Credentials are a great way to boost your value to your current employer as well as prospective employers. Credentials may not immediately change your pay in your current position, but they will open up more opportunities which should bring boosts in pay. The big question is, what credentials should you get? The two most popular accounting credentials most people have are the CPA or CMA. Each one is different and varies with studying and cost.
Should you get the CPA or CMA? This is a question that you may be contemplating. The quick answer is that most companies value the CPA over the CMA, but that doesn’t mean it is the right choice for YOU. The CPA is a state issued license while the CMA is issued by an organization, therefore it holds more weight in the eyes of companies. The CPA is also more established giving it more notoriety and a certain prestige in the accounting community. The CMA is a smaller investment in terms of time and money. It is also geared towards accountants that want to work for a company (industry) and not be in a public accounting firm. The CMA still requires you to take a two part exam, but the information covered is not as wide ranging. The exam is more focused on financial reporting and strategic decision making, so it does not cover tax and audit like the CPA exam does. More companies are beginning to recognize the CMA credential and its popularity is growing among accountants. The CMA just doesn’t have long established reputation that the CPA has or as wide of a range of subject matter. Below is more detailed information about both credentials below.
CPA – The Certified Public Accountant (CPA) is considered by many to be the most prestigious and versatile. It is a license designated by a state board, which means it is backed by the government. It is also nearly a requirement to move up in the public accounting field. To become a CPA requires 150 hours of college study with a specific amount in the accounting field. This essentially means you need to have a bachelor’s degree and another year of education. Candidates also need to pass all four sections of the CPA exam in 18 months or less and have one full year of accounting experience. The exam covers a lot of material and is known for its difficulty. The AICPA who is responsible for the exam posts the passing rates per quarter. How hard is the CPA exam? As of the third quarter in 2016 the CPA passing rates by section cumulatively are as follows:
AUD: 46.37% BEC: 56.55% FAR: 46.38% REG: 49.41%
As you can see less than half the people who take the test pass in most sections. Those that decide to pursue the CPA credentials spend hours upon hours studying. This can be quite a lot especially during a busy season. It is highly recommended that candidates that want to take the exam, purchase a study system. There are a handful of different companies that offer these. Depending on which study guide company you go with, you can expect to between $1,000 to $4,000 for study materials. There is quite a financial investment in the CPA as well as time. However, for those that decide to accept the challenge and pass, new opportunities arise. CPAs can earn 10-15% more than their counterparts without the CPA credentials. There are also positions that require the candidate to be a CPA. This is particularly true in the public accounting sector. Nothing worthwhile comes easy.
CMA – is a credential designated by the Institute of Management Accountants. The credential is geared towards accounting professionals in the private sector or as it is also called, “industry”. To obtain these credentials, the process is less difficult than the CPA as well as a little cheaper. This is why some accountants may prefer this route over the CPA route. To become a CMA you must hold a bachelor’s degree which does not need to be in accounting, you must pass the CMA two section test, and you must have two years of continuous financial or accounting management experience. The material for the exam reviews financial reporting and strategic decision making. The CMA is good for those that want to move into a controllership position within private accounting or are currently in a controllership position.
My suggestion is to achieve at least one of the credentials, though achieving both comes with its own level of recognition. However, if you only have the time and money for one, I believe that the CPA is the better choice. It has much more recognition and mobility. Life throws all kinds of curve balls and you never know where you may end up working. With the CPA credentials you will have recognition in most business environments because of the exposure to auditing, tax, and financial reporting.