25%)
  • Assessing Risk and Developing a Planned Response (20-30%)
  • Performing Further Procedures and Obtaining Evidence (30-40%)
  • Forming Conclusions and Reporting (15-25%)

FAR

  • Conceptual Framework, Standard-Setting and Financial Reporting (25-35%)
  • Select Financial Statement Accounts (30-40%)
  • Select Transactions (20–30%)
  • State and Local Governments (5-15%)

REG

  • Ethics, Professional Responsibilities and Federal Tax Procedures (10-20%)
  • Business Law (10-20%)
  • Federal Taxation of Property Transactions (12-22%)
  • Federal Taxation of Individuals (15-25%)
  • Federal Taxation of Entities (28-38%)

The two-part CMA exam covers business analysis, management accounting and reporting, and strategic management plus financial planning, analysis, control, and decision support. The breakdown:

Part 1 – Financial Reporting, Planning, Performance, and Control

  • External financial reporting decisions (15%)
  • Planning, budgeting and forecasting (30%)
  • Performance management (20%)
  • Cost management (20%)
  • Internal controls (15%)

Part 2 – Financial Decision Making

  • Financial statement analysis (25%)
  • Corporate finance (20%)
  • Decision analysis (20%)
  • Risk management (10%)
  • Investment decisions (15%)
  • Professional ethics (10%)

Get Both Certifications?

If you can afford the additional time, effort, and exam cost, there are solid reasons to get both certifications. From a marketing standpoint, having the broadest set of skills possible will set you apart and make you more noticeable to current and future employers. And from a practical perspective, if your job includes a mix of responsibilities, say you’re a CMA but you also prepare your company’s taxes, a CPA certification will help ensure this task goes smoothly.

Not only will dual certification expand your competencies but it will probably also expand your wallet. In 2016, respondents to the IMA Global Salary Survey who had both the CPA and CMA certifications reported a median total compensation 47 percent higher than respondents with neither certification. That compares to 36 percent higher median total compensation for respondents with just the CPA and 28 percent higher median total compensation for those with the CMA only.

Another reason to go for both is that when you compare the two exams, you’ll see there’s approximately 30 percent to 40 percent overlap in the knowledge tested. For example, Part 1 of the CMA exam could be seen as a broader, more comprehensive version of the BEC section on the CPA exam. So if you’ve already done one, and you’ve got the stamina, why not go for the other as well?

Which One Should I Choose?

There’s little doubt that holding either the CPA certification or the CMA certification will help you maximize your career and salary potential. The time, effort, and expense involved in obtaining these three (or six) letters illustrates the commitment and focus you have on your career and the likelihood you’ll make a solid contribution to your employer. So either one will give you a leg up over non-certified individuals when competing for desirable positions. Combine that with an expanded knowledge base and a thicker wallet and you’ll quickly see why you need to get certified.

As for which one to obtain, that’s a tougher question. The answer depends on an array of factors, including career choice and preferred working environment. Do you want to work with taxes? Do you want to work in a public-facing role? Or do you prefer to work with management to meet their goals, objectives, and mission? Also, what about your ego and desire for prestige – are these key motivators for you? Do you care whether Grandma has heard of your certification? And finally, your answer may also depend on the time and money you’re willing to commit.

Bottom line: you can’t lose either way. So you may just want to reach into your piggybank, grab a shiny coin, and flip it. After all, sometimes there’s no need for in-depth financial analysis.

Summary Details

  • Exam length: CPA (4 parts); CMA (2 parts)
  • Total exam hours: CPA (16); CMA (8)
  • Hours of study: CPA (approximately 400-600); CMA (approximately 200-400)
  • Exam cost: CPA (approximately $900); CMA (approximately $900). The cost can vary by state.
  • Exam pass rates, 2016: CPA (49% average across all sections and regions; BEC was the easiest section to pass, followed by REG); CMA (35% Part 1, 50% Part 2)
  • Exam expenses, estimate: CPA ($2,000 to $3,000); CMA ($1,000 to $2,000)
  • Continuing professional education: CPA (40 hours/year); CMA (30 hours/year)
  • Licensing requirements: CPA (1 to 2 years’ experience); CMA (2 years’ experience)
  • Average top annual compensation: CPA ($124,000); CMA ($122,000)